Sense on Cents

America is full of financial writers who have 20-20 hindsight. While I am fully respectful of writers everywhere who legitimately try to help investors, I have limited regard for those writers who are less than thorough in their pursuit of truth and transparency in the process. I witness just such a syndicated writer, Julie Jason, this morning. I welcome sharing a letter I just wrote to her in response to her weekly commentary:

Julie,

I truly appreciate your desire to help people but I also believe you provide a false impression as to the integrity and effectiveness of the financial regulator FINRA.

In your article Online Tools Gauge Investor Risk, you write,

“On a recent visit to a resort in Miami, I came across some investors who had been victimized by Bernard Madoff, the Ponzi schemer, or knew of people who had. The investors were quite vocal that they could never trust anyone again based on those experiences.

My regular readers, who know that I’m a born skeptic, won’t be surprised by my reaction: I asked why would you trust someone who offered consistently higher returns than the market could deliver?

That led to many discussions, and to a few confessions. It turns out that the lure of higher returns did indeed cloud judgment.

To avoid that problem, check out two online tools developed by the Financial Industry Regulatory Authority, the largest independent regulator for all securities firms doing business in the United States.

They are the Scam Meter and Risk Meter, which both can be found at www.finra.org, then clicking on investors and following the links.”

Julie, with all due respect, you very much give the impression that if these investors had only used these tools prior to making an investment in Madoff they would have been spared the pain and loss associated with their investment.

You fail to highlight when FINRA instituted these investor tools. By overlooking this fact, intentional or otherwise, you give the readers the false impression that the Madoff investors were partially to blame for not being more thorough prior to putting money into Madoff.

Julie, again with all due respect, you further victimize the Madoff investors with your writing. I commend you for highlighting tools that can help protect investors. Anything that can help investors is certainly worthy of praise. However, once again you promote FINRA without highlighting the information which I have provided you previously.

As a reminder, that information includes a complaint by a FINRA member firm, that being Amerivet Securities, which alleges that FINRA’s own internal investment portfolio had money invested in Madoff. Perhaps those within FINRA should also have utilized their own tools prior to making an investment in Madoff!!

Repeated calls on FINRA to release details on this alleged investment fall on deaf ears. The complaint was just moved from the federal court in Washington D.C. into the state court system. Hopefully, American investors at large and Madoff investors specifically can learn all the details regarding FINRA’s alleged investment in Madoff.

Please read my review of this complaint which I wrote last August and highlighted for you a few months ago. I will share it with you again, Breaking News: Amerivet Complaint Against FINRA Alleges Madoff Investment.

In regard to the Madoff investors specifically, perhaps instead of taking a subtle shot at them you could provide them a forum to highlight the failures of regulators, primarily FINRA, to perform and protect them. The Madoff investors deserve our support, not subtle ridicule. Have the Madoff investors spoken up in calling out FINRA? You bet they have. Please review my commentary from last September in which I highlight, Madoff Victims Call Out FINRA.

In summary, Julie, I commend you for pointing out some basic tools which can now help investors. That said, you do investors everywhere and Madoff investors specifically a huge disservice by giving the false impression that these tools were there during the period when Madoff operated his scam.

Our nation needs all the investor protection it can get, but we also need full and total truth and transparency in our reporting.

I welcome the opportunity to discuss any and all of the points highlighted here. Additionally, I would be happy to meet and discuss a wide array of other topics which might help promote further investor protections.

Sincerely,

Larry Doyle
Sense on Cents

I will let readers know if and how Julie responds.

LD

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This entry was posted on Sunday, July 18th, 2010 at 7:55 AM and is filed under FINRA, General, Madoff. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.