The Financial Industry Regulatory Authority (FINRA) reversed an eight-year decline in enforcement actions in 2024, according to an analysis by the law firm Eversheds Sutherland. While FINRA has yet to release its official annual disciplinary report, Eversheds Sutherland compiled data from past reports and FINRA’s online database to assess trends in enforcement.
Last year, FINRA reported 552 disciplinary actions, marking a 22% increase from the 453 actions recorded in 2023. This reversal signals renewed regulatory scrutiny within the brokerage industry.
The surge in disciplinary actions was overshadowed by a dramatic increase in restitution orders. FINRA mandated firms to pay approximately $23 million in restitution in 2024, a 207% jump from the $7.5 million ordered in 2023. This spike was driven in large part by seven firms facing restitution penalties exceeding $1 million each, totaling around $18 million. In contrast, only one firm faced a seven-figure restitution order in 2023.
However, total fines imposed by FINRA declined in 2024. The regulator reported $59 million in fines, a 35% drop from the $89 million issued in 2023. This decrease is largely attributed to a substantial $24 million fine levied against Bank of America Securities in 2023 for spoofing in the U.S. Treasuries market. Without that outlier, the total fines in 2023 would have been only 10% higher than in 2024.
Spoofing continued to be a key enforcement focus. In 2024, FINRA imposed a $6 million fine on TD Securities for alleged manipulation of the U.S. Treasury cash securities market. Beyond spoofing, the most heavily penalized compliance violations included:
- Trade reporting failures: 21 cases totaling approximately $9 million in fines. - Options trading violations: $4.3 million in fines. - Technology-related compliance failures: $3.5 million in fines. - Fingerprinting failures for associated personnel: $2.7 million in fines.
Eversheds Sutherland describes this uptick in enforcement as a “significant turnaround” for FINRA, indicating heightened regulatory vigilance. While FINRA declined to comment directly on the report, it reaffirmed its mission: “FINRA fosters vibrant markets with an integrated regulatory program that promotes member firm compliance, targets key risks for investors and markets, and leverages technology and data.”
Legal and Political Challenges Facing FINRA
The increase in enforcement comes as FINRA faces legal challenges to its authority as a self-regulatory organization (SRO). The Securities and Exchange Commission (SEC) oversees FINRA, but its status as a private entity with enforcement powers has been challenged in court.
The most high-profile case involves Alpine Securities, which has been contesting a 2022 expulsion order and questioning FINRA’s legitimacy as a regulator. Last November, an appellate court overturned Alpine’s expulsion, leading the firm to petition the U.S. Supreme Court to stay FINRA’s expedited disciplinary proceedings. Both FINRA and the Justice Department have opposed Alpine’s request for a stay.
Separately, FINRA’s future is being scrutinized in the context of the new Trump administration. Project 2025, a policy framework developed by the Heritage Foundation and endorsed by several Trump-affiliated policymakers, advocates for dismantling FINRA and transferring its regulatory functions to the SEC. However, Eversheds Sutherland partner Adam Pollet believes FINRA’s abolition remains unlikely.
“Despite these constitutional and political challenges to FINRA and its enforcement program, it’s highly unlikely that FINRA will be abolished over the next four years, even if litigants or politicians are successful in curtailing certain practices or having the SEC more closely supervise FINRA,” Pollet says.
FINRA’s Role in Reg BI Enforcement
Eversheds Sutherland expects FINRA to continue playing a leading role in enforcing Regulation Best Interest (Reg BI), the SEC’s standard for investment advice to retail clients that took effect in 2020. In 2024, FINRA reported 30 Reg BI-related cases, resulting in $1.6 million in fines. This marked an increase in case volume from 2023, when only 15 cases were resolved. However, fines in 2023 totaled $6 million, with one case alone accounting for $5.5 million.
The SEC’s approach to enforcement under the Trump administration is expected to be less aggressive, potentially creating an opening for FINRA to take a more prominent role. Eversheds Sutherland partner Brian Rubin anticipates FINRA will continue leading Reg BI enforcement efforts.
“Regardless of whether SEC enforcement activity slows down under the second Trump administration, FINRA’s role in Reg BI examinations and enforcement actions will likely increase because it remains the primary regulator of broker-dealers,” Rubin says.
Implications for Wealth Advisors and RIAs
For wealth advisors and registered investment advisors (RIAs), FINRA’s renewed focus on enforcement underscores the need for rigorous compliance oversight. The sharp rise in restitution orders highlights the regulator’s prioritization of investor protection, particularly in cases involving improper trade execution, sales practices, and disclosure failures.
Advisors operating under the broker-dealer model should anticipate closer scrutiny of their trade reporting, record-keeping, and best execution policies. Meanwhile, the evolving regulatory landscape surrounding FINRA’s authority could create additional uncertainty, particularly if legal or political developments alter the scope of its enforcement powers.
Despite these uncertainties, FINRA’s continued emphasis on Reg BI enforcement signals that wealth advisors must remain vigilant in adhering to best-interest obligations when recommending investments to retail clients. As the regulatory environment evolves, firms should proactively assess and enhance their compliance programs to mitigate enforcement risks and align with FINRA’s heightened expectations.
