CSG Law Alert: An Unofficial Guide to FINRA’s 2024 Enforcement Statistics
In 2024, FINRA Enforcement settled by Letter of Acceptance, Waiver, and Consent (AWC) approximately 523 disciplinary actions. Of those, roughly 70 percent were filed against individual respondents and 30 percent against firms.1 This alert will focus on the AWCs filed against firms.
In 2024, FINRA filed a total of 158 AWCs against firms: 81 against small firms, 17 against mid-size firms, and 60 against large firms.2
The average fine (irrespective of firm size) was $362,547; the median fine (irrespective of firm size) was $125,000. The median fine for small, mid-size, and large firms was $75,000, $137,500, and $375,000, respectively.
Predictably, many of the AWCs against firms included supervision charges. Focusing on the nature of the underlying violations, whether charged or uncharged, the most common underlying violation types were: Reg BI, trade reporting, AML, net capital, recordkeeping, outside business activities and private securities transactions, and excessive mark-ups/mark-downs.
Several years ago, FINRA began including in many AWCs the source of the examination or investigation that led to the AWC. Of those AWCs that included the source of the matter, the most common source identified was FINRA’s cycle exam program (within Member Supervision), followed by Market Regulation, and firm self-reports.
The median fine for matters that originated with a cycle exam was $185,000; the median fine for matters that originated with Market Regulation was $65,000; and the median fine for matters that originated with a self-report was $95,040.
For matters that originated with a cycle exam, the most common underlying charge was AML, followed by excessive-trading supervision and a failure to apply applicable fee waivers/discounts.
FINRA ordered undertakings in 60 matters. Moreover, FINRA ordered firms to pay restitution in 35 cases. The average amount of restitution ordered was $519,470; the median amount was $85,554.
1 In 2024, FINRA filed 21 Complaints—all 21 were filed against individuals; none was filed against firms.
2 FINRA separates its member firms into three categories—small, mid-size, and large—based on the firms’ population of representatives: small firms = 1-150 representatives; mid-size firms = 151-499 representatives; and large firms = 500 or more representatives. According to FINRA’s 2024 Industry Snapshot, in 2023, there were 2,945 small firms, 198 mid-size firms, and 155 large firms.