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US Supreme Court Declines to Hear Standard Investment v FINRA

Posted by Larry Doyle on January 17, 2012 4:54 PM |

In the fall of 2009, I was asked by some Washington based attorneys if I was aware of a case known as Standard Investment Chartered v FINRA. I informed them that I did not know the case.

These attorneys shared with me information that seemed to expose that the merger of two regulators to form Wall Street’s current SRO FINRA was predicated on a proxy statement that included misinformation. I was enormously intrigued and tracked the case closely, including paying a visit into the federal courthouse in New York to observe a hearing on this case.

The crux of the case was that executives of FINRA improperly represented information in the proxy statement used for a merger of the NASD and the regulatory arm of the NYSE.  In the midst of my pursuing this story, I interviewed one of the attorneys bringing the case. That attorney, Richard Greenfield, pulled no punches in questioning the integrity of Mary Schapiro and other former FINRA executives. In fact, in a recap of my interview, I wrote in October 2009 Attorney Richard Greenfield Brands Mary Schapiro and FINRA Execs as “Liars”:

Greenfield comments on some interesting connections between Bernie Madoff and Mary Schapiro, former head of FINRA and current head of the SEC.

Documents provided by the NASD (now known as FINRA) to Greenfield and his colleagues show unequivocally that the NASD defendants lied to the NASD member firms regarding distribution of funds from the sale of the Nasdaq.

Greenfield reiterates that these individuals lied blatantly and unequivocally. They intentionally lied. The lies are repeated over and over in a proxy statement provided to the member firms. The lies were repeated at roadshows which took place all around the country.

Who is they? Who lied? Who repeated the lies?

Mary Schapiro and senior officers in the NASD (FINRA)!!! > The primary lie is the misrepresentation of the maximum proceeds that could have been paid to the NASD member firms. That figure was represented as being $35k when in fact it could have been much, much higher.

Pretty heavy stuff!!

The attorneys for the plaintiff had appealed the case all the way to the United States Supreme Court. The supporting documentation included a reference to work here at Sense on Cents.

I most recently had written about this case two weeks ago inquiring if we would learn, in 2012, the answer to a question that lies at the core of this case, that is, Did Mary Schapiro Engage in a Fraud?

Alas, today we learn from a WSJ report that the High Court Declines to Weigh In on FINRA’s Immunity.

I believe that is a real shame. Why? I strongly maintain that if the case were to be heard it would have provided the key to unlocking the regulatory capture of our financial services industry, or as I have often defined the Wall Street-Washington Incest.

Do I regret so actively pursuing this story? Not in the least. Tracking this case was an education unto itself. That education provided the framework for real ‘sense on cents’. The education is also embodied in the voluminous chapters embedded in the link at the end of that last paragraph.

I STRONGLY encourage every American to save, store, and review the stories in that link. In the process, I think you will learn how and why I have come to believe that the large protected interests on Wall Street have joined forces with their crony capitalist brethren from both sides of the aisle in Washington to serve their own mutual interests at the expense of the American public.

Navigate accordingly!!

Larry Doyle

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Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • LD

    From an article on this case in Investment News, we learn

    “Members of Finra will never have their day in federal court to prove that Wall Street’s regulators themselves committed a significant financial fraud,” William Anderson, one of Standard’s attorneys at Cuneo Gilbert & LaDuca LLP, wrote in an email.

  • RJB

    I think you are absolutely right on your summation there, Larry.

    It is an interesting point today to find that the FDA which was created to protect the public from pharmaceutical mistakes, intentional or otherwise, but now its role is purely protecting the pharmaceutical industry against the public.

    The SEC was supposedly created to protect investors from fraudulent behavior on the part of brokers, registered advisors, etc.. but these days it is focused almost entirely on protecting the industry from the investing public. The same holds true of course for FINRA which was supposed to self-regulate and enforce propriety amongst its members.. but which does the direct opposite.. sheltering the largest and most criminal from the smaller firms attempting to level the playing field and keep things a tad honest.

    It is no different with the USDA which was supposed to protect consumers and farmers but instead protects the interests of large factory farming to the exclusion of local or smaller non-factory farming operations and provides little to no serious protection for consumers at all any longer, including foisting large and growing amounts of genetically modified foods upon the public despite our desire to avoid them.

    In prior times, we always still had a final option for remedy of our grievances from the court system, eventually the U.S. Supreme Court.. However, even that is now little more than an illusion.

    Our politicians, our government agencies and even our courts have all been captured by the large corporations and powerful special interest groups including the Central bankers, etc.

    There is no longer any viable place for us to seek equitable redress for fraud, dishonesty, and all forms of criminal behavior engaged in politicians, by the banking and securities industries, or even by large agricultural interests like Monsanto, or the big pharmaceutical companies, etc..

    The principles of honesty and integrity have given way at the highest levels to the greed and lust for money and power and the tide is unlikely to be easily turned to the proper direction in our lifetime. That does not mean we should not pursue every legal remedy and avenue available to us at every occurrence, it just means the probability of success is often slim at best.

    Best Regards…

  • Andrew

    A big disappointment. Was hoping the Supremes would do the right thing. LD, keep going. Thanks

  • B/D

    What did you expect from a court that places the rights of corporations above natural persons? The ‘Supreme’ Court is simply following the precedent as established by John Roberts.

  • Perry

    If nothing else it would have been nice to have the truth. Several small member FINRA board members ran on the promise of investigating this. The last I heard they were stymied by a sealed letter from the IRS which threatened the tax status of the NASD if the distribution amound exceeded 35K. Of couse this sounds like BS but to my knowledge this IRS letter was never opened and disclosed to the members. Without this excuse, it would appear by any resonable valuation that the members were short changed. Addtionally, if the IRS letter does not exist or place the limits described then false representations were made.

  • B/D

    If the infamous IRS letter supported FINRA/Schapiro’s case, why did they want it sealed? Even the president gave in and published a document in response to the “birthers!”






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