FINRA Releases Revisions to Its Sanction Guidelines

Financial Crimes FINRA Sanctions

On April 10, FINRA issued a notice revising its Sanction Guidelines to reflect recent developments in its disciplinary process, revisions to certain rules, and amendments to the levels of sanctions imposed during proceedings. FINRA Regulatory Notice 17-13 states that the revisions: (i) establish a new factor that requires “the exercise of undue influence over a customer be considered for all violations”; (ii) introduces new guidelines concerning systemic supervisory failures, short interest reporting, and borrowing and lending arrangements with customers; (iii) provides guidance on a new factor related to the mitigating effect of sanctions imposed by other regulators or firms; (iv) describes amendments made to twelve sections that revise sanctions for more serious rule violations; and (v) harmonizes “the Sanction Guidelines to the relevant precedent, prior amendments to the Sanction Guidelines and FINRA’s rulebook consolidation process.” FINRA further states that the purpose of the Sanction Guidelines is not to “prescribe fixed sanctions for particular violations . . . [but to] provide direction for Adjudicators in imposing sanctions consistently and fairly. The guidelines recommend ranges for sanctions and suggest factors that Adjudicators may consider in determining, for each case, where within the range the sanctions should fall or whether sanctions should be above or below the recommended range.” The revised guidelines are effective immediately.