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FINRA’s ‘2009 Year in Review’: INCOMPLETE

Posted by Larry Doyle on June 22, 2010 10:32 AM |

What good is a 2009 Annual Report released in September 2010?

Picture a student informing his teacher that he has not been able to complete his 75-page year end review, but that he will surely get it done over the summer and “I’ll have it for you when school starts back up in September.” Additionally, the student tries to ingratiate his teacher by submitting a 6-page summary year in review. If this were not so pathetic it may actually be comical, but my friends this is what we are subjected to by the Wall Street self-regulator FINRA. How so?

FINRA Chairman and CEO Rick Ketchum just released a magnanimous 6-page 2009 Year in Review while informing America that the full 2009 FINRA Annual Report will not be released until September.

American citizens and investors are experiencing one of the most dramatic, traumatic, and anxiety-ridden financial and economic period in our nation’s history, and all we get is a 6-page summary.

The FINRA 2009 Year in Review will not take long to critique, but suffice it to say the grade on this review will certainly be “INCOMPLETE.”

In short (no pun intended), the FINRA review highlights initiatives FINRA is undertaking, including:

1. Issues raised from the debacle surrounding the Madoff scam.

2. Issues raised from the Flash Crash in the equity markets on May 6th.

3. A self-congratulatory statement addressing the fact that FINRA will now include a handful of new bonds into its Trade Reporting and Compliance Engine (TRACE).

4. A cursory review of FINRA’s financial results for 2009. The figures show a decline in revenue of 6% relative to 2008.

5. A commendable initiative to increase investor education (although I have not seen anything truly cutting edge on this front).

6. FINRA support for a fiduciary standard within the industry. I agree with them on this front.

Why is it that FINRA is not held to a higher standard? Why is it that their “teacher” does not inform them that a 6-page summary for a year’s worth of work is unacceptable? Well, let’s not forget that Ketchum and FINRA report into none other than Head of the SEC Mary Schapiro. Now do you understand why that bar is so low?

Has FINRA released a 6-page summary in lieu of a fully audited Annual Report so as not to draw attention to this regulator prior to Congressional completion of financial regulatory reform? Yes, that reform in which FINRA is barely even mentioned.

For those who care to review the real issues within this Wall Street self-regulator as highlighted by the Project on Government Oversight (POGO), please read my commentary from February 23rd, Is FINRA’s Future in Doubt?.

For those who care to read Rick Ketchum’s full, 6-page 2009 Year in Review, it is not going to take you long, but feel free to click on this page:


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