A look back at the year 2008 reveals a busy yet productive one for both FINRA and the SEC. Perhaps the most exciting news relating to the two agencies occurred on December 18, when President-elect Barack Obama announced his intent to nominate FINRA CEO Mary Shapiro as the 29th chairperson of the U.S. Securities and Exchange Commission, replacing Christopher Cox. She was unanimously confirmed by the US Senate in late January 2009.
The SEC’s action-packed year also included closing 1,355 cases (a 260% increase from 2007) due to a significant rise in enforcement actions from the previous fiscal year. In fact, the number of enforcement actions brought by the SEC in 2008 was the second highest in history, including twice the number of cases against public issuers, a 25% increase in cases pertaining to insider trading, a 45% increase in market manipulation, and even a slight increase in cases against investment advisors. Cases against broker-dealers, however, were down (approximately 33%), as were civil penalties (approximately 50%) and disgorgement (29%).
The SEC spent a significant amount of time launching investigations and examinations surrounding new topics, like the creation and spreading of rumors intended to control securities prices, and spent more time than in the past investigating issues related to auction rate securities, insider trading, online account intrusion, regulation S-P, market manipulation, stock loans, conflicts of interest, market timing and late trading. After being scrutinized for not looking into alleged Ponzi schemes earlier, the SEC has begun investigations designed to avoid future scams like the one linked to former NASDAQ stock exchange chairman Bernie Madoff.
With the initiation of 946 new cases, expulsion of 14 member firms, barring of 321 individual’s memberships, suspension of 300 individuals, and collection of $1.2 billion in restitution and reimbursement from firms and individuals, the young FINRA, which just completed its first full calendar year since the merger of NASD and NYSE Regulation in July 2007, also had a demanding year. In addition to standard issues, including form filings, municipal securities, and variable annuities, just to name a few, FINRA brought cases concerning insider trading and continuing education.
Regulatory Compliance is committed to helping our clients avoid becoming a compliance or enforcement statistic. If you have questions about any issues involving your firm or its registered representatives, please contact your Compliance Partners account manager at (603) 434-3594 or (888) 734-2667.
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