Key Takeaways From FINRA’s End of Year Statistics

The Financial Industry Regulatory Authority (FINRA) recently issued its last newsletter of 2020. Like all regulatory bodies, businesses, companies, and services, FINRA acknowledged that the events of the past year brought several challenges. Managing today’s environment, many cases have shifted from an in-person hearing to Zoom. In fact, as of November 30, 2020, a total of 124 arbitration cases have conducted at least one hearing via Zoom. As the new year begins, it’s worth taking a closer look at some highlights from FINRA’s end of year statistics.

New Case Filings Remained Stable

Despite the logistical challenges for holding arbitration hearings, the number of new case filings remained more or less the same as in previous years. The total number of new cases filed in 2020 was 3,615, as compared to 3,757 in 2019. Of the 3,615 new cases filed in 2020, 52 percent were initiated by customers, while 48 percent were considered intra-industry. In 2020, 3,205 cases were closed, with 5,205 open cases remaining as of the end of the year.

Most Common Controversy Types in Customer Arbitrations

In 2020, the top controversy type in customer arbitrations was breach of fiduciary duty, with a total of 1,551 cases served. A total of 1,435 cases involving negligence were served, followed by 1,291 cases alleging a failure to supervise. Other popular accusations made against financial institutions and advisors in 2020 include: Misrepresentation (1,235 cases), breach of contract (1,166 cases), suitability (1,111 cases), omission of facts (1,091 cases), fraud (840 cases), violation of Blue Sky laws (296 cases), manipulation (295 cases), unauthorized trading (168 cases), elder abuse (157 cases), churning (104 cases), errors-charges (86 cases), and execution error (79 cases).

Top Security Types Involved in Customer Arbitrations

The number of cases involving real estate investment trusts were up this year, with 357 cases served in 2020 versus 211 cases served in 2019. Other top security types involved in customer arbitrations include: Common stock (348 cases), private equities (206 cases), business development companies (176 cases), mutual funds (164 cases), options (164 cases), municipal bonds (141 cases), limited partnerships (140 cases), municipal bond funds (124 cases), annuities (88 cases), exchange-traded funds (88 cases), variable annuities (86 cases), corporate bonds (72 cases), 401(k) (68 cases), and government securities (53 cases).

The skilled securities law experts at Judex Law, LLC are here to help. Call (303) 523-4022 today to get started with a dedicated Broomfield attorney.

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