FINRA FINES POLICY INFORMATION - CONTACT US IF YOU NEED DEFENSE
FINRA Fines Policy
Fines are an important sanction in FINRA's arsenal of tools to deter misconduct. Fines are sought in formal disciplinary actions brought by the enforcement staff of FINRA.
FINRA has a process in place regarding the use of fines, which is designed to guard against potential conflicts in the organization's collection and use of fine monies. The FINRA fine guidelines provide that:
1. All fine monies collected are segregated from FINRA revenues into a separate account.
2. Fine monies collected or anticipated are not included in FINRA operating revenues and play no role in developing the operating budget.
3. Fine monies are not used to fund employee compensation (salaries or bonuses).
4. The use of fine monies is limited to capital expenditures and specified regulatory projects that have a clear and direct nexus to protecting investors and ensuring market integrity. Capital expenditures are approved by the Management Committee up to a specified level, with escalating levels being approved by the Finance Committee of the FINRA Board of Governors and/or the FINRA Board of Governors.
5. Staff reports to the FINRA Board of Governors at the end of each fiscal year on the projects and purposes for which fine monies have been used. Furthermore, FINRA Internal Review performs an annual audit as to whether FINRA's use of fine monies complies with these guidelines, with results being reported to the FINRA Audit Committee.
Selling unregistered securities- Fine of $2,500 to $50,000- possible suspension bar or other sanctions.
Conversion or improper use of funds- $2,500- $50,000- If conversion bar no matter the amount, Where the improper use resulted from respondent’s misunderstanding of his or her customer’s intended use of the funds or securities, or other mitigation exists, consider suspending respondent in any or all capacities for a period of six months to two years and thereafter until respondent pays restitution.
Forgery- $5,000-$100,000- In cases where mitigating factors exist, consider suspending respondent in any or all capacities for up to two years. In egregious cases, consider a bar.
Churning or excessive trading- Fine of $5,000 to $75,000- Suspend respondent in any or all capacities for a period of 10 business days to one year. In egregious cases, consider a longer suspension (of up to two years) or a bar.
Exercise of discretion without written authority – Fine of $2,500-$$10,000- In egregious cases, consider suspending respondent in any or all capacities for 10 to 30 business days.
Misrepresentations or material omissions- negligent $2,500-$50,000 intentional $50,000-$100,000- possible suspension, bar or termination.
Unsuitable Recommendations- Fine of $2,500 to $75,000- possible suspension bar or other sanctions.
Unauthorized Transactions and failures to buy/sell- fine $5,000-$75,000- possible 2 year suspension.
Soreide Law Group also represents member firms and brokers before the Financial Industry Regulatory Authority Office of Hearing Officers and the National Adjudicatory Council (NAC) accused of the following violations:
Anti-Intimidation/Coordination—Failure to Comply with Rule Requirements
Arbitration Award—Failure to Honor or Failure to Honor In a Timely Manner
Best Execution—Failure to Comply with Requirements for Best Execution
Branch Offices—Failure to Register
Cheating, Using an Imposter, or Possessing Unauthorized Materials in Qualifications Examinations or in the Regulatory Element of Continuing Education
Churning or Excessive Trading
Communications with the Public—Late Filing; Failing to File; Failing to Complywith Rule Standards or Use of Misleading Communications
Confidentiality Agreements—Settling with Customer in Exchange For Customer Agreement Not to Cooperate with Regulatory Authorities
Continuing Education (Firm Element)—Failure to Comply with Rule Requirements
Continuing Education (Regulatory Element)—Failure to Comply with Rule Requirements
Conversion or Improper Use of Funds or Securities
Corporate Financing Rule—Failure to Comply with Rule Requirements
Customer Account Transfer Contracts—Failure to Comply with Rule Requirements
Customer Protection Rule—Failure to Comply with Rule Requirements
Day Trading Accounts—Failure to Comply with Risk Disclosure Requirements; Failure Appropriately to Approve an Account for Day Trading; Failure to Preserve Required Day-Trading Records
Discretion—Exercise of Discretion without Customer’sWritten Authority
Disqualified Person AssociatingWith Firm Prior to Approval; Firm Allowing Disqualified Person to Associate Prior to Approval
Disqualified Persons—Failure to Discharge Supervisory Obligations
ECN Display Rule—Failure to Comply with Rule Requirements
Engaging in Prohibited Municipal Securities Business
Escrow Violations—Prohibited Representations in Contingency Offerings; Transmission or Maintenance of Customer Funds in Underwritings
Failure to Display Minimum Size in NASDAQ Securities, CQS Securities and OTC Bulletin Board Securities
Failure to Respond or Failure to Respond Truthfully, Completely or Timely to Requests Made Pursuant to NASD Procedural Rule 8210
FOCUS Reports—Late Filing; Failing to File; Filing False or Misleading Reports
Forgery and/or Falsification of Records
Forms U4/U5—Late Filing of Forms or Amendments; Failing to File Forms or
Amendments; Filing of False, Misleading or Inaccurate Forms or Amendments
Free-Riding andWithholding Violations
General Principles Applicable to All Sanction Determinations
Guaranteeing a Customer against Loss
Limit Order Display Rule—Failure to Comply with Rule Requirements
Limit Order Protection Rule—Failure to Comply with Rule Requirements
Locked/Crossed Market—Failure to Comply with Rule Requirements
Marking the Close or Open
Member Agreement Violations
Misrepresentations or Material Omissions of Fact
MSRB Rule G-36—(Timely Filing of Offering Documents with MSRB)—Late Filing and Failing to File
MSRB Rules G-37 Reporting—Late Filing; Failing to File; Filing False or Misleading Reports
Net Capital Violations
Options Exercise and Positions Limits—Failure to Comply with Rule Requirements
Order Audit Trail System (OATS)—Late Reporting; Failing to Report;
False, Inaccurate or Misleading Reporting; and Clock Synchronization Failure
Options Positions Reporting—Late Reporting and Failing to Report
Outside Business Activities—Failure to Comply with Rule Requirements
Passive Market Making Violations
Penny Stock Rules—Failure to Comply with Rule Requirements
Pricing—Excessive Markups/Markdowns and Excessive Commissions
Principal Considerations in Determining Sanctions
Regulation M Reports—Late Filing; Failing to File; False or Misleading Filing
Regulation T and Margin Requirements—Violations of Regulation T and/or
FINRA Margin Requirements
Reportable Events under Conduct Rule 3070—Late Reporting; Failing to
Report; Filing False, Inaccurate or Misleading Reports
Request for Automated Submission of Trading Data—Failure to Respond
in a Timely and Accurate Manner
Schedule A to the FINRA Sanction Guidelines
Selling Away (Private Securities Transactions)
Settling Customer Complaints Away from the Firm
Short Sale Violations
Supervision—Failure to Comply with Taping Rule Requirements
Supervision—Failure to Supervise
Supervisory Procedures—DeficientWritten Supervisory Procedures
Trade Reporting—Late Reporting; Failing to Report; False, Inaccurate or Misleading Reporting
Prohibition on Transactions, Publication of Quotations or Publication of Indications of
Interest During a Trading Halt
Trading Ahead of Research Reports
Transactions for or by Associated Persons—Failure to Comply with Rule Requirements
Unauthorized Transactions and Failures to Execute Buy and/or Sell Orders
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