According to the Wall Street Journal, Kara Stein, one of the five commissioners of the Security and Exchange Commission, described the enforcement actions of the Financial Industry Regulatory Authority as "too often financially insignificant for the wrongdoers.”
The data the Journal cited in the article paints a picture of lax enforcement and paltry fines by Wall Street's self-regulator. In the battle to determine which agency is the tougher cop, the SEC wins.
From the article:
In the five years since the financial crisis, Finra, which is funded by the industry, didn't discipline any Wall Street executives. It imposed fines of $1 million or more 55 times through 2013, compared with 259 times for the SEC, according to a Wall Street Journal analysis. The SEC oversees a wider number of firms and range of conduct.
In 2013, Finra issued $74.5 million in fines. The SEC imposed $3.4 billion.
Why would it surprise anyone that the self-regulator was softer on its members than the real enforcers?
Susan Axelrod, the executive vice president of regulatory operations for Finra, described the self-regulator as: “The cop on the beat from Wall Street to Main Street."
To which I would add: “…which is way too sweet on those who cheat.”
To contact the author on this story:
Barry L Ritholtz at firstname.lastname@example.org