How Does FINRA Lose 8 Hours of Testimony? Wall Street’s “Kangaroo Court”
Posted by Larry Doyle on March 13, 2012 11:03 AM |
I will admit that having written extensively and aggressively about Wall Street’s self-regulator FINRA over the last three years, I did not think there was anything more I could see that would surprise me.
Today I am surprised, shocked, and saddened.
For those in our nation who have a semblance of decency and a desire to see due process reflected in legal hearings and financial arbitration, I believe you will be similarly dismayed.
The case to which I will refer strikes deep into the core of Wall Street arbitration.
I hope you are sitting down and do not have any sharp objects nearby as Dow Jones’ Al Lewis provides a scathing expose of a FINRA arbitration entitled Broker Bankrupted in Kangaroo Court,
Mark Mensack joined Morgan Stanley (MS) in 2008, landing an $873,000 signing bonus, but now he’s in personal bankruptcy and just moments away from losing his home in Cherry Hill, N.J.
He’s turning 50. He’s got a wife and three kids. And this is where he’s landed after losing an arbitration with his former employer before his industry’s self-regulating body, the Financial Industry Regulatory Authority.
Mensack claimed he was forced to leave Morgan Stanley after he accused the firm of taking hidden fees from its retirement-account customers. In July, a Finra panel ruled against this would-be whistleblower and ordered him to pay Morgan Stanley $1.2 million, essentially demanding most of his bonus back after quitting, plus interest and legal fees.
It is extraordinarily difficult to successfully appeal a Finra ruling. It is even more difficult when Finra mysteriously loses several hours of recorded testimony.
Mensack told me that when his attorney requested recordings for an appeal, Finra wouldn’t produce them. He said he eventually learned eight of about 18 hours of testimony from his case were missing. He sent me audio files that were inexplicably cut off at the end. He also showed me a Jan. 13 letter that Finra regional director Katherine Bayer wrote to his attorney. It said:
“Finra is required to make a…recording of every hearing. …Unfortunately, portions of testimony returned to us by the panel are missing. …I apologize for this and any perceived miscommunications from the Finra staff about the status of the recordings. …I understand Mr. Mensack’s disappointment with the arbitrator’s decision. However, Finra has no authority to reverse the award.”
A Finra spokeswoman declined to comment on the case.
The plaintiff’s charges of Morgan Stanley effectively double dipping into its 401-K accounts is obviously a very serious allegation. If I were a Morgan Stanley 401-K customer, I would be on the horn to my representative TODAY.
Those charges are NOT the main point here.
If there is supposed to be a whiff of justice and fair dealing in our nation, then each and every plaintiff is entitled to a fair hearing and a full record of testimony.
The fact that FINRA cannot and did not provide the full testimony of his hearing to Mr. Mensack renders the FINRA arbitration process as nothing more than a kangaroo court.
Richard Ketchum and his cronies at FINRA can talk all they want about progress on the financial regulatory front.
If they want to have a scintilla of credibility with the American public then they should go back and rehear Mr. Mensack’s case AND this time make sure that ALL of the testimony is properly recorded and provided for all the parties involved.
Statements such as,
…Unfortunately, portions of testimony returned to us by the panel are missing. …I apologize for this and any perceived miscommunications from the Finra staff about the status of the recordings…
may work in kangaroo courts of third world nations but last I checked, this is America.
Losing 8 of 18 hours of testimony?……America?………Really?
Come on Mr. Ketchum, you have work to do here.
Reopen the case.
If you read this story and agree with my statement compelling FINRA to reopen the case, I hope you will leave a comment here stating as much. I thank you.
Simply after reading this, I think I want to take a shower.
Nice work by Al Lewis.
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.