Sen. Warren Presses FINRA to Explain Enforcement Decline

“Any suggestion that FINRA360 had the effect of reducing the number of enforcement actions is just dead wrong,” Pellecchia said, adding that such allegations would carry more weight if the industry wasn’t continuing to blast FINRA’s enforcement moves.

Industry executives have complained the regulators’ enforcement function “is inflicting unnecessary and excessive costs and uncertainty,” Ann Wagner, a Missouri Republican and senior member of the House Financial Services Committee, said at a December hearing.

FINRA barred 3,640 individuals and expelled 130 firms from its membership between 2014 and 2023, according to Pellecchia. Those expulsions included high-risk firms as well as associated individuals who had been the subject of multiple disciplinary actions, moves that would help explain the decline in enforcement actions, Pellecchia said.

“Other high-risk firms withdrew from our membership following considerable regulatory attention,” Pellecchia said. During that period, the regulator’s enforcement actions resulted in $377.9 million ordered to be returned to harmed investors, he said.

Sen. Elizabeth Warren, D-Mass. Credit: Bloomberg