FINRA, the broker-dealer industry’s self-regulator, said in an annual report this week that its board decided to pay the rebates after the agency logged $99.6 million in net income this year. That surplus was driven largely by $72.4 million in investment gains, along with $27.2 million in operating income, according to the report.
After reviewing its projections for revenue, expenses and market conditions for the next several years, FINRA’s board of directors approved a rebate of $50 million to member firms that are in good standing with compliance matters. The rebates were paid on July 1, according to a blog post by FINRA CEO and President Robert Cook and Board Chairman and Large Firm Governor Scott Curtis.
“The Board reviews FINRA’s financial outcomes on a regular basis to consider whether current revenues and expenses warrant any changes to its financial planning,” Cook and Curtis wrote. “Consistent with the Financial Guiding Principles and FINRA’s status as a not-for-profit membership organization, responses to material excess revenues may include a fee rebate or a reduction or deferral in fee increases.”
Cook and Curtis said the rebates will be tallied up according to the regulatory fees individual member firms paid last year. The calculations will take into account members’ annual minimum fee of $1,200, which will be reduced for firms that paid for only part of the year, as well as payments of other fees.
“This allocation method is consistent with FINRA’s approach in prior discretionary rebates to member firms,” they wrote.
FINRA’s surplus in 2024 comes after a couple of years in which the self-regulatory organization had seen its annual budgets ending in the red. For 2023, FINRA reported a net operating loss of $119.1 million and one of $60.2 million for 2022.
In response to those deficits, FINRA instituted a plan to raise its fees steadily over the next five years and eventually bring in an additional $450 million by 2029. The increases will vary by firm size.
For broker-dealers with 10 or fewer registered representatives, their annual cost from fees is expected to rise by $625 a year by 2029. On the other end of the size range — brokerages with 500 or more representatives — the increase is expected to be $415,000 a year. FINRA had 3,298 member firms in 2023, according to its latest “industry snapshot” report.
Cook announced plans for the $50 million rebate at FINRA’s annual conference in May, Barron’s then reported. “When we have excess funds, we have a choice of banking it to defer any future fee increases, or doing a rebate to the members,” Barron’s quoted Cook as saying.
FINRA’s 2024 report also lists compensation figures for Cook and other executives at the agency. This year, Cook will receive the same $1.1 million salary he did in 2024, along with $2.51 million in incentive compensation, up from nearly $2.37 million in 2024.
Cook’s listing for 2025 did not include deferred compensation and other benefits he’ll receive through the rest of the year. With those additions in the previous two years, he made just over $4.1 million in total in 2024 and nearly $3.9 million in 2023.
