Here's How FINRA Spent $48M of Fine Money

The Financial Industry Regulatory Authority issued $48.1 million in fines in 2022, a significant drop from the $57 million levied in 2021.

FINRA’s board determined that there were $111.4 million in fines-eligible expenditures in 2022 (including capital initiatives, strategic expenditures and other activities eligible to be funded by fine moneys), FINRA said in a just-released report.

“Because the total of fines-eligible expenditures exceeded the amount of fines issued in 2022, the balance of $63.3 million was funded from FINRA’s reserves and excess operating results,” the group reported.

FINRA, a nonprofit, points out that it cannot use fee money to fund its operating budget or employee compensation. These are funded through fees paid by firms, exchanges and individuals.

In 2022, FINRA invested $52.2 million in several initiatives to enhance various tools and systems used for exams, investigation and disciplinary programs, according to the report.

For instance, FINRA invested $17.1 million to enhance the tools and systems used for exams and investigations, which included costs “to implement an enhanced process to address risks from broker-dealers with a significant history of misconduct, costs to build standardized investigative analytic tools and spending to develop tools to analyze market data, including criminal and civil records.”

Spending also includes “costs to transform the National Cause and Financial Crimes Detection Programs to provide additional support for specialists including those focused on cybersecurity and anti-money laundering programs, as well as the second phase of an initiative to expand cross-team collaboration,” FINRA explained.