A new report shows a decline in revenue for the Financial Industry Regulatory Authority last year, according to AdvisorHub.
FINRA’s annual report, published last week, showed the authority had a net loss of $218.1 million in 2022, mainly as a result of operating and investment losses. The drop followed a net profit of $218.8 million the previous year.
The operating loss for the year came to $60.2 million while a $166.9 million loss was reported in FINRA’s $2 billion investment portfolio. FINRA said this was the result of a decline in the market transactions on which it charges trading fees. The organization’s expenses rose by $124.4 million last year due to costs related to its staff. Most of those costs came from compensation and benefits, which rose by 8%, followed by the expenses involving cloud computing and software.
In the report, FINRA CEO Robert W. Cook and Chief Financial and Administrative Officer Todd T. Diganci said the operating loss was expected, and fell in line with the multi-year strategic plan developed in 2020. It is expected that FINRA’s revenues and expenses will increase in 2023, Cook and Diganci said.
“We further expect that expenditures will outpace revenues over the next several years, even taking into account fee increases that were filed with the SEC in December 2020 and phased in over three years, beginning in 2022,” the two executives wrote. “Accordingly and aligned to our multiyear financial strategic plan, we expect to continue drawing down our reserve portfolio to meet our operating and capital needs, to invest appropriately for the future and to support gradual fee increases.”
In the report, FINRA also said it assessed $54.5 million in fines in 2022, down from $103 million in 2021. The authority noted that it expelled seven firms, suspended 328 brokers, and barred 227 brokers.
The attorneys at Lewitas Hyman include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. Our attorneys fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. If your firm is facing an investigation from a regulatory agency, please contact Lewitas Hyman at (844) 651-2641 or through our online contact form.