In 2010, the Financial Industry Regulatory Authority brought 1,310 disciplinary actions against unscrupulous brokers and brokerage firms – a 13 percent increase over 2009, and the largest number of actions filed in recent years. That is, until now.
By Dec. 16 of 2011, FINRA already had brought 1,411 disciplinary actions against registered individual brokers and firms, and ordered more than $19 million in restitution to investors, according to a Dec. 16 FINRA news release. Registered brokers and firms accused of securities violations also were ordered to pay more than $63 million in fines. In addition to monetary penalties, FINRA suspended 432 brokers from association with FINRA-regulated firms, barred 317 individuals, and expelled 17 firms from the securities industry.
Complaints and disciplinary actions filed in 2011 included those against:
- David Lerner & Associates for alleged misrepresentations, advertising and suitability violations concerning the sales of Apple REIT Ten;
- Wells Fargo for alleged unsuitable reverse convertible sales;
- Credit Suisse for alleged misrepresentations of subprime securitizations;
- Merrill Lynch for alleged misrepresentations of subprime securitizations;
- Citigroup for alleged failure to supervise;
- UBS for alleged securities violations involving short sales and for alleged failure to supervise;
- UBS Financial Services for alleged misleading communications about Lehman-issued notes; and
- Morgan Stanley for alleged excessive markups and markdowns on corporate and municipal bond transactions.
FINRA's investigations also led to more than 600 referrals of potential fraud to federal and state regulators and law enforcement agencies, according to the release.
In addition to the significant increase in disciplinary actions filed this year, FINRA’s 2011 activities included substantial investments in investor education, such as the newly redesigned SaveAndInvest.org website and the newly launchedResearch Center on the Prevention of Financial Fraud. FINRA also issued a total of ten investor alerts, which warned investors about the potential perils and pitfalls of investing in diverse products, including: non-traded REITs, high-yield products, structured products, and gold.
"Our top priority is to protect investors," said Richard Ketchum, FINRA's Chairman and CEO. "We are continually incorporating measures designed to root out products and practices that harm investors, as well as providing information and tools that help investors save and invest for their future and avoid costly mistakes. We remain committed to ensuring that those who engage in fraudulent or other activities posing a threat to investors are held accountable."
For more information about FINRA’s 2011 activities and actions, read the full release here.