In 2011, enforcement actions and fines by the Financial Industry Regulatory Authority (FINRA) went up sharply. In fact, 2011 was the third year in a row FINRA significantly boosted its enforcement activities against brokers and advisers.
“What makes us most proud is that we are getting through that caseload” said Brad Bennet, FINRA Executive Vice President. FINRA filed 1,488 disciplinary actions last year, a significant jump from the 1,310 cases in 2010 and fines spiked from $45 million in 2010 to $68 million in 2011, according to a survey by Sutherland Asbill & Brennan LLP.
FINRA’s top compliance concerns were advertising, including false or fraudulent internal communications, and suitability, or rather the lack thereof.
A new suitability rule is due to be finalized this summer. As Mr. Bennet is quoted as saying, quite poignantly: “If you see products being sold to people who don’t understand them to people who don’t understand them, that’s a supervision and suitability problem.” The author relates. So do read up. And stay tuned for future blogs discussing the proposed new rule.
How We Can Help Ensure Compliance
Of course, this post provides only a brief overview of the potential enforcement actions against advisers and brokers. Therefore, you should consult with experienced counsel to evaluate your compliance procedures.
Eckerle Law offers a highest-quality and cost-effective alternative to the traditional law firm model for a wide variety of transactional and regulatory matters serving all your business law needs. Our experienced attorneys also provide a full range of compliance services for investment advisers, offering compliance tools that are tailored to fit the ever changing regulatory landscape as well as your business needs.
If your company would like to strengthen its business practices, please contact us today so we can leverage our experience to create real-life business and legal solutions to help your business thrive.