Financial Industry Regulatory Authority (FINRA) has released its 2009 annual report concerning disciplinary actions
brought forth by the organization. The report highlights the lessons learned
from the recent financial crisis, as well as revelations of fraud and
measures to protect investors.
Here are some of the highlights:
- In March, FINRA created an Office of the Whistleblower to encourage individuals
to report fraudulent activities conducted by those entrusted with investors’
money. In October, they also created the Office of Fraud Detection and
According to the report, in 2009, FINRA took 993 disciplinary actions.
These actions included the disbarring of 383 individuals, the suspension
of 363 individuals and the expelling of 20 firms for
investment fraud. Nearly $50 million in fines were levied against firms and individuals.
These actions were partially a result of about 2,500 routine examinations.
- The report also indicates that FINRA reviewed approximately 96,700 advertisement
and sales communications that were produced by firms to distribute to
investors. The intent of this review was to detect potential investment scams.
- As a result of the volatility of the past few years, FINRA has challenged
regulators to increase their focus on investor protection. FINRA is also
supporting a fiduciary standard for broker-dealers that offer personalized
advice. They have recommended the SEC to be the best agency to enforce
these increased standards.