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Posts Tagged ‘Cuneo Gilbert Laduca’

Judge Rakoff Orders FINRA Documents to Remain Sealed

Posted by Larry Doyle on February 17th, 2010 9:26 AM |

Nobody ever said it was going to be easy.

The pursuit of truth, transparency, and ultimate integrity in our financial regulatory system can only be equated to a 15 round heavyweight fight. Yesterday, the  sting of opposing blows landed hard upon our face as Judge Jed Rakoff ordered FINRA documents relating to the very formation of this Wall Street self-regulatory organization to remain sealed.

Recall that the request to unseal these documents was made by attorneys representing Dow Jones, Bloomberg, and The New York Times. From the blogosphere, Sense on Cents also wrote to Judge Rakoff requesting that he order these documents to be unsealed.  The information embodied in the documents addresses an allegation made by attorneys representing a plaintiff, Standard Investment Chartered, in a lawsuit filed against FINRA. The crux of that lawsuit is that then FINRA head (and current SEC Chair) Mary Schapiro and her fellow FINRA executives lied verbally during roadshows and in writing via the proxy statement issued for the merger of the NASD and NYSE Regulation to form FINRA. (more…)

FROM THE ARCHIVES: Attorney Claims Wall Street’s Cop, FINRA, Invested in Madoff

Posted by Larry Doyle on January 29th, 2010 8:31 AM |

Time.

The policies implemented in Washington are trying to buy time in hopes that our economy recovers. Japan took the ‘buying time’ approach and twenty years later they are still waiting for real recovery.

Moving forward.

The approach being taken by those within our financial regulatory structure (SEC and FINRA) is to ‘move forward.’ Well, unless the critically unanswered questions and issues embedded within these organizations are fully exposed and addressed, America can never truly move forward with confidence in the markets and those overseeing them.

President Obama wants real financial regulatory reform. Then Mister President, compel your chair of the SEC, Mary Schapiro, to open the books and records of FINRA. Mr. President, compel Ms. Schapiro to unseal documents regarding the very formation of FINRA itself.

America knows something still smells on Wall Street. What is it? (more…)

Attorney Richard Greenfield Brands Mary Schapiro and FINRA Execs as “Liars”

Posted by Larry Doyle on October 19th, 2009 10:09 AM |

Is Mary Schapiro a liar? Are other FINRA executives also liars?

Fully appreciating that merely asking these questions is aggressive by its very nature, I do not ask them in a derisive fashion. The fact is, the answer to those questions in the eyes of Richard Greenfield is an unequivocal, “Yes!”

Who is Richard Greenfield? I had the distinct pleasure of chatting with Richard last evening on my weekly Sunday evening radio program. Richard Greenfield of Greenfield & Goodman is an attorney with over 40 years of experience in banking, securities, and consumer litigation. Amongst other legal venues, Attorney Greenfield has been admitted to practice before the Supreme Court of the United States.

Our conversation last evening was riveting. If you have an interest in the markets, our economy, developments on Wall Street and in Washington, I strongly encourage you to listen to the interview in its entirety. I will share with you some of the highlights which Richard provided.  (The timing I provide for these highlights can be used in the audio player provided here.)

16:40: FINRA’s mindset has never been on major league enforcement, but rather relatively picayune broker-dealer violations and even then the violations are more technical than they are real. Greenfield said, “the big boys always seem to get away with murder.”

18:30: The NASD coming out of the 1930s initially did a good job, but over time it became less and less concerned with enforcement and more concerned with the appearance of enforcement.

20:00: Most state attorneys general don’t have resources to devote to securities regulations. It’s the rare state, California and New York for example, which undertakes real enforcement activities. (LD’s comment: I would add that Massachusetts has also aggressively undertaken serious enforcement of securities regulation.)

22:00: Too Much Wall Street money finds its way into campaign warchests with the result that its special interests rival those of the insurance and defense industries and as a result Congress and many state government initiatives have been subverted.

25:00: Every major financial institution has ‘cooked their books’ for the last five years.

At the 29 minute mark or thereabouts,  our conversation truly elevates from the general nature of financial regulation to the very specific details of the cases Richard Greenfield and colleagues from the Washington D.C. based firm of Cuneo, Gilbert, and LaDuca are bringing against FINRA. I STRONGLY encourage you to listen to the next twenty minutes.

29:30: Greenfield provides background information on the complaint filed on behalf of the California based FINRA member firm, Standard Investment Chartered against FINRA.

32:00-44:00:
- 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.

> Greenfield also highlights the fact that FINRA failed to perform in protecting investors from the Auction-Rate Securities scandal while liquidating its own ARS investment position in 2007.

> Greenfield sheds some light that he believes New York AG Andrew Cuomo is investigating FINRA’s liquidation of its Auction-Rate Securities investment.

>47:00

– Greenfield repeats his assertion initially made on September 3rd while appearing on America’s Nightly Scoreboard on Fox Business News (video clips can be seen here) that, based upon information and belief obtained from a source which Greenfield and colleagues believe to be reliable, FINRA had made investments with Bernie Madoff!!

– Greenfield believes that FINRA may have to be disbanded and the self-regulation of Wall Street may have to be scrapped because the self-regulatory model for this industry has failed.

– Greenfield concludes that Mary Schapiro talks a tough game, but is truly a non-regulator.

While Greenfield makes some serious allegations and charges in the course of this interview, he has unquestioned credibility and experience which comes from 40 years of fighting these battles.

Will the truth and transparency being sought in these complaints and which the American public so badly needs at this time come out? Do not discount the power of information. Please share this information which Richard Greenfield so descriptively and professionally detailed last evening with your friends and colleagues.

I thank you.

Questions, comments, constructive criticisms always appreciated.

LD

Mary Schapiro Has Some ‘Splainin To Do…

Posted by Larry Doyle on October 8th, 2009 4:03 PM |

Mary Schapiro

Big money makes for a very strange bedfellow. Is FINRA sleeping well these days? A pending lawsuit against FINRA would like to pull back the covers and check to see if the money in the FINRA mattress was allocated appropriately. Let’s enter the sitting room and take a peek into this corner of the FINRA household.

In the process of consolidating the NASD with NYSE Regulation to form FINRA, the NASD allocated capital proceeds to its member firms. This capital was generated via the initial public offering of the Nasdaq. Did the NASD, now known as FINRA, significantly underallocate capital proceeds to its member firms? This alleged underallocation, known as being ‘picked off’ on Wall Street, is the basis for a lawsuit brought by two FINRA member firms, Benchmark and Standard Investment Chartered.

Why am I concerned about the arcane inner workings and legal issues of a Wall Street self-regulatory organization? For the very same reason that I’m concerned about that regulator’s internal investment portfolio activities. Transparency or the lack thereof and the resulting confidence or lack thereof that the American public has in our entire financial regulatory system. Those goals strike me as worthy especially in light of the systemic risks embedded in an array of organizations which this regulator was charged to oversee. Yes, a large amount of exposure and transparency is badly needed at this point in our economic history. Against this backdrop, let’s navigate and see what we can learn about this lawsuit.

The law firms of Cuneo, Gilbert & LaDuca along with Greenfield and Goodman are representing the plaintiffs. From the former’s website we learn:

Along with our co-counsel Greenfield & Goodman, LLC, we currently represent members of the Financial Industry Regulatory Authority (“FINRA”) (formerly known as the National Association of Securities Dealers or “NASD”) in United States District Court and Court of Appeals litigation.  The complaints, which are based on state law, allege that defendants, among other things, obtained the NASD members’ vote in support of the consolidation of NASD and NYSE Regulation through an inaccurate and deceptive proxy statement and solicitation process. (LD’s highlight) At issue in the suit is whether NASD could have distributed to its members a larger share of the approximately $1.5 billion of NASD members’ equity.  As members will recall, NASD repeatedly asserted that the IRS imposed a $35,000 “hard cap” on what the NASD could pay its members.

Wow. With a $1.5 billion pie, we are talking big money. In light of that, a charge labeled as ‘inaccurate and deceptive proxy statement and solicitation process’ is aggressive especially for an industry’s regulatory organization. Whatever happened to embracing accuracy and clarity? Let’s continue.

Some documents from the litigation that shed light on the truth of these statements are now public.  However, FINRA has insisted that the key fact – the amount the Internal Revenue Service (“IRS”) told NASD it could distribute – remain secret, that is, under seal.

Secret? Under seal? Those terms aren’t synonymous with transparent. I thought under the ‘change’ being promoted by the Obama administration transparency would be embraced. What this looks like is more ‘business as usual’ on Wall Street. Navigating further we learn,

>The IRS did not limit the payment to member firms to $35,000 as NASD and its officials insisted.

>The IRS did not issue a formal ruling on the payment to members until March 13, 2007 – approximately two months after the member vote on the bylaws occurred.November 21, 2006.

>NASD Board Minutes demonstrate that the NASD Board discussed the $35,000 limit stating, “regardless of the amount agreed upon, it was paramount that the figure not be subject to negotiation.”

At this juncture, if I could be so bold as to steal a line from Ricky Ricardo in engaging Lucy, I would say to Mary Schapiro who headed FINRA, “you got some ‘splainin to do.”

For any legal beagles and overachievers in the audience, I am happy to submit the following legal documents pertaining to this case:

Communications between NASD and the IRS

NASD Board Materials

Proxy Materials

Internal NASD Emails

Internal NASD Memoranda

Communications Between NASD and NYSE

Rest assured, I will be monitoring developments in this case closely.

LD

FINRA Must Play by Its Own Rules

Posted by Larry Doyle on August 19th, 2009 11:21 AM |

Will the pressure being applied on FINRA compel this Wall Street self-regulatory organization to open its books and records? I am heartened and hopeful that the complaint filed by Amerivet Securities against FINRA will do just that.

High five to RS for sharing this complaint, Amerivet Securities v. Financial Industry Regulatory Authority.

Amerivet requests FINRA open its books for purposes of reviewing FINRA’s (and the NASD’s) engagement, oversight, and investment activities broadly speaking.

My major axe with FINRA remains its liquidation of Auction-Rate Securities in 2007. I would ask the judge who is hearing the Amerivet complaint to review a September 2008 document produced by FINRA in regard to the Auction-Rate Securities debacle. I submit Testimony by Susan L. Merrill, Executive Vice-President, Chief of Enforcement, Concerning Auction-Rate Securities Markets to Committee on Financial Services U.S. House of Representatives September 18, 2008.

Ms. Merrill promotes that as part of FINRA’s investigation of the ARS market, it would also focus on:

possible conflicts of interest where a firm may have been in possession of knowledge about ARS failures and liquidated their proprietary ARS positions by selling those positions to customers or ahead of customer liquidations.

Ms. Merrill, Ms. Schapiro, Mr. Ketchum, and members of the House Committee on Financial Services, Sense on Cents calls on all of you to hold FINRA to the same standard you would apply to every bank, broker-dealer, and money manager involved in the Auction-Rate Securities market.

I can only hope the judge handling the Amerivet complaint is able to review Ms. Merrill’s testimony.

FINRA must release all information regarding the liquidation of ARS from its investment portfolio in 2007.

What is good for the goose is good for the gander.

LD






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