Wall Street Regulator FINRA Strengthens Its Sanction Guidelines against Brokerage Firms and Registered Reps

13th May 2015

The Financial Industry Regulatory Authority (FINRA), the largest independent regulator for all securities firms doing business in the United States, announced on May 12, 2015, that, effective immediately, it has instituted stiffer penalties for brokerage representatives and brokerage firms who commit fraud or violate suitability rules.

FINRA stated that “for individuals who violate FINRA’s suitability rule, the range of the suspension has increased from one year to two years, and adjudicators are advised to strongly consider barring an individual respondent where aggravating factors predominate over mitigating ones.”

FINRA said that the review of its Sanction Guidelines by its National Adjudicatory Council, FINRA's appeal tribunal for disciplinary cases (NAC), has resulted in a number of significant revisions to both the principles that apply to sanction determinations and to the Sanction Guidelines themselves.

The amendments underscore FINRA’s stated policy of imposing progressively tougher sanctions on registered representatives and firms that engage in a pattern of similar misconduct; or where there is evidence of a reckless disregard for regulatory requirements, investor protection, or market integrity.

FINRA also stated that “while the Sanction Guidelines are not meant to prescribe fixed sanctions for particular violations, the goal is to assist FINRA’s adjudicators – Hearing Panels and the NAC – in imposing appropriate sanctions consistently and fairly in disciplinary proceedings” and that FINRA’s Departments of Market Regulation and Enforcement also consult the Sanction Guidelines in determining the suitable or proper level of sanctions to seek in settled and litigated cases. 

Click here for FINRA’s Sanction Guidelines