How FINRA spent its enforcement fines

Enforcement fines levied by the U.S. Financial Industry Regulatory Authority Inc. (FINRA) last year contributed US$48.1 million to the self-regulatory organization’s spending on an array of initiatives.

In a new report, FINRA outlined how it used the money collected from enforcement fines in 2022.

Similar to the way that Canadian SROs segregate the money collected through enforcement activity from their operating budgets, the fines collected by FINRA can only be spent for certain purposes that must be approved by its board.

FINRA’s board can authorize a wide range of uses for that money including investor education and investor protection initiatives, but also capital spending to improve regulatory oversight and compliance, among other things.

In 2022, the FINRA board identified US$111.4 million worth of spending that could be funded by enforcement fines. Spending included US$89.2 million on capital initiatives or non-recurring strategic expenditures to improve compliance and bolster regulatory oversight, and US$22.2 million on investor and industry compliance education.

Given that the eligible spending exceeded the fines handed out, the balance of those expenditures (US$63.3 million) was funded from FINRA’s reserves and operating budget, it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.