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2016 FINRA Actions - The Stats

2016 FINRA Actions - The Stats

 

 You can download a full copy of the slides from this webinar. 

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Full video transcript available below: 

 

Welcome and thank you for joining today's webinar hosted by me Joe Boyhan of MCO and Brian Rubin and Adam Pollet of Eversheds Sutherland. With that I'll hand you over to my co-hosts.

 

Now we're moving on to FINRA. This is as Brian said data from our database and that we confirm using FINRA's own statistic that they post annually. Here we have the number of cases in 2016 as you can see looks slightly down compared to 2015 although it puts it right in the average ballpark of about 2011.

 

Now on to the fines, so despite the decrease in the number of cases FINRA set a new record for fines in 2016; $176 million. This surpasses the old record set in 2014 by $42 million, so it's a significant increase. As we'll discuss here soon, this figure was propelled by a lot of multi-million dollar fines. So we see here that from 2008 there's been a 529% increase. For comparison's sake since 2008 the S&P 500 has increased by just about 70% so it's too bad you can't invest in FINRA fines.

 

For 2017, the first half or so FINRA appears to be off to a relatively slower start. We haven't seen as many large fines being reported in a press release.

 

All right so here we are talking about restitution. Although fines have sky-rocketed, restitution was actually down significantly in 2016 compared to 2015, but it was pretty much on par with the prior five years. It's important to note that 2015 was boosted by a number of mutual fund discount cases that resulted in over $50 million in restitution so if you knock those out, 2015 was somewhat comparable to prior years.

 

One of the things that we're interested in looking forward is whether 2016 or 2015 was an outlier in where we're going with regard to restitution, but as Adam noted there have not been a lot of big cases brought so far in 2017 and that's not unusual. Most of the big cases are usually in the latter half of the year.

 

Let's go to the next slide and this one focuses on fines and supersized fines and when I started doing this, I have little kids and McDonald's was important and supersized things were important, so we named the fines of a million dollars or more supersized. You can see the stats from 2016 that there's a record number of million dollar plus fines and it outpaced the prior year significantly.

 

Let's go to the next slide. In honor of the President and because the fines have increased so significantly, we last year established the category of huge fines which is $5 million or more and you can see there were eight of those type of fines. 2014 there were actually more, but the huge sized fines for 2016 were significantly greater than in 2014 so they totaled $89 million and again we'll see if there is a continuing trend going forward and we'll talk about that in some of these slides that we'll be on soon.

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Eversheds - Sutherland

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