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FINRA Should Crack Down on Management

Posted by Larry Doyle on January 3, 2014 7:53 AM |

The lead article in this morning’s Wall Street Journal is entitled FINRA To Crack Down on Brokers with High Numbers of Complaints. This should be a good thing, right? Yes, it should.

The question still begs, though, why FINRA has been so amenable to expunging such an overwhelming percentage of complaints against brokers. Recall that just a few weeks back, I highlighted the fact that FINRA had expunged 96.9% of complaints lodged against brokers from mid-2009 through the end of 2011.

How might individuals know if a broker soliciting them is unscrupulous if a large number of complaints have been erased? Talk about a massive pardoning and significant do-over! But what is an even bigger problem in the industry than brokers with questionable business ethics?

In the opinion of a longstanding and very highly regarded industry insider, the far bigger issue resides within Wall Street management. This individual recently shared the following highly incriminating statement with me:

The reason I think management needs to be held accountable is …
I’ve seen more brokers effectively fired for being ethical than fired for being unethical.
Read that again. Think about what that simple sentence means for the client and the industry. It sounds like hyperbole, unfortunately it is not.

That is an exceptionally strong statement. I would welcome hearing from others inside the industry as to what they think of that statement specifically and FINRA in general.

Navigate accordingly.

Larry Doyle

Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.

For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit the blog to comment on this piece of ‘sense on cents.’

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I have no 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 so that investor confidence and investor protection can be achieved.

  • Peter Scannell

    According to the article, FINRA has just now put together a
    team of 6 to investigate the more than 5000 “cockroaches” (gypsy brokers) identified by the WSJ as still being allowed to ply their singular craft – robbing mom and pop. Stunning!

  • Disenchanted

    Not to defend rogue brokers,but how many compliance officers take the blame in
    an arbitration or disciplinary case in the large firms? Most of the time the
    firm and the registered rep get named. For a small firm litigation, everyone
    gets named. In those cases expungement may be warranted. As an arbitrator I
    believe I have the insight to make an intelligent judgement call in an
    expungement case. This brings me to my biggest beef with the new arbitration
    rules, allowing all public panels. Industry arbitrators have an educated insight
    to know when a broker is a bad seed. Those brokers give this industry the bad
    name and we do want them out. Remember, it takes two to tango. There are also rogue customers and Attorneys also.






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