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Financial Regulatory Reform Overlooks the Financial Industry Regulatory Authority

Posted by Larry Doyle on December 13, 2009 11:36 AM |

Only in Washington could the promotion and passage of a piece of legislation known as Financial Regulatory Reform overlook the Financial Industry Regulatory Authority (FINRA).

How could this happen? What does it mean? Why haven’t legislators and large parts of the media questioned this reality?

I am not saying that there are not significant elements of the reform bill passed by Congress that are not necessary. But I am questioning how and why a piece of legislation that strikes at the core of the financial industry can possibly wind its way through Congress without ever addressing FINRA, the entity charged with overseeing Wall Street and protecting investors.

Our country not only needs effective and strong financial regulatory practices but, much more importantly, our country needs effective and strong financial regulatory practitioners.

Let’s return to my questions. How could this happen? What does it mean? Why haven’t legislators and large parts of the media questioned this reality?

The fact is, Congress intentionally overlooks the ineffective practitioners of financial regulation because it would expose the extensive incest amidst the financial industry, the regulatory authority, and Washington.

If Washington truly wanted to inspire confidence in financial regulatory reform and send a strong message to America that it is seriously motivated to clean up Wall Street, our leaders would publicly support the lawsuits pending against FINRA.

Regular readers of Sense on Cents know the particulars of these lawsuits well. For newer readers, I am referring to the following:

1. Standard Investment Chartered v. FINRA: details of this case are highlighted in my story from October 19th, Attorney Richard Greenfield Brands Mary Schapiro and FINRA Execs as “Liars”:

– Greenfield comments on some interesting connections between Bernie Madoff and Mary Schapiro, former head of FINRA and current head of the SEC.

– Documents provided by the NASD (now known as FINRA) to Greenfield and his colleagues show unequivocally that the NASD defendants lied to the NASD member firms regarding distribution of funds from the sale of the Nasdaq. Greenfield reiterates that these individuals lied blatantly and unequivocally. They intentionally lied. The lies are repeated over and over in a proxy statement provided to the member firms. The lies were repeated at roadshows which took place all around the country.

Who is they? Who lied? Who repeated the lies?

Mary Schapiro and senior officers in the NASD (FINRA)!!!

> The primary lie is the misrepresentation of the maximum proceeds that could have been paid to the NASD member firms. That figure was represented as being $35k when in fact it could have been much, much higher.

> Greenfield also highlights the fact that FINRA failed to perform in protecting investors from the Auction-Rate Securities scandal while liquidating its own ARS investment position in 2007.

2. Amerivet Securities v. FINRA: I have written extensively about this case and specifically highlighted in late August, “BREAKING NEWS: Amerivet Complaint Against FINRA Alleges Madoff Investment”:

WOW! The allegation of an investment by FINRA in Madoff is a BLOCKBUSTER. What information did Amerivet and its legal representation unearth to make this allegation? This information must be revealed and FINRA must open its books and records to address this charge.

Washington can toot its horns and blow its whistles over the passage of financial regulatory reform, but from where I come it is totally inconsistent and felonious to think that a crowd of questionable integrity, that is Ms. Schapiro and FINRA, can now be charged with promoting practices to instill integrity.

Washington should support these lawsuits as they work their way through the United States Court in New York (Standard Investment Chartered complaint) and District Court in Washington (Amerivet).

We need to promote transparency and integrity in our financial regulators before we can even think of achieving transparency and integrity in our financial regulations.

Comments, questions, constructive criticism always appreciated.


  • Randy Bowman

    Surely you jest when you feign surprise at this result? I really can’t believe you are surprised by this, when it is nothing more than business as usual by a government steeped in graft and corruption at the highest levels, as it has been for quite some time.

    I warned you a good while back to expect little more than a good dog and pony show for the public when it comes to meaningful enforcement that would have any chance of upsetting the real applecart and divulging to the public what really goes on behind the scenes between Wall St. and Pennsylvania Avenue, especially with regard to the SEC and FINRA.

    These people have been conducting nothing less than an undeclared economic war against the American public, a war that if left unchecked will eventually result in the total financial annihilation of the middle class in this country.

    This isn’t just a minor matter for perhaps our children and future generations, it is going to have a current and continuing devastating impact on our economic lives for the foreseeable future.

    Despite any lack of genuine surprise, I do still think it is important and necessary that you continue to bring it to the fore over and over again, if for no other reason than to let the banking and government crooks know that more and more of the American public are waking up to the government’s dishonest and likely illegal shenanigans and that some day they shall all be held accountable for their actions. For this, I heartily applaud your astute and continuing efforts.

  • Larry Doyle


    I am not surprised, but merely disappointed. Of what am I most disappointed? The fact that FINRA is known by VERY few people in this country.

    I write about this topic to draw attention to the institution and the incest. I know that ‘you get it.’ I only hope more people who have never visited my site get the opportunity to read my commentary and gain an appreciation for the lack of integrity and transparency at the core of our financial regulatory system in America.

    I thank you for the plug and support.

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