Mary Schapiro has a well-documented desire to protect the securities industry from investors. She has done a great job as the CEO of FINRA (the industry's toothless "self-regulatory" agency) preventing investors from obtaining redress for the harm caused by brokers.
FINRA runs the industry's mandatory arbitration system. It makes up the rules. It selects the panel of arbitrators who will hear disputes and it resolves all administrative disputes.
Its rules provide that one member of the "impartial" tribunal must be a member of the securities industry!
Game, set and match to brokers.
Here's a concrete example of how this flawed process works:
Mary Jane Schwartz is a 62 year-old, divorced, retired nurse, living in Massachusetts. She had nearly her entire lifesavings -- approximately $1.3 million dollars -- invested with her broker.
Orally and in writing, Ms. Schwartz advised her broker that she was a conservative investor who depended on her investments for her living expenses.
Her broker ignored her instructions and invested most of her portfolio in risky stocks. Mrs. Schwartz lost over 80% of the value of her portfolio.
You would think this overwhelming case would be a slam dunk. Not so.
The panel awarded Ms. Schwartz only $4,994 and then assessed her $5,625.00 in NASD forum fees.
This case is a perfect example of how Mary Schapiro has "protected" investors during her tenure at FINRA.
This is not an isolated example.
Through November, 2008, investors received no recovery in 60% of the arbitration cases that went to a hearing. In a significant percent of those cases where there was a recovery, it was a fraction of what the investor should have received.
Mary Schapiro's advocacy for FINRA's flawed mandatory arbitration process - and her antipathy for investors' rights -- disqualifies her from confirmation as head of the Securities and Exchange Commission.
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