FINRA Posts $218M Loss for 2022

The Financial Industry Regulatory Authority on Friday reported a $218.1 million net loss for 2022, compared with the $218.8 million profit the regulator reported for 2021.

The 2022 net loss was “driven by” investment and operating losses of $166.9 million and $60.2 million, respectively, Robert W. Cook, FINRA CEO and president, and Todd T. Diganci, its chief financial and administrative officer, said in the report.

FINRA’s reserve portfolio lost 6.4% last year. Although “negative for the year, our portfolio performance was favorable relative to the double-digit declines in the global equity and U.S. investment grade bond markets,” the executives said in their annual message.

The $60.2 million operating loss, compared with a $112 million operating profit in 2021, “reflected lower revenues and an increase in operating expenses, offset by higher interest and dividend income,” according to the report.

Revenue, meanwhile, dipped to $1.34 billion last year from $1.4 billion in 2021. The decline was “due to a decrease in the number of public offerings and lower Trading Activity Fees,” the executives said.

FINRA’s increased operating expenses last year were “driven in part by investments in staff and technology to strengthen our capabilities to fulfill long-standing regulatory responsibilities, address more recent expansions in the scope of our duties, and meet new challenges in the markets,” they said. “The increased costs also reflect steps we took to manage evolving workforce conditions, including wage inflation and competitive labor markets.”