If Past Is Prologue, Mary Schapiro's Future Should Not Include the SEC
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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I nominate Daffy Duck fr the position. At least then we know that nobody will be served well.
Thank you HP for printing this here. Schpiro, useless as she was at FINRA, is now running the SEC.
I think it is a mistake to assume the disclaimer was added by HP. Most likely it was included by Solin, on the advice of his or his firm's attorneys, in order to avoid running afoul of the securities laws. That seems like a reasonable precaution in light of the fact that it appears likely Ms. Schapiro will be the person in charge of the agency with responsibility for enforcing federal securities laws.
In the example of the retired nurse, although the broker appears to be the one primarily at fault, it also appears that some fault reasonably could be ascribed to the nurse as well. After all, a broker cannot execute trades on a customer's behalf without authority, so she must have authorized her broker to make trades without first getting her approval of each specific trade.
No, she could have been called and told some malarky and said "yes" because she didn't really know any better and listened to her broker believing him to be a "professional" and having some fiduciary responsibility to honor her trust. Sounds like this is the case for practically ALL "investors," who are then called "sophisticated," BY FINRA, and should have known better. People go to brokers because they Don't know better and beilieve these guys have a fiduciary responsibility towards them, sort of like what happened to the crew who were blown away by Madoff. They put their savings, 401ks, or financial assets with brokers because they have little to NO expertise in an area they feel these guys have been professionaly trained and taught to handle. Would you operate on yourself to remove a gallbladder? No? So you go to a Doctor who is trained to handle medical needs.
You "assume" to much in her disfavor. The facts are what they are and FINRA must base decisions on FACTS.
Brokers get away with financial murder and they have NO responsibility to anyone but the institutions they work for. People be damned!
As a matter of fact, I don't think I have ever seen HP put in a disclaimer on ANY nominee or person before this--Clinton? NO. HP has written so many attacks on people here and for this woman there is a disclaimer?
Well, read the nottom of this blog where Huffington Post puts in a disclaimer. That will show you how much we the people have a say in this nomination process and what good our phone calls will do.
I am amazed that is was posted at all considering the extremely hard time they give you posting negative about Wall Street, FINRA, SEC< or this bailout. Where is this money going? Aren't these banks supposed to be in the hole for trillions? Better watch your IRA and 409K>
Disclaimer: meant 401K, that's 401K! Shows you what I know!
Schapiro is having her nomination hearing in the Senate Financial Committe today.
I suggest anyone who beleives she will not protect us, call Sentor Dodd (chair) & express their disaproval. I did & also called my Congressman.
Dodd's no# (202) 224-2823
Thanks for the info........
I have called my rep's many times...... but most often it seems to have no affect at all.........very discouraging.
They chose Schapiro because Obama received enormous contributions from Wall Street.
FINRA is an arm of Wall Street and so is the SEC.. I doubt Obama will pick anyone who will
protect us. I was recently burned and told "forget it." Lawyers! Thank you for this blog, but who is going to help? Not congress and from what I hear, Biden is dripping in Wall Street Cronies. Bush or Obama, we're screwed.
Dan
The problem is...... What can we do about it?
The American people have no say in the matter.
You are right. What are we to do? We read we listen and what can we do?
One of the things people can do is read books by individuals like Mr. Solin who has a deep understanding of the problems with our investment system. Keep in mind this following simple phrase when it comes to your money and brokers/advisors:
THEY SIMPLY WANT TO SEPARATE YOU FROM YOUR MONEY.
This does not mean all brokers/advisor types are bad. Many are suspect and most work for firms that have business models based on income that is determined by a % of assets under management and assorted add-on fees for trading and other services rather than your best interests (which should include capital preservation, fair return on capital given your risk tolerance profile).
Shapiro and arbitration for investors have basically been a sham for years. Our small amounts of money just do not matter to the Wall street ilk and those who regulate them. What matters are huge sums in the aggregate and the games you get to play with those sums. Sound famiiar?
let us hope this comes out in confirmation. I too wonder how the Obama team came to chose her and why.
If your example is really the rule rather than the exception, Schapiro should have NO shot at this job. Thanks for your advice. Hoping the Congress gives you a hearing. What I suspect will happen...
Does anyone object to Mary Schapiro? ..--crickets-....
Ungroovy. Not "in the loop" myself, as far as things financial are concerned, perhaps some kind commenter can enlighten me on PE Obama's reasoning behind choosing someone so associated with the financial industry as it failed.
For the life of me, I still can't fathom why anyone in the Obama team chose Mary Schapiro.
If this poor judgment keeps on coming regarding the Obama team vs. the Financial industry, I'll be force to listen to those who pretend that the fix is in, regardless of who occupies the Oval office.
Keep up the great work Dan; I hear you and let's pray your message is being heard...
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