FINRA floats voluntary buyouts to trim headcount

FINRA President and CEO Robert Cook, pictured here at a House Financial Services hearing, said at FINRA’s May conference that the organization has brought in outside consultants “to figure out how we could be more efficient in our processes.”

Ting Shen/Bloomberg

The Financial Industry Regulatory Authority is asking for voluntary buyouts from employees, for the third time in the last five years.

A source familiar confirmed that a buyout program has been offered to FINRA personnel. Previous rounds came in 2020 and 2024.

“As a self-regulatory membership organization, FINRA must continually adapt to support our mission of protecting investors and ensuring that the U.S. securities markets are the most vibrant in the world,” a FINRA spokesperson said in an email. “FINRA is realigning our organization, programs, and resources to maximize efficiency and impact, and drive innovation.”

FINRA is the self-regulatory organization that oversees the broker-dealer sector. The group, which is privately funded by its broker-dealer members, reports to the SEC. The organization also floated voluntary retirement or incentive programs in 2020 and 2024, according to the 2020 annual report and the 2024 annual report. The latest one has not yet been publicly announced.

As of January 31, 2024, 187 eligible employees had accepted the “voluntary incentive program” with separation dates in 2024 and 2025, according to the 2024 report. FINRA reported “special termination benefits” of approximately $33.3 million in 2024 in connection with the VIP, it said in the report.

FINRA’s operating expenses in 2025 are expected to total around $1.37 billion, according to the 2025 budget summary. That’s up from $900.7 million in 2020. It has 4,382
employees, not including contractors, the budget summary said. That’s up from 3,619
in 2020. The increase is “largely attributable to contractor conversions and additional staff needed to support regulatory operations in order to respond to the demands of an evolving marketplace and expansion in FINRA’s regulatory responsibilities,” the budget summary said.

Ninety percent of FINRA’s operating expenses are driven by compensation and technology costs, the organization said.

President and CEO Robert Cook, at FINRA’s annual conference in May, noted the SRO is funded by its members, not taxpayer dollars, and is focused on being “good stewards of those dollars.”

FINRA has “brought in outside consultants to help us figure out how we could be more efficient in our processes,” Cook said. “We’ve shrunken our real estate footprint. We’ve had voluntary buyouts. So these are things we’ve been doing over the years.”

The voluntary buyouts come amid a larger culling and scrutiny of financial regulators under the Trump administration. The Securities and Exchange Commission has reduced its headcount by 15% since the beginning of the current fiscal year, SEC Chair Paul Atkins said in May.

In April, a House bill was introduced to transfer FINRA’s rulemaking, examination and enforcement authority to the SEC. The bill, H.R. 2689, introduced by Rep. Lisa McClain, R-Mich., was referred to the House Committee on Financial Services on April 7 and has not moved since. It has not gained any co-sponsors.

The constitutionality of self-regulatory organizations like FINRA has also been called into question.

In June, the U.S. Supreme Court declined to hear a case from Alpine Securities Corp. that challenged FINRA’s authority and to consider “whether FINRA’s unusual status as the purportedly private enforcer of the federal securities laws violates the Constitution’s structural provisions.”