The Financial Industry Regulatory Authority (FINRA), the major
non-governmental regulator for all securities firms having
operations in the U.S., levied $68.0 million in fines on the
brokerage houses for the year ended 2012, marginally down from
$71.9 million imposed in 2011. Concurrently, they have been
ordered to repay $34 million to the aggrieved customers.
Notably, FINRA's fine impositions on the brokerage firms
significantly increased from $42.5 million levied in 2010.
Moreover, a mere $6 million was ordered for repayment to
investors in that year. Such an escalation stemmed from an
increase in the overall enforcement activity of FINRA.
Fines imposed inculcate high-profile enforcement cases against
huge brokerages along with small brokerage owners. FINRA's
continuous vigilance on fraudulent activities in the securities
market led to such penalties. To ensure market veracity, the
regulator implemented certain cross-market scrutiny and
discovered electronic manipulative trading. Therefore, financial
markets have been made more transparent to safeguard investors.
During the course of 2012, FINRA has been profoundly working on
detecting potential conflicts of interest and complex products,
including various types of exchange-traded funds. This scrutiny
resulted in the revelation of various cases against major Wall
Street brokerage houses including
), Merrill Lynch and units of
Wells Fargo & Company
Overall, firms in the U.S. are actively responding to legal and
regulatory pressures, displaying competence to encounter
impending challenges. However, the potency of the sector is not
expected to return to its pre-recession peak anytime soon.
Economic intricacies, both domestic and overseas, may result in
some more disappointments in the upcoming quarters.
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