FINRA's NAC Strengthens Sanction Guidelines for Fraudulent Conduct


WASHINGTON – The Financial Industry Regulatory Authority (FINRA) announced that the National Adjudicatory Council’s (NAC) review of its Sanction Guidelines has resulted in a number of significant revisions. In particular, the NAC is amending the overarching principles that apply to sanctions determinations and is revising the Sanction Guidelines to call for tougher sanctions against those who commit fraud or make unsuitable recommendations to customers. The revised Sanction Guidelines now advise FINRA adjudicators to strongly consider barring an individual respondent, or expelling a firm, for cases involving fraud. 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.

The NAC is also revising the Sanction Guidelines’ General Principles. The amended Sanction Guidelines emphasize that FINRA’s disciplinary system should be designed to protect the investing public, deter misconduct and uphold high standards of business conduct. The amendments underscore FINRA’s policy of imposing progressively escalating sanctions on registered representatives and firms that engage in a pattern of similar misconduct or evidence a reckless disregard for regulatory requirements, investor protection or market integrity.

The revised Sanction Guidelines outlined in Regulatory Notice 15-15 are effective immediately.

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