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Great American Ed Morrow Lashes Out at Mary Schapiro

Posted by Larry Doyle on April 20, 2010 1:10 PM |

Edwin P. Morrow, Chairman & CEO of IARFC

I am heartened when great Americans across our country are willing to stand up and lash out at those involved in the Wall Street-Washington incest. I crossed paths with just such an American this morning in Ed Morrow, the chairman and CEO of the International Association of Registered Financial Consultants, a non-profit educational society for the financial planning industry.

Ed wrote to his representaitve John Boehner (R-OH) on financial regulatory topics which he feels are vitally important to his members. I thank Ed for his courage to speak his mind and his willingness to let me run his letter here at Sense on Cents. Thank you to our great American Ed Morrow for writing the following:   

The Office of Inspector General was set to release its Report of Investigation that indicate the many opportunities, some going back as far as 1997, for the Securities & Exchange Commission and its sub-agency, FINRA (formerly NASD) to reveal and prosecute the Ponzi scheme of Allen Stanford – another multi-billion dollar scam.  This report was dated March 31 and was to become public last week.  This report is the Investigation of the SEC’s Response to Concerns Regarding Robert Allen Stanford’s Alleged Ponzi Scheme.

The agency that is charged with responsibility for addressing consumer complaints has been FINRA (Financial Regulatory Authority) formerly known as NASD (National Association of Securities Dealers).  NASD was not a true association, but a regulatory agency.  NASD/FINRA was headed up by Mary L Schapiro, who president Obama promoted to head of the SEC.  It was under her (failed) leadership that Bernie Madoff, Allen Stanford and many others were defrauding many Americans.

There is a rumor that the SEC’s announcement to request an indictment of Goldman Sachs, was merely a PR blast to divert attention from the very real issues brougnt forth in the OIG-526 Report cited above – and that nothing will ever happen with Goldman Sachs, just a lot of noise.

Shapiro was responsible for the failure of securities broker dealers, the issuance of so-called “Gilt-Edged Mortgage backed Collateral securities that were the packaged debt instruments that created the financial crisis of 2008-2009.  She is either incompetent or a crook, and you can expect that more failure to properly supervise investment firms will come to light.

Meanwhile, Senator Dodd and Congressman Barney Frank are seeking to re-structure financial regulations – and would give even more authority and control to the SEC and Schapiro. We do not need more laws and more oversight. What we need is proper performance and the effective administration of current regulations.

Incidentally, when Ms. Schapiro was “promoted” from FINRA to SEC she received final compensation deferred compensation and a multi-million “pension plan buyout” – Sounds like the pay of NYSE Grasso! Not bad pay for failure to perform…..

While serving as head of FINRA Schapiro failed to act against large FINRA members Lehman Brothers, Bear Stearns and Merrill Lynch in connection with their roles in the subprime mortgage securities scandals; failed to warn investors about Auction Rate Securities (ARS) problems, after FINRA had liquidated its own ARS holdings in mid-2007, but before the ARS market “froze” and there were any public disclosures about the risks inherent in such “investments”; failed to follow up on tips relating to Madoff and Stanford.  But she was able to attend board meetings of Kraft (who paid her $675,000) Duke Energy (who paid her over $750,000 on whose boards she served). Schapiro’s salary at FINRA was $2,750,000 and she received a pension plan payment of over $5 million when she left to take the job at SEC which will pay only $162,900. Doesn’t that make you wonder where she intends to make up the pay difference?

Judge Jed Rakoff issued a ruling dismissing the lawsuit brought on behalf of Standard Investment Chartered against Mary Schapiro and other FINRA executives. What was the basis for Judge Rakoff’s dismissal? He allowed the defense the cover of “absolute immunity.”

Ed Morrow, CLU, ChFC, CFP, RFC
International Assn. of Registered Financial Consultants

Mr. Morrow’s message may not necessarily be new news to regular readers of this site, but the fact is he chairs an association with 8000 members. What do you think these members are communicating to their clients about Ms. Schapiro specifically and the Wall Street self-regulator FINRA?

American investors may not be getting satisfaction on Wall Street or in Washington, but if the case of Wall Street-Washington incest grows in the court of public opinion, I have a strong feeling as to what the verdict will be.

Thank you Ed Morrow for standing up and speaking out!!

LD

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Related Sense on Cents Commentary

Mary Schapiro-FINRA

  • Fred

    Larry,

    You said it all in the following modified statement. “We do not need more laws, we need proper administration and effective enforcement of current regulation”.

    Less, but more efficient government, wouldn’t that be refreshing.

    Keep up the good fight!

  • Forrest Wallace Cato

    Larry,

    Notice that Ed Morrow, the recognized co-founder of the financial planning industry, is the only financial planning association leader with the expressed and displayed courage and conviction to speak out on this subject. There is a ground-swell of disgust with the SEC within both the public and the financial industry, for the failure of the SEC to do the job for which Shapiro is so well paid.

    • LD

      Forrest,

      With this letter Mr. Ed Morrow is immediately inducted into the Sense on Cents Hall of Fame.

      In the spirit of full disclosure, the International Association of Registered Financial Consultants is a non-profit educational society and as such is neither regulated nor overseen by FINRA (I also believe there is no oversight by the SEC either).

      This by no means diminishes Ed’s courageous statement. It merely highlights the consistent message from those within the industry that their silence is not a lack of interest but a fear of retribution.

  • Hal Chorney

    Ed Morrow calls things the way they are. It takes courage to criticize our own government especially if you are in some way under the jurisdiction of one of the agencies you are criticizing. The article is right on. The message is clear. We do not need more government and we don’t need to expand the powers of those regulating the industry.

  • David Sttt

    Less IS more!

    Less government, less bureaucratic red tape, less tax burden will contribute to more freedom, more efficiency, and more growth of the true engine of the economy – small business!

    Why is it that government employees on average make 140%+ of the average private industry employee, and then complain about how greedy business is? Seems to me that people with their hands pointing a finger have three fingers pointing right back at themself!

    You go, Ed.

  • SOB

    I can not believe that the media did not pick up on the failure of the SEC and FINRA. So the same game just with new players. Thanks ED for binging light from darkness ! Why don’t we see this in our news ?






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