National Adjudicatory Council Introduces New Sanction Guidelines

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today announced that the National Adjudicatory Council (NAC) revised the Sanction Guidelines to include a new principal consideration that contemplates coverage for financial exploitation of vulnerable individuals or individuals with diminished capacity. It also includes three new guidelines relating to systemic supervisory failures, borrowing and lending arrangements, and short interest reporting. Additionally, the NAC revised the guidance concerning sanctions imposed by other regulators, indicating that these sanctions may be considered as mitigating factors.

The NAC is FINRA’s appellate tribunal for disciplinary cases and is a 15-member committee composed of industry and non-industry members. It first published the Sanction Guidelines in 1993 to familiarize member firms with some of the typical securities law or FINRA rule violations that occur, and the range of disciplinary sanctions that may result from those rule violations. The Sanction Guidelines do not prescribe fixed sanctions for particular violations, and are intended to assist FINRA’s adjudicators—Hearing Panels and the NAC—in imposing appropriate sanctions consistently and fairly in disciplinary proceedings. FINRA’s Market Regulation and Enforcement Departments also consult the Sanction Guidelines in determining the appropriate level of sanctions to seek in settled and litigated cases. The NAC last updated the Sanction Guidelines in May 2015.

The revised Sanction Guidelines resulted from a periodic review by the NAC to ensure that the Sanction Guidelines reflect recent developments in the disciplinary process, comport with changes in FINRA’s rules and accurately reflect the levels of sanctions imposed in FINRA disciplinary proceedings. The revised Sanction Guidelines outlined in Regulatory Notice 17-13 are effective immediately and available on FINRA’s website.

FINRA is dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. To see if your investment professional is regulated by FINRA, please go to BrokerCheck. And for more information, visit www.finra.org.