In announcing a $218.1 million net loss for 2022, FINRA said most things are still going according to plan.
The self-regulator for broker-dealers noted in its
The agency was quick to note in its annual report that the operating loss was "in line with our multi-year strategic plan that we outlined in 2020."
The $218.1 million loss for 2022 comes on the heels of the Financial Industry Regulatory Authority's $218.8 million gain for 2021.
"We further expect that expenditures will outpace revenues over the next several years, even taking into account fee increases that were filed with the SEC in December 2020 and phased in over three years, beginning in 2022," said the introductory note.
FINRA's investment losses stemmed from a 6.4% decrease in the value of its roughly $2 billion portfolio. The agency pointed out that its investing performance was still better than the overall stock and bond markets, which both declined by double-digit percentages last year.
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FINRA said its costs meanwhile increased by $124.4 million, or 9.5%. That was primarily driven by rising spending on compensation and benefits, which was up by $67.5 million, and cloud computing and software, up by $53.4 million.
FINRA had roughly 3,900 employees on staff by the end of 2022, nearly 200 more than by the end of the previous year. In 2022, the agency spent $25.9 million more on merit and promotion-related raises, $21.1 million on additional employees, $9.6 million more on incentive compensation and $10.9 million more on expenses related to employee insurance.
FINRA said the additional spending comes amid its efforts both to retain current employees and add to its enforcement staff at a time of increasing complexity in the financial markets.
At the agency's top, FINRA President and CEO Robert Cook made a $1 million salary, $2.15 million in incentive compensation, $510,960 in other compensation and $15,718 in benefits for a total of nearly $3.7 million. That was up from nearly $3.3 million in the previous year.
Todd Diganci, FINRA chief financial and administrative officer, made nearly $1.8 million, up from $1.5 million for the previous year; Chief Information Officer Steven Randich made nearly $1.7 million, up from $1.6 million; Chief Legal Officer Robert Colby made $1.4 million, up from $1.3 million; and head of member supervision Greg Ruppert made $1.2 million, up from $960,000.
FINRA's operating revenues meanwhile declined by $13.3 million, or about 1%, according to the report. That in large part was the result of a decrease in initial and secondary public stock offerings last year.
FINRA noted that its balance sheet remains strong. It had roughly $1.6 million in net assets at the end of 2022, down only slightly from the $1.7 billion it had at the end of the previous year.
The report also notes that FINRA in 2022 collected $54.5 million in fines, down from $103 million the year before. It also paid $26.2 million in restitution to investors, expelled seven firms from the brokerage industry, suspended 328 brokers and barred another 227 from the industry.
