The Farce Called FINRA Has No Shame
The Financial Industry Regulatory Authority (FINRA), is the "non governmental" regulator for U.S. securities firms. FINRA runs the mandatory arbitration system for the resolution of all disputes between brokers and their clients. Many believe (and I am one of them) this process is biased and rigged against investors.
FINRA's Board of Governors is a who's who of the securities industry. Prudential, Merrill Lynch, Pershing and other industry insiders are well represented. They "govern" their fellow brokers the same way the SEC "governed" Bernie Madoff.
FINRA's kangaroo court is currently processing cases brought by investors who purchased auction rate securities. These investors were told ARS were "as good as cash." It turns out the markets were rigged (much like FINRA's arbitrations) by the market makers, who made huge underwriting profits packaging and selling these "investment" products. The ARS markets froze in February, 2008 leaving investors holding more than $100 billion.
We now learn that FINRA itself bought more that $860 million of ARS. Unlike investors who are stuck with these bonds, FINRA dumped all its holdings less than six months before the market for them froze up.
What remarkable foresight!
FINRA is the ultimate insider. Is it really possible it did not know the market for ARS was in deep trouble when it got rid of its ARS?
In October, 2007, Mary Schapiro, formerly the head of FINRA, gave a speech in which she said that "individuals bought auction-rate securities even as institutional investors were dumping their shares." Shapiro posed "the question" as follows: "Was that information freely shared with individual investors?"
At the time, FINRA's own sale of its ARS was not publicly disclosed.
Ultimately, it will fall to the SEC to investigate the propriety of FINRA's conduct. That could present a problem. Mary Schapiro is now the head of the SEC. How vigorously will she investigate her own behavior?
In the meantime, gullible investors will proceed with their FINRA arbitrations, clinging to the false hope of a fair hearing.
And pigs will fly!
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I view FINRA as akin to the palace guard. The question that needs to be asked is:
Does The Palace Guard Have No Clothes?
http://www
This post covers the entire ARS-FINRA travesty. It also exposes the fact that FINRA has investments in hedge funds, fund of funds, and private equity.
Our entire system is corrupted and it's only getting worse, not better....
'Not better' being the very definition of worse...
Schapiro is just another fine Obama nominee. That and we have completely missed the reform moment and nothing will be reformed. The only thing that changed is Obama served us up to be raped by the banks. Bush, Obama on finance and being raped by the baks did the election relally matter? It's like a prisoner and having the guard changed. Point is you are still a prisoner. It's just disgusting.
I am a FINRA Abritrator who has been assigned to approximately ten cases over the last four years. I don't think this process is rigged at least not by myself or the Abritrators I've worked with. If people don't like the fact they can't file a formal suit against a brokerage firm then maybe then shouldn't invest.
Maybe the brokerage houses who insist on arbitration should go out of business if they can't stand the scrutiny that a law suit exposes them to. Just sayin.
See Dan Solin's Profile
They have options other than not investing. They should use Registered Investment Advisors who focus on asset allocation and the use of a globally diversified portfolio of low cost index funds. These advisors are typically not FINRA members and they do not require their clients to submit to FINRA's mandatory arbitration process.
Thanks to Dan Solin for pointing to a truly rotten area of the investment industry. Auction rate securities victims are languishing more than a year after having their "cash investments" disappear. Their only recourse is expensive arbitration before an industry-slanted board.
This needed to be exposed, and Dan Solin has done it.
"FINRA itself bought more that $860 million of ARS"
Interesting, that crimes committed by individuals on Wall Street bring punishment - but if you can get, say, three or more people to act with you in concert, then said crimes are miraculously transformed into "poor decisions".
Seems like some form of insider trading or front running to me. SEC enforcemen
http://www
First there was a plan... Destroy the country, and take a profit in the process.
http://www
With government broken, they were able to get to the money tap directly during the ensuing crisis.
http://vid
By increasing the spreads as wide as possible, and selling the country short... They steal from the market as well, and maximize their gains.
Blame Democrats, and that is pretty much the GOP plan.
The most important thing that needs to happen is we need to get rid of the Federal Reserve. It is a private corporation that has been stealing from American taxpayers since 1913.
www.endthe
Go there. Sign up as a signature collector.
Help restore our nation to its rightful owners. . . . US.!
In the law, there are some agreements that cannot be enforced. For example, you cannot formally sell yourself or your family into slavery. You cannot be forced to break the laws.
While acknowledging that arbitration is a useful business practice, we should start thinking about the limits of arbitration. Aside from FINRA, some semi - con games in the franchise industry enforce bad deals with contracts of binding arbitration. Perhaps, we need more judges and more courts, speedier justice, and to get rid of some other bad practices like reliance on the jailhouse snitch. (I resent Scalia's remark that innocence is not a defense. He's on the United States Supreme Court and the persecution of the innocent is an abomination. Has he no honor?)
Perhaps, it is time to modernize the Judiciary.
Absolutely! Thanks billw.
So far I like what Mary Shapiro is doing - this crisis started in Oct. 2007 - 2 months after Chris Cox - Bush's SEC chairman rescinded the uptick rule, which had been in effect since the depression - this allowed hedge funds et al to dump stock without restraint which got us where we are today. Along with some other things.
She is going to be looking into hedge funds, and shorting and a list of other things. She is 100% better than what we had.
Anyone investing in wall street ( what after last 10 years) and expect to get a fair shake should get
off (Dem Drugs) if you happen to invest in a fund or large cap and it does not blow up in the next
10 years from some type scandal, consider yourself Lucky, not Smart.
This farce called our government has no shame. It's an oligarchs' boondoggle, from one end to the other.
Yah! and Paulson and those in power did not know this?--the wealthy did not know this please..pl
We all knew when the auction was, the belief system was still in force, we were lulled into an observer position. This is the head in the sand trick, the catch is to wake up and do something. Were we defeated before we could respond to the tricksters? We are all dumbed down,it took many years for us to feel so powerless. Can we believe again in the United States of America? Our comments are telling a sad story.
Don't give up. Get out of the chair and take a deep breath and then get back here and write your congress folk, sign up with some organizations which are trying to pull the country into a new and better direction and be part of the solution. Thanks for all you are doing.
more crooks...t
only the rich should play in the stock market.
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