FINRA is scaling back on "supersized" fines.
The organization levied only two fines of $1 million or more -- for a total of $2.25 million -- through June 2013, compared with seven of those jumbo fines in the first half of 2012, according to data taken by securities litigation firm Sutherland Asbill & Brennan from FINRA's monthly Disciplinary and Other FINRA Actions report.
The report measures sanctions brought by the regulator against firms and brokers and does not include client or customer complaints.
One reason: As the markets improve and the industry distances itself from the financial crisis, FINRA has fewer big-ticket items left to prosecute, according to the firm. "Theyre bringing in more smaller cases, says Brian Rubin, the head of Southerlands securities litigation and enforcement group, who represents firms and brokers in regulatory cases. In the past, theyve brought a number of larger cases that stemmed from the market crisis, and given the number of years that have passed since the market crisis, theyve probably run through their inventory.
FINRA earlier this year pulled back from its bid to become the primary regulatory body for independent advisors.
DROP IN OVERALL FINES
From January through June 2013, FINRA sanctioned firms a total of $23 million, down from $39 million in the first half of last year, the law firm reported. The regulator is on track to issue some $46 million in fines this year, compared with $78 million in 2012.
The number of cases has remained relatively consistent, however. FINRA brought 597 disciplinary actions during the first six months of 2013, just slightly down from 609 last year.
The total fines were down for all of last year's top five enforcement issues: suitability, due diligence, research report/analyst, advertising and exchange-traded funds. Advertising-related fines, for example, were only $1.2 million in the first half of this year, down from $10.4 million in all of 2012.
The Sutherland report cautioned that there may still be big fines incoming. In July, FINRA said it had fined a firm $7.5 million and ordered it to pay $1.5 million in restitution to investors over recordkeeping failures. The regulator also imposed three more fines of more than $1 million in August, Sutherland found.
It remains to be seen whether these recent cases are precursors of increased disciplinary activity in the last half of 2013 or simply blips on FINRAs enforcement radar, the firm said in a statement.