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Wall Street Fines Have Plummeted Under Trump

August 8, 2017

Financial regulators imposed far less in fines in the first six months of Donald Trump’s presidency than in the first six months of last year, according to a Wall Street Journal analysis. But regulators warn not to read too much into six month’s worth of figures.

In the first half of this year, the SEC, Finra and the Commodity Futures Trading Commission doled out $489 million in fines compared to the $1.4 billion they levied in the first half of 2016, the Journal found. If penalties continue at this rate, this year will have the lowest level of fines since at least 2010, according to the paper.

One reason for the lower penalty levels is the Trump administration’s business-friendly stance, lawyers tell the Journal. But other factors play a role as well, such as the winding down of multibillion-dollar cases dating back to the financial crisis and leadership changes at the regulators, according to the paper.

The SEC and CFTC both have new chairmen and all three regulators have replaced their enforcement chiefs in the past five months, the Journal writes. Both the SEC and CFTC, meanwhile, have been operating with just two out of five commissioners each for most of the first half of the year, according to the paper.

Presumably those management changes will impact penalties as well.

SEC chairman Jay Clayton “has expressed concern” over the agency’s penalties on corporations, for example, the Journal writes. During the first half of 2016 the SEC’s actions brought in $750 million in penalties, an SEC spokesman tells the paper.

In the first half of this year, that figure dropped to $318 million, based on the Journal’s examination of publicly available records, court documents and other data.

President Donald Trump (Getty)

The SEC declined the Journal’s request for its internal numbers for the first half of 2017 but confirmed that they were lower compared to the same period last year. The spokesman also tells the paper the number of cases was comparable, but that six months is too short a timeframe to evaluate the SEC’s effectiveness.

There’s also been a “dialing back” of fines at Finra, Brian Rubin, a partner at law firm Eversheds Sutherland, tells the paper. The industry’s self-regulator imposed just $17 million in fines in the first half of the year, or 77% less than it did in the first half of 2016, according to the Journal.

But a Finra spokeswoman tells the paper that the regulator assesses its programs by its ability to catch and punish bad actors rather than the volume or quantity of fines.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.