FINRA Announces Tougher Sanctions | Cold Spring Advisory Group

FINRA Announces Tougher Sanctions

May 14, 2015

The Financial Industry Regulatory Authority (FINRA) announced that it will impose stiffer penalties on its member firms and their brokers who commit fraud or make unsuitable recommendations to investors. Effective immediately, FINRA's adjudicators will strongly consider barring a broker from the industry if they engage in fraudulent activities. The new guidelines also increase the likelihood that brokerage firms that commit fraud will be expelled from the industry by the regulator.

According to the press release, firms or brokers who violate FINRA's Suitability Rule (Rule 1111) will also face tougher punishment. The length of time an individual can be suspended for suitability abuse has doubled from one to two years, and adjudicators will "strongly consider barring and individual respondent where aggravating factors predominate over mitigating ones."

The revised Sanction Guidelines reflect FINRA's efforts to crack down on firms and brokers who exhibit a pattern of misconduct or abusive behavior, or have a history of failing to comply with regulatory requirements.