Definitely not-for-profit: Finra loses $84M in 2011 on rising expenses

The Financial Industry Regulatory Authority Inc. took a hit as regulatory fees continued to decline and the costs of its ongoing integration with the NYSE rose.

The Financial Industry Regulatory Authority Inc. lost $84 million last year as regulatory fees continued to decline and the costs of its ongoing integration with the NYSE rose.
“Since the financial crisis, revenue from regulatory fees is down … by nearly $50 million” compared to 2008, said Finra chief executive Richard Ketchum in the regulator’s 2011 annual report, posted today on its website.
Finra’s investment returns are also lower than in prior years, Mr. Ketchum added.
Net revenues for 2011 rose, however, to $880.1 million, up $30.2 million from 2010. But total expenses grew by $54 million to $994.9.
New data centers in New York and Maryland, increased integration costs for exchange oversight, and the “full-year effect of former NYSE employees and related costs” added to the expense line, the report said.
Finra plans to cut expenses by $35 million this year, Mr. Ketchum said, which together with savings made last year will total nearly $60 million in reductions by the end of 2013.
As a result of ongoing losses, Finra this week announced a series of fee increases
for member firms.
According to the annual report, Mr. Ketchum received $2.7 million last year in total pay, including a $1.2 million bonus for 2010 that was paid in early 2011.
This year, Mr. Ketchum got a $1.25 million bonus based on 2011 performance. His base salary of $1 million per year remains the same as last year.