As 2011 comes to a close, the Financial Industry Regulatory Authority (FINRA) has issued a look-back at the year. The agency posted some interesting statistics on activities in the areas of investor protections, fraud avoidance and various efforts to "ensure the securities industry operated fairly and honestly for investors." Noting the achievements of this past year, the agency has certainly been proactive in this charged environment that carries with it not only investor expectations, but a greater public focus on financial markets and their stability.
Advising and representing broker-dealers and firms, the lawyers of the Securities Lawyer Blog are well aware of the proactive regulatory and enforcement environment. FINRA's numbers are noteworthy. In the area of disciplinary actions for example, FINRA brought over 1400, involving both firms and registered individuals. The fines resulting from these amounted to over $63 million. Restitution to investors amounted to over $19 million.
The Securities Lawyer Blog has also posted throughout the year on expulsions and suspensions that have resulted from various enforcement actions and settlements. FINRA notes that its numbers are up from 2010 in this regard, with the suspension of over 430 brokers and the barring of nearly 320 individuals from association with regulated firms. The agency reports that it expelled 17 firms from operating within the securities industry.
The year-end review for FINRA's Office of Fraud Detection and Market Intelligence (OFDMI) included referrals to other regulators in over 600 matters. The breakdown of those referrals between federal and state regulators and law enforcement is not delineated in FINRA's statistics.
Coordinated efforts with the Securities and Exchange Commission in the area of real-time surveillance is noted to have made it possible for the OFDMI to expedite matters that involved potential fraud and insider trading. Nearly 640 matters were referred out by OFDMI for further investigation when real time surveillance pointed to potential issues. These matters were referred to various enforcement agencies, including the SEC, state and federal agencies.
Over the year, the Securities Lawyer Blog has also kept our readers informed of the many matters involving firms and broker-dealers in the area of retail product promotions and unsuitability issues involving structured products. FINRA notes that it has been very active during the year highlighting its activities in the area of 'sales practice violations" that include a broad spectrum of issues, such as "misrepresentation, material omissions, unsuitable recommendations, and inadequate supervision and training in principal-protected notes, reverse convertibles and subprime investments."
We will continue the year-in-review with the area of examinations and market regulation in our next post. The lawyers of New York's Gusrae Kaplan Nusbaum, PLLC are pleased to bring our readers the Securities Lawyer Blog. Please contact our New York or Florida offices to learn about our law practice and speak with one of our highly-experienced attorneys.
We wish you all a good and productive year in 2012.
