Sen. Warren Presses FINRA to Explain Enforcement Decline

Senator Elizabeth Warren is pressing the nation’s broker-dealer regulator, FINRA, on its claim that success in kicking bad actors out of the industry explains why enforcement numbers have plummeted in recent years.

Fines levied by the Financial Industry Regulatory Authority have dwindled to half their recent levels, and the number of enforcement actions last year was the lowest in history, Bloomberg News reported in June. The regulator attributed the decline to improved rules and strategies to weed out repeat offenders.

“The new report appears to indicate that the decline in enforcement is part of a deliberate deregulatory effort,” Warren said in a letter to FINRA, a private self-regulatory organization that’s funded by its members.

The Massachusetts Democrat said the enforcement slowdown coincided with the so-called FINRA 360 program, launched seven years ago to make the regulator more “effective and efficient.”

That effort saw the integration of two different enforcement divisions at the markets watchdog. It was intended to streamline investigations and information sharing and “enable the organization to vigorously and fairly enforce applicable rules,” FINRA spokesperson Ray Pellecchia said in an email.

Warren asked FINRA to explain what policy changes were made as a result of that initiative.