FINRA released its 2024 Industry Snapshot, which provides metrics on its member brokerage firms’ activities, revenues and headcounts from the previous year. This year’s Industry Snapshot demonstrates a continuation of trends observed last year.

Some key takeaways from 2023

• The total number of registered firms continued to decline, following a five-year trend of consolidation in the industry.
• The number of registered representatives increased to 628,392, the highest total since 2019. And 2022 was the first year since 2015 that the number of registered representatives increased. The data from 2023 seems to solidify a reversal from five years of decline.
• Firms’ pre-tax net revenue increased slightly to $53.6 billion from 2022’s $47.3 billion. This marks a slight recovery from 2022’s market chaos, where net revenues slid from 2021’s high water mark of $91.6 billion.

Enforcement status quo: streamlined or lethargic?

The Industry Snapshot was published as FINRA comes under fire for allegedly anemic enforcement. According to Bloomberg, in 2023 FINRA pursued its fewest-ever number of enforcement actions, despite its budget and headcount increasing.

And the same goes for press and issue promotion: that year, FINRA only published 10 press releases out of a total of 426 enforcement actions. Bloomberg notes that this includes an omission of major cases, such as the significant 6.1m settlement with LPL Financial for failure to effectively supervise the transmittal of customer funds.

In contrast, the SEC’s enforcement statistics have stayed steady.

FINRA responded by claiming that the financial regulatory environment has simply become more indolent: many of the bad actors have already been sanctioned or prohibited from entering the industry, according to spokesperson Ray Pellecchia. The self-regulatory agency could also be consolidating its efforts by addressing multiple infractions in single enforcement actions.

But Senator Elizabeth Warren (D-Massachusetts), a longtime advocate of strict regulation, says she plans to investigate the decline.

These criticisms come as FINRA begins to scrutinize a host of new enforcement areas, including crypto asset evaluation, AI-involved regulatory compliance, and the supervision and retention of off-channel communications.