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Sense on Cents Calls for Independent Investigation of FINRA

Posted by Larry Doyle on March 27, 2010 4:51 PM |


I have publicly stated time and again that I believe the Wall Street self-regulatory organization, FINRA, did sit and likely still sits at the nexus of the Wall Street-Washington incest that has brought our nation’s economy to its knees.

Regrettably, we have had no Congressional inquiries into the failures at FINRA. Dare I say, we have had no public pressure from the media to drive a Congressional inquiry.

I am tremendously sickened by Congress not working for America’s citizens interests by investigating FINRA. Please recall that FINRA not only failed to protect investors, but there are strong allegations that FINRA itself participated in some of the greatest frauds on Wall Street via its own internal investment portfolio. Which frauds?

We know they dumped $647 million auction-rate securities in mid-2007 and likely front ran the ARS market while doing it. I unearthed the fact that FINRA owned these ARS in January 2009 when reading FINRA’s 2007 Annual Report. Meanwhile, $150 BILLION held by thousands of investors remains in frozen ARS investments.

There is an outstanding allegation that FINRA invested its own funds in Bernie Madoff. We know they failed to properly regulate and monitor Lehman, Bear Stears, and Merrill Lynch. How much more should Congress need to know?

FINRA needs to be introduced to the American public and investigated by Congress. FINRA has not even received direct focus or attention in Senator Dodd’s proposed Financial Regulatory Reform.

We can sit idly by and allow Wall Street and Congress to dictate to us or we can do something. I choose the latter. I want this post and this site to be the lightning rod to bring attention to how Wall Street’s self-regulation, embodied in FINRA, drove our economy into the ditch.

Please add your support by leaving a comment endorsing this investigation. I intend to keep a focus on this topic until FINRA’s failures are fully exposed and people are held to account. Get your friends and colleagues to do the same. If we can create a groundswell of support, I feel confident I can get some selected media friends to pick this up. From there, I welcome leading this march to Washington.

The American public and American investors deserve nothing else.

Any questions. Please do not hesitate to ask here or write me at

Who’s with me?

FINRA must be independently investigated. America needs to learn how the Wall Street cop was not only asleep, but also in bed with the financial industry as Wall Street brought America to the brink of disaster.


  • LD

    I’ll be the first to endorse my own call for an independent investigation of FINRA.


  • Randy

    Come on Larry.. even the courts refuse to touch them. There’s no such thing as an “independent” investigation if it is going to be handled by Congress anyway. It’s all the same big den of thieves.. but ok.. for whatever it is worth, I endorse a truly independent investigation of FINRA as well as its current and recent management.

    Perhaps the stench coming from FINRA is so strong and leads to so many people that no one in Congress dare even point their fingers? I would almost bet on it.

    • LD


      In fact, it was your comment from earlier today that inspired me to write this post. I am not giving up. I am not stating that this effort will be successful but I am determined and do believe I can get a LOT of people to sign on and endorse this call. I also do believe I can get some air time.

      I’m going for it!! Plenty of realism but no negative waves around here.

  • Randy

    I respect that Larry. Little to nothing was ever gained by becoming a quitter. Though I might caution you to be mindful about not expending all your ammunition in a single battle. If you really believe you can win this one and in so winning it will truly make a real difference, then by all means go for it.

    Someone a lot smarter than I has cautioned me more than once that I will get far better results by trying to build up something new that works better than attempting to poke holes in something that is rotten so that it can either be torn down or rebuilt from the inside out.

    He said it is because the people who got us into the mess are almost never the ones capable of getting us out. As I look around at the trouble we are in today I can see that his advice is absolutely on the money.

    • LD


      I am a trader at heart and know well enough never to put all my eggs in one basket or show all my cards. That said, I am passionate about bringing attention to the travesty heaped upon the American public by the failures within FINRA. Thanks for your support!! Please share!!

  • Reagan

    I strongly endorse an investigation of FINRA!!

  • Brandi

    I support your call for an investigation of FINRA.

  • disenchanted

    An investigation is long overdue. The fact that so many of the key people are leaving should be some kind of sign that something is not right in tinsle town. Why would you give up a million dollar salary unless you had bad inside information, or knew your knowledge would get you into trouble, or you were part of the trouble? I do agree with Randy that a NEW organization with all new blood is needed.

  • FLA

    I am fully supportive. Perhaps the Financial Crisis Inquiry Commission (FCIC), headed by Phil Angelides, could pick up on this.

  • Duke

    I would love to see this. Why didn’t Congress ever pursue this after Harry Markopolos opened this can of worms in his initial Madoff testimony a year ago.

    Seems rather obvious that the Wall Street-Washington fix is in. Can’t hurt to continue pounding the door, though.

  • Mike

    + 1. Larry if you ever get on CNBC again you’d have to find a way to bring up this topic… although they may silence your mic.

  • colonial

    I vociferously endorse an independent investigation of FINRA. Their failures are an indictment of the entire regulatory system and the absence of oversight is a hollow reminder that our elected officials are not looking out for Main Street.

  • Vin

    I not only endorse an investigation of Finra, but also the NFA (the futures SRO), SEC and CFTC. As we speak, Gary Gensler (ex- GS) has proposed regulation simliar to the Commodity Modernization Act in 2000 that eventuallylead to $150 crude which MS and GS made billions. It’s impossible for the layman to read, but the clues are in the “exemption” language. I can even give you names to go start:
    Mary Schapiro – Finra/SEC – How does someone over see the greatest fraud in history, earn a supposed $7mm a year and get a “promotion” to the SEC?????
    Finra:Greg Firehock, Richard Ketchum, Stephen Luperello, Susan Merrill (she is a criminal and has just left Finra), Terri Reicher, Cindy Foster, Michael Rogal, Perry Hubbard, Robert Turk, Lawrence Bernard, Leo Kane, Leo Orenstein
    NFA: Dan Roth, Dan Driscoll (criminal), Michael Schaefer (how do you fine, suspend and ban others for “failure to supervise” and have two multi million frauds right under your own jurisdiction at Citibank?), Charles Nastro, Micahel Crowley
    SEC: Jim Bresnicky
    CFTC: Mark Bucard, Gary Gensler, Elizabeth Brennan, Steven Ringer, Phillip Rix, Michael Dunn, Walter Lukken, Robert Zwirb, Elliot Ramirez, Tim Mulreaney, Rueben Jeffrey

    Go get them!!! Libel, Slander, Collussion, Harrassment, Malicious Prosecution, etc, etc, etc. All designed for job security (inside or private), paying for gowth and imbedded anti competitiveness by letting the big guys steal, while fining and banning small firms. It’s the biggest cottage industry in this country!

    • LD

      “Sunlight is the great disinfectant.”

      Barack Obama, 2008 Presidential campaign

      • Barry

        But sadly, President Obama went to the dark side of the moon to appoint Mary Shapiro, who left Finra with $50million in compensation over 12 years, to take over the SEC. She was Bernie Madoff’s guardian angel for many years. In her long career, SEC, CFTC, NASD/FINRA, back to the SEC as Chair, she has never, ever, come down on any member of any prominance and has consistently defended bad behavior. She will block any independent investigation because most bad conduct would lead right back to her.

  • Bill

    FINRA’s license to steal needs to be revoked.

  • Lenny

    I strongly endorse the investigation of FINA. It is a travesty that ARS investors are stuck in an illiquid market created by the big banks (which they themselves shut down), and FINRA (who is supposed to monitor and correct abuses in the financial services industry), got the inside scoop and liquidated before the market froze. Once again, investors got screwed.

    Also…why are the AG’s settling with firms for less than the total outstanding? That leaves many investors high and dry. As i wrote in another post, AG Cumo settled way too early with Morgan Stanley and other firms. Morgan Stanley (and others) screwed their clients by continuing to peddle failed ARS even after the market froze with false promises of redemption from issuers in the short term;”good as cash in the short term”……right.

    Larry, keep fighting!

    • LD

      Quit is not in my vocabulary.

      We may never get a Congressional inquiry, or maybe we will, but many more people will know that FINRA dumped those ARS bonds as the market was failing.

      That I will guarantee you!!

  • Jesse Livermore

    Count me in….at least way back when, the games may have been fixed but people had a chance to win.

    Nowadays, not so much!!

    Investigate FINRA? Great idea!!

  • Ted K

    Poor Larry Doyle…. poor Larry Doyle…. still holding his breath on a FINRA investigation. Has his face turned purple yet???

    Let’s see Larry, that should happen roughly the same time Catholic pederasts (or as Christopher Hitchens called them “calcified sadists”) are taken before civil authority for sexual crimes against children.

    • LD

      Not poor at all….in fact, overflowing in the riches of life that matter most: relationships, especially with JC as we approach the holiest of days in my faith and church. Feel free to attack me all you want.

      On your second topic, refer back to the previous post, in which I gave you directions as to find another site to shed your views. Keep your sarcastic detritus to yourself. Seriously Ted, if you need to speak to somebody, get yourself professional help. But that is not me, I am here to provide a forum for the above referenced topics.

      Good luck and God bless you!!

      • Vin

        Ted K, although comparisons between the corrupt attorneys at Government and Pseudo Government agencies and Catholic priests are probably a stretch in this forum, I agree that abuses against innocent people are wrong and should be prosecuted. At least Mr. Doyle’s forum is trying to allow “freedom of speech” (remember that concept?) in drawing attention to it. The Catholic church has been and is currently being held accountable. They have paid billions in restitution and some priests have gone to jail. Not enough, but its something. The SEC, NFA, CFTC and Finra have personally ruined my life and career. Please show me anything that shows anyone at these institutions have been shown to have answered and paid for any of their wrong doing? Or do you believe they are 100% “just doing their jobs”?

  • jim

    Thanks Larry..once again I have passed your posts regarding FINRA and the ARS meltdown on to my congressman urging an investigation – will continue to do so. Please keep up the fight to bring this issue into the mainstream media!

  • Brian

    Just curious – not seeing how you tell from the 2007 financials that FINRA sold $647M of ARS in 07. I see the stuff about reclassification to trading (at pp.47-48), and I see the total trading account going from $1,286.8M at y/e 2006 to $555.6M at y/e 2007 (p.47), but where are you getting the specific number from?

    • LD


      I commend you for digging through the FINRA financials. On page 48 of the FINRA 2007 Annual Report, it states that at year end 2006 FINRA had 646.9 million auction rate securities classified as trading securities.

      Upon reading that in January 2009, I immediately questioned whether FINRA still owned those ARS and I wrote, “Let’s Really Question Ms. Schapiro”:

      For those not familiar with Auction Rate Securities, this sector of the market totally imploded last Spring leaving institutional and individual investors holding the bag. While many institutional investors were made somewhat whole via settlements from the larger broker-dealers, many individual investors remain holding the bag as smaller broker-dealers, who did not necessarily underwrite these securities but did distribute them, have not been forced to make clients whole. WOW!!!

      Are you kidding me!!?? The main regulator of the financial industry happens to be an investor in securities which virtually every Attorney General in the country is going after every Wall Street institution for improper marketing and distribution!! Are we looking at gross negligence, ignorance, incompetence or all of the above?? The question that MUST be answered is what has FINRA done with these Auction Rate Securities. Do they still own them? Did they liquidate them? If so, when and at what price? How was the sale negotiated? So many questions.

      I brought this info to The WSJ in the hopes they would pursue the story, given that they had just prior to this date written a scathing review of Ms. Schapiro. I thought that The WSJ would pursue it, but after a few weeks of communicating with them, they passed.

      A few weeks later, I crossed paths with a Bloomberg reporter who followed the ARS market. To his credit and Bloomberg’s as well, they did pursue it and published a story on April 29th 2009.

      I then wrote “FINRA Is Supposed to Police the Market,” which includes excerpts from the Bloomberg article. Detailed in there is an admission by FINRA that it sold the ARS in mid -2007. Bloomberg wrote:

      The Financial Industry Regulatory Authority, supervising 344 investor arbitration cases over auction-rate bonds, skirted losses from the securities by selling its holdings months before the market collapsed.

      Finra, responsible for educating and protecting investors, owned as much as $862.2 million of the debt before exiting the market in the spring of 2007, less than six months before auctions began to fail, according to spokesman Herb Perone.

      …hope this proves helpful.

      Thanks for your interest.

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  • Edward T. Mack

    Sounds like the corruption just keeps going, in a merry go round, in which the crooks get on for a nice ride and then off if there is a problem. How does FINRA amass such a large portfolio in the first place? How can this be managed to avoid conflicts of interest that clearly took place and continues to take place?

  • john w

    I agree, FINRA come clean and disclose what you crooks at FINRA knew and when you knew it in the Auction Rate Security Fraud.

    FINRA needs to order all SRO member firms to redeem this junk now, or revoke their licenses!

  • disenchanted

    If only walls could talk.If this country really
    had free speech, so much could be exposed.

  • Pat

    Since FINRA works and is paid by the brokerage industry and those who auction their stocks, it seems likely that investigating FINRA has little chance of altering tradition. Besides, FINRA is mostly a publishing house in disguise anyway – for specific wares – similar to the SEC.

    What is missing in the “financial markets” are the prosecutors and attorneys with paying clients to offset the thieves. The cure for that is the ability to use tax exempt funds to fund indigent defense. While most don’t think that market investors are “indigent” in the classic sense of the word, most Madoff scam victims might disagree since all of their funds were probably tied up with Madoff to begin with. With what would they have sued individually – at the current rates of attorneys and their staffs?

    Tax exempts can and should perform the “public service” for tax exemption of aiding in the access to justice that all citizens need to protect their rights and their property from ripoffs, as consumers, or in the financial markets.

    Indigent defense is big business, and probably more lucrative than account churning. To prevent stock market malfeasance, availability of lawyer funds are a necessity, and that is not possible but for tax exempt nonprofits. Civil Rights cases have shown America that truth.

    If attorneys could be assured of getting paid, perhaps they would work honestly on the right side of the law instead of exploiting business, individuals, and families, including the dead who have no means of self defense in courts of justice that aren’t corrupt.

    Balance of powers applies to more than the national offices; it means offsetting mechanisms to prevent predatory capitalism from creating discriminatory consequences. That is what the judicial system was meant to be – on the civil side, and on the criminal side.

    If Madoff had been sued sooner, perhaps so much would not have been lost by so many for so long. There is no cure for no access to justice that enslaves people as well as nations. Elections are not a cure.

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