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Posts Tagged ‘Amerivet Securities complaint vs FINRA’

FINRA Owes America Answers on These Proposals

Posted by Larry Doyle on June 22nd, 2010 1:28 PM |

FINRA can talk about transparency and integrity all it wants. We all know talk is cheap. FINRA’s board and executives need to show America how they truly define and embrace transparency and integrity. How so?

FINRA is scheduled to hold its first Annual Meeting in almost three years on August 2nd. In anticipation of that meeting, FINRA member firm Amerivet Securities has submitted seven proposals to be included in the FINRA proxy materials. The FINRA board and executives owe their member firms, and ultimately America, the opportunity to address and then receive complete answers on each of these proposals. (more…)

Madoff Victims Call Out FINRA

Posted by Larry Doyle on September 3rd, 2009 8:26 AM |

Is Uncle Sam, in the form of the SEC, attempting to issue a mea culpa, mea culpa, mea maxima culpa in the bungling of the Madoff investigation and trying to conveniently turn the page?

The American public learned very little with the release of the SEC Inspector General David Kotz’s review of the SEC’s failure to expose the Bernard Madoff Ponzi scheme. In fact, having just finished reading the Executive Summary of his investigation, I would maintain it is largely an extended regurgitation of much of what Harry Markopolos provided in his Congressional testimony last February.

What was Harry’s conclusion of his exhaustive pursuit to expose the Madoff scam? The SEC is incompetent.

What was the Inspector General’s conclusion from his investigation? In so many words, Kotz lays out the same results. The SEC was incompetent on so many fronts from the early 1990s until Madoff was exposed last December. For those who would like to read Kotz’s 22-page summary of his investigation, just click on the image below.

Is this all the public gets? Is this all the public can expect from our regulators? Nothing more than a mea maxima culpa? How about a real pursuit of the total truth? This Madoff affair has many more legs. Let’s navigate.

Ronnie Sue Ambrosino, head of the Madoff Victims Coalition for Investor Protection (my guest on NQR’s Sense on Cents with Larry Doyle on August 16th), and her husband Dominic comment on the Inspector General’s report and simultaneously call out FINRA last evening during an interview on Fox Business News.

Ronnie Sue and Dominic effectively connect the dots while highlighting the following:

1. Current head of the SEC Mary Schapiro formerly headed FINRA

2. Harry Markopolos defined FINRA as being “in bed” with the industry when he provided Congressional testimony this past February detailing his decade-long pursuit to expose the Madoff Ponzi scam.

3. FINRA had an internal investment portfolio (Sense on Cents would add that the portfolio was invested in hedge funds, fund of funds, and also had hundreds of millions in Auction-Rate Securities).

4. Amerivet Securities has recently filed a complaint against FINRA. The complaint indicates it has information and reason to believe that FINRA’s investment portfolio invested in Madoff.

Sense on Cents would add that the Amerivet complaint looks to have FINRA provide a full and thorough review of the following:

>> interactions with the major Wall Street banks

>> its compensation practices

>> its liquidation of its auction-rate securities position in 2007

>> all investment activities

Sense on Cents would further add that the Madoff family had extensive relationships with the NASD, Nasdaq (Bernie helped establish this exchange) and FINRA.

Let’s listen to Ronnie Sue and Dominic Ambrosino:

Is the Madoff investigation over? Any rational individual can understand there are many more regulatory questions needing answers. Where do those questions lead us? Inside FINRA and specifically to its investment portfolio. Why shouldn’t a Wall Street self-regulatory organization mandated to protect investors be obligated, and if need be compelled, to provide total transparency of all its business dealings?

I can only hope major media outlets and Washington pick up this story and understand the need to fully investigate FINRA.

I ask you again . . . is the Madoff investigation over? Not by a long shot!

What do you think?

LD

Related Sense on Cents Commentary:
“Amerivet Complaint Against FINRA Alleges Madoff Investment” (August 25, 2009)
NoQuarter Radio’s Sense on Cents with Larry Doyle Interviews Head of Bernard Madoff Victims Coalition (August 16, 2009)
“FINRA Is Supposed to Police the Market” (April 29, 2009)
“Riveting Testimony from a Great American, Harry Markopolos” (February 4, 2009)

BREAKING NEWS: Amerivet Complaint Against FINRA Alleges Madoff Investment

Posted by Larry Doyle on August 25th, 2009 10:47 AM |

Two weeks ago, Amerivet Securities filed a complaint against FINRA (Financial Industry Regulatory Authority), the Wall Street self-regulatory organization. This morning, Donna Mitchell of Financial Planning provides further insight on this complaint. Ms. Mitchell writes FINRA Rebuffs Amerivet’s Demand to Inspect Records. She reports:

The Financial Industry Regulatory Authority (FINRA) says it will not open its books and records to inspection by Amerivet Securities, the California brokerage firm which recently sued the regulator.

“We disclose a great deal of public information in our annual reports, far more than we are required to do,” says Herb Perone, a spokesman for FINRA. “Our records are not open for public examination.”

Sense on Cents questions why any financial self-regulatory organization mandated to protect investors would not be required to fully open all of its books and records for public review. Additionally, having extensively studied all of FINRA’s annual reports as well as those of its predecessor, the NASD, I echo the questions being raised by Amerivet. Does FINRA have any appreciation for the need for total truth and transparency in our markets and economy? The questions beg: why won’t FINRA fully open its books? are they trying to hide something? do they have reason to be concerned?

OPEN THE BOOKS!!!

Financial Planning continues:

The request for records is part of a civil suit filed Aug. 10 in the Superior Court of Washington, D.C., by Inglewood, Calif.-based Amerivet Securities. It stems from a July 23 letter sent to FINRA from Amerivet, in which the company initially asked to review FINRA’s documents.

In the lawsuit, Amerivet accuses FINRA of a litany of wrongdoings, from mismanaging the organization’s investment assets to placing substantial funds with Bernard L. Madoff Investment Securities, the former broker-dealer and investment advisory firm that was brought down amid a $65 billion Ponzi scheme.

WOW! The allegation of an investment by FINRA in Madoff is a BLOCKBUSTER. What information did Amerivet and its legal representation unearth to make this allegation? This information must be revealed and FINRA must open its books and records to address this charge. (Click on image to access copy of Amerivet complaint)

Financial Planning further reports:

Amerivet also alleges that FINRA failed to regulate and oversee the operations of large securities firms such as the former Bear Stearns & Co., the former Lehman Brothers, Merrill Lynch & Co., and Stanford Financial Group.

Amerivet also claims that FINRA overpaid its executives, sustained investment-related losses of $568 million and separately incurred substantial losses in the auction-rate securities market. “FINRA has failed in what it represents in its advertising to be its core function, i.e. the protection of investors,” Amerivet says in the lawsuit.

Is there any doubt that FINRA has failed to protect investors? Is there any doubt that senior executives at FINRA were paid handsomely?

In regard to the auction-rate securities allegation, is Amerivet maintaining that FINRA lost money on the ARS which it owned or is Amerivet referring to money lost by investors? Details of FINRA’s liquidation of ARS in 2007 must be released. Did FINRA front-run the market in the course of selling its own ARS?

OPEN THE BOOKS!!

Financial Planning gains a degree of insight from FINRA and reports:

FINRA would not comment about the lawsuit directly, but Perone said the organization had steered clear of investing with Madoff.

“As for any claim or question as to whether we had money invested with Madoff, we had no investments of any kind in Madoff or in any of its feeder funds,” Perone said.

The allegations and implications of the Amerivet complaint strike right at the core of our financial regulatory framework. Any credible media outlet should be running the Amerivet complaint as a lead story.

The American public deserves answers.

OPEN THE BOOKS!!

LD

Related Sense on Cents Commentary:

Amerivet Securities Files Complaint vs. FINRA for Release of Investment Information and More (August 17, 2009)
FINRA Must Play by Its Own Rules (August 19, 2009)

*****************************

UPDATE as of 11:20AM – Financial Planning has removed from its website the article referenced in this post. I am in the process of receiving the actual Amerivet complaint and will review it and comment later this afternoon.

UPDATE as of 12:05PM – I just received a copy of the Amerivet Securities vs. FINRA complaint.  See pages 8-9, points #24-28 for details regarding the allegation that FINRA was invested with Bernie Madoff.

Amerivet Securities Files Complaint vs. FINRA for Release of Investment Information and More

Posted by Larry Doyle on August 17th, 2009 11:53 AM |

The temperature is rising in the FINRA kitchen!!

Major high five to ARS investor ED for pointing out a breaking Bloomberg story that strikes right at the heart of our financial regulatory failings over the last number of years. Bloomberg reports Iraq Vet Asks Why Securities Overseers Can’t See.

This complaint encompasses a number of questions Sense on Cents has been asking over the last several months. As Bloomberg reports:

Amerivet Securities Inc. v. Financial Industry Regulatory Authority, a complaint filed in the District of Columbia Superior Court on Aug. 10 against Finra, the regulator whose Web site boasts of “proactively addressing emerging regulatory issues before they harm investors or the markets.”

If you can stifle your chortling over Finra’s psychotic break of a self-description and pay attention, the Amerivet complaint is example of regulators and those they regulate at their farcical finest.

Plaintiff Amerivet is run by Lieutenant Colonel Elton Johnson Jr., a one-time Special Forces soldier who served two tours of duty in Iraq in the U.S. Army Reserve, earning a bronze star and other decorations. Johnson has a long history with Finra — previously NASD — whose enforcement arm first went after him in 1997, censuring and fining him for violations of minimum capital requirements and for failing to file municipal securities offerings on a timely basis.

Complaining to Bush

Most recently, Finra suspended him as a supervisor from December 2006 to June 2008 because he didn’t properly manage an employee. Johnson says in his stockbroker records that the case was retaliation by Finra, which didn’t like it when he wrote to President George W. Bush to complain about how Finra was treating him.

While it does seem more than a little weird that Finra would bring a case in 2006 based on actions that happened a decade earlier, it’s hard not to wonder whether Johnson — with Army obligations, a real estate license, a firearms business and a private-detective operation — is a guy who might be a tad too busy to keep up with the details that a well-run brokerage firm should attend to.

His lawsuit against Finra, though, provides a funhouse window into what’s wrong with securities regulation. (more…)






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