General Finance
Apr 23, 2025
The Rising Cost of Compliance Fines & How Data Reasoning Can Help
Download the full white paper here.
Compliance fines have turned into an immense cost center for financial firms, with data showing that fines have gotten significantly larger over the course of the past decade. In addition to the cost of paying these fines, financial firms also incur plenty of supplemental costs associated with staying compliant such as onboarding employees, hiring counsel, or implementing technology.
Fortunately, AI-powered data reasoning has emerged as a unique solution to help financial institutions decrease their compliance costs while staying within regulation. Solutions like Gradient’s Finance Reasoning Platform can help financial institutions decrease resources associated with staying compliant while also freeing up compliance and legal professionals to focus on higher-level tasks.
SEC Fines are Growing Larger Each Year and Hit a Record $8.2 Billion in 2024
The Securities and Exchange Commission (SEC) has a proven history of fining financial institutions more money consistently over time. Last year was no exception to this trend, as the regulator collected $8.2 billion in financial remedies – the highest total in SEC history and a 64% increase from 2023.
Zooming out, total annual SEC fines have nearly doubled over the past decade and tripled since 2010:
$8.2 billion 2024
$5 billion in 2023
$6.4 billion in 2022
$2.4 billion in 2021
$4.68 billion in 2020
$4.3 billion in 2019
$3.9 billion in 2018
$832 million in 2017
$4 billion in 2016
$4.2 billion in 2015
$2.8 billion in 2010
The SEC has shown no signs of letting up in 2025 and has already notched several fines larger than $10 million, including:
$10 million: Charles Schwab & Co, Inc.
$11 million: Kohlberg Kravis Roberts & Co LP
$11.5 million: Robinhood Financial
$12 million: Blackstone & several affiliated companies
$18 million: LPL Financial
$28 million: Wells Fargo Clearing Services
$25 million: Merrill Lynch
$33.5 million: Robinhood Securities
A similar trend is playing out with other regulatory agencies, like the Financial Industry Regulatory Authority (FINRA). These fines directly impact a company’s operating margin, bottom line, in some cases, stock price.
Compliance: The Ever-Growing Cost Center
As we dug through data behind the rising cost of compliance fines, three takeaways became clear:
Regulators are Getting More Aggressive: As fine sizes continue to rise, financial institutions need to prepare for a future where regulators routinely impose fines of $30 million and more for compliance-related issues.
Remaining Compliant is Becoming More Challenging: The complexity of today’s tax code and ever-changing regulations make it harder than ever for financial institutions to remain compliant, despite their best efforts.
There are Multiple Costs Associated With Compliance: In addition to the fines themselves, firms must also dedicate significant resources to the non-stop task of maintaining compliance. This includes significant human capital, technology costs, and the opportunity cost of employees who could be focusing on higher-level tasks.
Financial firms have thousands of different rules and regulations to be mindful of and, frustratingly, the burden is on the company to be aware of the most up-to-date rules, follow them to the letter, and then prove that they followed them.
Fortunately, AI-powered data reasoning is helping financial firms empower their compliance departments to do more with less and reduce the financial, human, and opportunity costs of staying compliant.
Mitigate Your Compliance Costs With AI-Powered Data Reasoning From Gradient
Gradient allows compliance professionals to work alongside AI-powered data reasoning in order to achieve higher efficiency for knowledge-intensive work. Our team has achieved impressive results across a wide range of compliance tasks including:
SEC marketing compliance
Anti-money laundering
Know Your Business or Customer
In our full white paper, we dive deeper into the headaches that financial firms face while trying to maintain compliance in today’s world. We also discuss three economic trends that signal why compliance costs are likely to continue rising. Finally, we share more details about how Gradient’s Finance Reasoning platform is empowering compliance departments to operate more efficiently and mitigate costs while staying within regulation.
Share
