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Posts Tagged ‘did FINRA protect investors’

Is FINRA’s Future in Doubt?

Posted by Larry Doyle on February 23rd, 2010 2:04 PM |

Are the days of Wall Street’s self-regulatory organization known as FINRA numbered?

In the opinion of the very credible Project on Government Oversight, they should be. Why? Significant failures, massive conflicts of interest, and more. POGO’s comprehensive and scathing letter to four separate House and Senate committees touches upon every failing within FINRA, with the exception of the integrity of the proxy statement used in the formation of the organization itself. Strong allegations in a current lawsuit against FINRA make the case that Mary Schapiro lied verbally during roadshows and in the proxy statement. (For details on this lawsuit read here.)

Despite not addressing the issues embedded in that lawsuit, POGO touches all the other bases and covers all the other issues surrounding this organization. (more…)

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)

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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.






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