8 big Finra fines in 2018

Although the Financial Industry Regulatory Authority Inc. is not likely to reach the record-setting $173.8 million it levied in 2016, the broker-dealer self-regulatory-organization did dole out many multi-million-dollar penalties last year.

Wedbush Securities

In February, Finra fined Wedbush Securities $1.5 million for net capital deficiencies and for failing to accurately calculate its customer reserve requirement.

Fifth Third Securities

In May, Finra fined Fifth Third Securities Inc. $4 million and required the firm to pay $2 million in restitution for recommending variable annuity exchanges that were not suitable for its customers.

Industrial and Commercial Bank of China Financial Services

Also in May, Finra fined Industrial and Commercial Bank of China Financial Services$5.3 million for failing to implement an anti-money laundering program to detect suspicious transactions.

Interactive Brokers

In August, Finra fined Interaction Brokers $5.5 million for supervisory failures in managing the firm’s short-sale transactions that left it with so-called naked short positions.

LPL Financial

In October, Finra fined LPL Financial $2.75 million for failing to report dozens of customer complaints on its brokers Form U4 and U5 disclosures and for an inadequate anti-money laundering program. Finra said the firm had too narrowly interpreted the requirement that a customer complaint contain a “claim for $5,000 in compensatory damages or more.”

Merrill Lynch

In December, Finra levied a $5.5 million fine and required $490,530 in disgorgement from Merrill Lynch for improper sales of initial public offerings from 2018 through March 2018. The transactions, which were targeted at financial industry insiders including immediate family members of Merrill brokers, were for shares in companies such Facebook, General Motors, LinkedIn, and Twitter.


Anti-money laundering deficiencies were again the cause of two big Finra fines in December. In the first case, Finra imposed a $4.5 million fine on UBS Financial Services and a $500,000 levy on UBS Securities for failing to implement an AML system designed to flag high-risk transactions. The UBS Financial violations involve billions of dollars worth of foreign currency wires, while the UBS Securities violations centered on the monitoring of penny stock transactions.

Morgan Stanley Smith Barney

The biggest fine announced by Finra last year also involved anti-money laundering compliance. In December, Finra hit Morgan Stanley Smith Barney with a $10 million penalty for AML failures over the course of five years.

Source: Investment News

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