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FINRA's Year in Review

The Financial Industry Regulatory Authority (FINRA) has issued a release looking back at the regulator's activities in 2010.  Spurred, no doubt, by the reforms that took most of 2010 to work their way out of Congress, as well as efforts promoted by regulators like the SEC and CFTC, the year focused on renewed market regulation and surveillance, vigorous enforcement, expanding the firms regulated by FINRA, as well as new disclosure and investor education initiatives.

 Highlights of FINRA's 2010 activity include:

  • Expanded its market oversight responsibilities to include 11 new markets, particularly through the NYSE EuroNext group. FINRA is now responsible for surveillance of 80 percent of the trading volume of U.S. equity markets.
  • Successfully launched its Office of Fraud Detection and Market Intelligence (OFDMI), including fully staffing the Office of the Whistleblower. In 2010, OFDMI referred more than 500 matters involving potential fraudulent conduct to the SEC or other federal law enforcement agencies for further investigation. These matters involved a wide range of issues, including insider trading, microcap fraud and Ponzi schemes.
  • To date, made 244 insider trading referrals to the SEC, the highest in FINRA's history. The referrals include suspicious trading ahead of material news announcements by hedge funds, institutional investors, private equity firms and retail investors. The Insider Trading Surveillance unit continues to refine its analytics to identify concealed serial insider trading rings.
  • Brought 1,173 disciplinary actions and levied fines totaling $41.1 million. FINRA also ordered almost $8 million in restitution to harmed investors. FINRA expelled 14 firms from the securities industry, barred 270 individuals and suspended 407 from association with FINRA-regulated firms.
  • Further strengthened the executive leadership team by naming J. Bradley Bennett as the head of FINRA's Enforcement Division and Samuel H. Gaer as Chief Information Officer, and by promoting Susan Axelrod to lead the organization's Member Regulatory Sales Practice area.
  • Enhanced market transparency by expanding the Trade Reporting and Compliance Engine (TRACE) to include debt issued by federal government agencies, government corporations and government-sponsored enterprises, as well as primary market transactions in eligible debt issues. This expansion represented a 50 percent increase in the number of reportable debt instruments through TRACE. FINRA is currently preparing TRACE for expansion to securitized products, which will add more than 1.2 million asset- and mortgaged-backed securities to the current 45,000 TRACE-eligible securities. The rules for reporting transaction information in securitized products become effective in May 2011.
  • Completed the first major expansion of BrokerCheck since 2002. Investors now have more information, including historic complaints, on current brokers and former brokers. Records on former brokers are now available for 10 years (instead of the previous two years) after they leave the securities industry. Records of regulatory actions, criminal convictions, civil judgments and arbitration awards are permanently available. As a result, investors now have access to detailed information about nearly 1.35 million current and former securities brokers, an increase of more than 65 percent. Investors are able to use this information to research the background of former brokers who work in other sectors of the financial services industry or hold other positions of trust.
  • The FINRA Investor Education Foundation released the nation's first Military Financial Capability Survey, which measures the overall financial capabilities of U.S. military personnel and their spouses. The Survey found that the military community was significantly deeper in debt than the general population. As a result of the Survey findings, the Foundation will be launching a new, specialized tool to help military service members and their families with credit management.
  • The FINRA Foundation launched an interactive Web resource to display the results of America's first State-by-State Financial Capability Survey, which surveyed more than 28,000 respondents. The new website,, displays a clickable map of the United States and allows the public, policymakers and researchers to delve into and compare the financial capabilities of Americans in every state and across geographic regions.

FINRA's expanded scope of activities in 2010 demonstrate just how important this independent regulator has become for all securities firms doing business in the United States.  Look for even greater responsibilities and activities from FINRA in 2011.  

The full text of FINRA's release is available at: