The Financial Sector Regulatory Authority has allocated most of the money it collected from fines last year to bolstering its own operations, but a significant portion has gone into educating investors who flock to online brokerages and trading app-based.
The industry self-regulator says it levied $90.1 million in fines and allocated them to “fine-eligible expenses.” It also dipped into its reserves and “excess operating results” for an additional $37.6 million, for a total of $127.7 million it spent on fine-eligible expenses, according to the report. Finra on the use of the 2021 fines.
Most of the money – $80.4 million – was spent on capital initiatives and one-time payments to enhance the effectiveness of industry self-regulation, such as tools and systems for reviews, investigations and disciplinary measures; reporting and transparency systems, including $11.8 million to implement consolidated audit trail data; its external digital platform and other compliance-related systems; and its registration, testing and continuing education systems, including its central registration repository system, Finra says.
The remaining $47.3 million was spent on investor education, promoting compliance through education and various resources, and training industry self-regulatory personnel, according to the report. .
Of this amount, Finra has earmarked $30 million “to fund a multi-year initiative to explore innovative ways to reach and educate investors, particularly new self-directed retail investors who transact through online accounts. or via mobile applications”, the industry. said the regulator.
In March, an analysis of Evershed Sutherland the partners Brian Rubin and Adam Pollett concluded that Finra collected about $91 million in fines in 2021, a 60% jump from the previous year and the highest total since 2016.
More than half – $57 million, to be exact – came from the record fine Finra imposed on the online brokerage Robin Hood about failures related to margin trading, options trading, and breakdowns, among other issues.
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