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Home > Blog > Survey Shows FINRA Fines, Sanctions Up

Survey Shows FINRA Fines, Sanctions Up

Failed deals and misrepresented investments involving private placements, non-traded real estate investment trusts (REITS) and other alternative financial products resulted in an increased number of enforcement actions and fines by the Financial Industry Regulatory Authority (FINRA) in 2011. According to an annual study by Sutherland Asbill & Brennan LLP, fines from FINRA totaled $68 million last year, up 51% from $45 million in 2010.

FINRA reported filing 1,488 disciplinary actions in 2011 compared to 1,310 cases in 2010, the study says. The biggest enforcement increase concerned inaccurate or fraudulent advertising. Sanctions in that area rose to $21.1 million in 2011, from $4.75 million in 2010.

Suitability cases in particular resulted in $7.7 million in reported fines in 2011.  The 106 cases involving suitability allegations last year doubled the 53 cases reported in both 2009 and 2010, the study said.  Similarly, fines in suitability cases jumped from $3.75 million in 2010 to $7.7 million in 2011, a 105% increase.

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