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“Executives Typically Refrain from Criticizing FINRA or its Policies Publicly”

Posted by Larry Doyle on November 17, 2010 7:25 AM |

When I worked at JP Morgan, we had a year end review process that I believe was largely a joke. Why? It lacked integrity and honesty. How so? Individuals largely gamed the system by not being forthright with each other. As a result, the overall assessment of individuals, departments, divisions, and the firm itself were skewed. I recall looking at the composite and average scores and remarking to my boss, “Our people and our firm are NOT this good.”

Mind you, JP Morgan had and still has some real strengths — but it also had some real weaknesses. Excessively bureaucratic would be a good start on the ‘weakness’ list.

I did try to grade myself and others in an honest and constructively critical fashion. Some of my reports would come to me after the fact inquiring about my assessments of them. They would often be concerned. I would respond that I had little interest in ‘gaming the system’ but I had every interest in making them a stronger and more productive employee. My being forthright and honest was “the means,” their improving and becoming more productive was “the ends.”

I raise this topic today because every individual and every organization needs a very healthy dose of constructive criticism.

For those organizations charged with serving the public interest, the criticism should be public. Without somebody willing to dig into an individual’s and organization’s shortcomings, highlight them, question them on it, and pound the table if need be, will the individual and organization truly be held accountable and will the public be served?

The last few years of digging through annual reports, legal briefs, customer complaints, white papers, research reports, and more has enlightened me to the reality of what I have defined as the “Wall Street-Washington incest.” To wit, I am happy to be a constructive critic of those whom I believe have been intimately involved in this dynamic while not serving the best interests of the American public. Against this backdrop, I raised my eyebrows yesterday when reading:

Brokers and executives typically refrain from criticizing Finra or its policies publicly. (Investment News, November 17, 2010)

Really? The above line was included in an article yesterday in the financial newsletter referenced above. In light of my voluminous writings about FINRA over the last twenty-two months, I was obviously out sick the day that ‘memo’ was distributed!!

Allow me to comment further.

As readers of Sense on Cents are well aware, my greatest constructive criticism since launching my blog/website has been directed at Wall Street’s self-regulator FINRA. I do not write for shock value. I write to help people ‘navigate the economic landscape.’ That service obviously includes extensive commentary on the markets and market structures, including the financial regulatory system. Regrettably, many people within the industry have commented to me privately that they do not openly comment or constructively criticize FINRA for fear of retribution within their own business. I am very dismayed to hear people make that statement. That’s not America. People should not only be free to speak their mind, but I believe they should be encouraged to do so.

Honest, open, constructively critical commentary and dialogue are the precursors to greater transparency and accountability. Greater transparency and accountability are the cornerstones to a stronger market, a stronger economy, and ultimately a stronger nation.

Perhaps somebody from FINRA would care to comment and issue a response. In fact, I challenge FINRA to issue a public statement addressing the concerns people have about retribution. I further challenge FINRA to host quarterly public forums with extensive Q/A.   

Until then, here’s to a stronger America….

Sense on Cents/FINRA

…and please be constructively critical of me and my writing here. I am all for making this site better while we’re at it.

Larry Doyle

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Beth

    ~ Individuals largely gamed the system by not being forthright with each other. As a result, the overall assessment of individuals, departments, divisions, and the firm itself were skewed ~
    Enron employees did the in-house review… didn’t help them at all, in most of the books I’ve read on Enron this review was brutal.

  • fred

    LD,

    As much as I’ve enjoyed reading and participating in your blog, and hope to continue to do so in the future, it’s talk and ideas.

    If nothing else, no matter how effective or ineffective, whether in agreement or disagreement, our national and global leaders are not cheerleaders but active participants in the greatest global economic upheaval of our life times. I envy them. They will be remembered by history for what they did or didn’t do; as critics and commentators will history remember or be influenced by us?

    There were two great orators of antiquity, Cicero and Demosthenes, after Cicero would give a speech, everyone would say ponder and say “great speech”, after a speech by Demonthesnes, people would jump to there feet and shout “let’s march”!

    LD, which person has the greatest lasting influence, Cicero or Demonsthenes?

  • Mike

    Remember the “dissedent list” regarding the consolidation. What was that for other tan to retaliate. Same holds true for negative open public comments to the SEC. The fox is still in the henhouse.

  • Vincent

    I have commented many times about Finra and its corrupt process and lawyers. They have perfected a business model that is untouchable and unaswerable in its current state. It is scheme for lawyers both inside and outside of Government to perpetuate job security for themselves. They produce nothing and are a huge tax on society and growth. Recently, I met an accountant at a bank. He was bragging that some new head of FASB or some other group is a lifelong accountant and his first item on his agenda was to make banks and financial institutions produce more reports. He was so excited at what he thought his “job security” prosepcts were, that it reasonated instantly with me. All these peripheral groups, lawyers, accountants that are cost businesses have a traditonal role of course. But they have increased there uselfulness by multiples above their purpose. These groups and people are laughing at all the financial firms and people who are on the front lines burdened by all these people, most of whom, do nothng but create havoc. “Demand Destruction” s the only answer. Until people like Mary Shapiro, Gary Gensler, Richard Ketchum, Stephen Luparello, Dan Driscoll, Dan Roth and their criminal entities, SEC. FINRA, CFTC and NFA are dealt with, they will continue to harm America’s chances for real growth. I know things have to be written about, but I have met Finra attorneys like Greg Firehock, Leo Kane and Leo Orenstein that laugh at how corrupt they are and what they are capable of getting away with. As a people, we have to stop writting and do something drastic to drwar attention to the real criminals in our society and deal with them like they should be treated long ago. Do people realize these people ad institutions and people answer to no one???? How as a country and a people let this happen? Its time to stop writting and do something. I have already strted the process and my side and the results will be known soon. Read it in the papers.

  • Vincent

    Finra, SEC, CFTC & NFA. The only answer is demand destruction. That is the only way these institutions will stop laughing at us. There are too many lawyers doing criminal things protected by Congress ( also full of lawyers). “March” is right. I will do my part. For the people in power who hide and won’t act, you are cowards to leave it to your children to deal with these criminal groups and people.

  • disenchanted

    Vincent- I could not agree with you more. But our children are the reason we have to stay behind the lines. As soon as we come out, we loose our firms, our jobs, and the ability to put a roof over our childrens heads.I speak from experience. Go after Judge Rakoff. With full immunity, the heads of these organizations are not afraid of anything. Tell me how we can get the same immunity and I bet all of us will come out.

    • fred

      Disenchanted,

      “Institutional bullying” relies on fear, ignorance, and apathy to retain power. It is only when fear is replaced with anger, ignorance with knowledge and apathy with empathy that change can occur.

      “There, but for the grace of God, goes I”.

      Unless a citizenry becomes unafraid to loose, can it truly win. And when the enemy is finally exposed, be it include family, friends or neighbors, it must be publicly ridiculed and severely punished; (job loss, treble damages, prison terms). It has long been preferred by our nations citizenry, to just look away.

      Talk is cheap, we as a nation, have shown time and again an unwillingness to do what it takes to finally purge our greatest enemy, ourselves.

      • Vincent

        Dear Fred and Disenchanted,
        You are both much better writers than I am. Well stated. But our jobs and wealth are already gone my friends. What is left is a mirage and won’t last long. I say lets stop paying taxes now. Take to the streets. Overrun GS, JPM, the Fed, the Treasury. Convince our beloved soldiers to back us. Why? because we as elder citizens have done tremednous damage the last 10-20 years. If you truly love your country and welfare of our children, we will not leave them with lawyers and congressman (same thing) and some bankers like Gensler, Dimon and Blankfien with all the money. Fits the Government rapes us and takes all our money, and now we get raped when we take a flight. As a two time survivor of WTC attacks and losing 23 friends, I can tell you first hand my beloved lost friends would be the first ones to put a stop to this nonesense!

  • Gamo Scopes

    Let’s start by defining all our criticisms on website. Wikipedia for now, but stay tuned. The executives in charge of FINRA are on the website. They can come and they can go, but they have been identified and tagged as traitors to certain entities in the investment field. They have families too, and they have made their choices to steal from the public and make a sham out of a purported ‘regulator’. I think this fight is ours to win and they have offended me to the core. I will get my pound of flesh from FINRA and repay them for their societal benefit tenfold.

    • Gamo Scopes,

      I think we can do better than Wikipedia.

      Have you read my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy?

      I expose real corruption within our financial regulatory system. Especially at FINRA and the SEC as well. Easy read and with lots of details, documents, names, facts, and figures.

      TRANSPARENCY IS THE GREAT DISINFECTANT!!
      http://www.amazon.com/Bed-Wall-Street-Conspiracy-Crippling/dp/1137278722/ref=sr_1_3?ie=UTF8&qid=1374608019&sr=8-3&keywords=in+bed+with+wall+street

      • Gamo Scopes

        You are right. I think I was trying to say do anything, no matter how small daily against this firm. I guess I am just ramping up my efforts and hope to be with people like you in my dissonance. Thank You for your comment and this blog and your response. You are not alone against these beasts. In the next few years, I will make a dent in this organization and it’s members. I promise.

        • Given your strong interest in this topic, I do hope you will read my book and let me know your thoughts.

          I am confident you will find it compelling.






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