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FINRA Lost $84 Million in 2011 Amid Trading Volume Dip

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(Corrects story from June 29 to add detail on increased expenditures in last paragraph).

June 29 (Bloomberg) -- The Financial Industry Regulatory Authority said it lost $84 million in 2011 as lower trading volume reduced revenue from fees and a more risk-averse strategy shrank returns on its portfolio.

“The broader economic downturn continues to negatively impact Finra’s funding, resulting in a loss for fiscal year 2011,” Richard Ketchum, Finra’s chairman and chief executive, said in the organization’s annual report released today.

Finra, which earned $54.6 million in 2010, oversees more than 4,000 brokers and funds itself through fees on the industry, including trades conducted by its members, and income from its investments. The U.S. Securities and Exchange Commission oversees Finra’s activities and must sign off on the rules it proposes.

Finra sought SEC approval in April for an increase in trading and other fees to help offset the revenue loss.

The organization will pay Ketchum a $1 million salary in 2012, according to the report, along with almost $1.3 million in incentive compensation. Finra’s vice chairman Stephen Luparello will receive a compensation package worth almost $1.3 million this year and Todd Diganci, the executive vice president and chief financial officer, will earn almost $1.2 million.

The 2011 loss stemmed in part from increased expenses related to Finra’s “strategic initiatives.” That includes $16.1 million for a data center and $26.8 million to increase the organization’s “surveillance capabilities” for the New York Stock Exchange and Nasdaq, the report said.

To contact the reporter on this story: Steven Sloan in Washington at

To contact the editor responsible for this story: Maura Reynolds at

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