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Posts Tagged ‘merger of NASD and NYSE Regulation’

FINRA’s Enforcement Chief, Susan Merrill, Quits; How About a Subpoena?

Posted by Larry Doyle on March 18th, 2010 10:52 AM |

Will Susan Merrill provide America with a window into the scams perpetrated by Wall Street on the American investing public? Who is Susan Merrill? Let’s navigate.

Those charged with protecting the public interest must be held to an appropriate standard. In order to promote public trust, these organizations and their executives must be held to account. If need be, that accounting should include legal discovery and, if warranted, a subpoena as well.

Susan Merrill, the head of enforcement of Wall Street’s self-regulatory organization, FINRA, is stepping down after having occupied this role for three years. Think she knows some things that the American public would like to know? No doubt.

In fact, in my opinion, Ms. Merrill most likely has a wealth of information that American investors (those she was charged to protect) and the American public at large DESERVE to know. (more…)

FINRA Defense: Exhaustion and Immunity

Posted by Larry Doyle on December 2nd, 2009 9:24 AM |

Let’s revisit the case of Standard Investment Chartered v. FINRA. While I have written extensively on a host of issues related to FINRA, I believe the issues embedded in this specific case drive to the very core of our financial regulatory system. For those unaware of this case, a recent memorandum (link provided at end of this commentary) filed on behalf of the plaintiff highlights:

At the core of the case is the FINRA Defendants’ issuance of a proxy statement on December 14, 2006 (the “Proxy Statement”), which contained out-and-out material falsehoods and omitted essential facts bearing on the Transaction and on a proposed “Special Member Payment” that was to be made upon its completion. The most important false representation was that federal tax authorities limited a payment to NASD Members to $35,000. Second Amended Complaint (“SAC” or the “Complaint”) ¶ 13. The FINRA Defendants magnified the falsehood that the Internal Revenue Service (“IRS”) limited NASD Member payments to $35,000 in many different forms, over and over, as if saying it enough times and wishing it to be true would somehow make it come true.

A claim of out-and-out material falsehoods against defendants, including then FINRA head and current SEC chief Mary Schapiro, is where the rubber meets the road. How have the defendants responded? Are they willing to embrace the virtues of transparency and integrity so badly needed to restore investor confidence? No, I don’t think so.

The defendants have filed a motion to dismiss this complaint. On what grounds do the defendants make their motion?  The memorandum highlights: (more…)

Bloomberg Joins Ranks Calling for FINRA Transparency

Posted by Larry Doyle on November 9th, 2009 12:26 PM |

Calls for increased transparency from Wall Street’s self-regulatory organization FINRA continue to mount. How so?

None other than Bloomberg joins the ranks of Barrons, The New York Times, and Sense on Cents in calling on the courts to compel FINRA to release unredacted documents relating to the merger of the NASD with NYSE Regulation. That merger formed FINRA.

As I have highlighted previously, the core of a complaint filed on behalf of Standard Investment Chartered alleges that FINRA and assorted defendants, including current SEC head Mary Schapiro, misrepresented orally and in writing the financial terms involved in this merger. More specifically, the complaint alleges that FINRA and defendants lied in their representation of what the IRS would allow in terms of financial remuneration to FINRA member firms. (more…)

Media Attention Increases Heat on Mary Schapiro and FINRA

Posted by Larry Doyle on October 25th, 2009 1:44 PM |

Is the American public about to get a wider view into the relatively concealed world of Wall Street self-regulation? I believe so. The momentum towards real transparency is “heating up.” How is the temperature rising in the kitchens of SEC chief Mary Schapiro and her former colleagues at the Wall Street self-regulatory organization FINRA?

The widely read and enormously respected financial periodical Barron’s writes at length this weekend about a specific case which Sense on Cents has been addressing for the last few months. This case (Standard Investment Chartered v FINRA, NYSE Group, Mary Schapiro et al) is highlighted in Barron’s reporting of Suit Puts SEC Chief on the Hot Seat:

Did Securities and Exchange Chairman Mary Schapiro, in her former role as head of the National Association of Securities Dealers, approve a misleading proxy that helped boost her pay and those of other NASD executives?

I highlighted the points raised in the Barron’s article this past Thursday in writing “Nasdaq Sale: Why Would Schapiro and FINRA Execs Lie?”

I am heartened by Barron’s reporting. Why? I have written extensively about Ms. Schapiro and FINRA over the last ten months. I have been asked by dozens upon dozens of readers and friends as to why the mainstream media has not focused more attention on topics and questions which strike me as having enormous importance.

I believe the issues embedded in the questions I have raised are potentially explosive in terms of their impact on the entire financial regulatory structure in our country. Given their explosive potential, I believe many media outlets have not wanted to address them for fear of running the wrath of the power structure on Wall Street. That said, heat and pressure appropriately applied typically produce results. I believe the Barron’s article will go a very long way toward producing the much needed truth and transparency in our Wall Street regulatory structure. This development is outstanding. That said, the questions Ms. Schapiro and FINRA need to face go well beyond the topics addressed in the Barron’s article.  What other questions must be fully addressed? I submit the following:

1. America deserves to know the full extent of FINRA’s internal investment activities.  Did FINRA invest in Bernie Madoff as alleged in a lawsuit filed by Amerivet Securities v FINRA this past August? I submit from September 15th, 2009: “Attorney Claims Wall Street’s Cop, FINRA, Invested in Madoff.”

2. America deserves to know whether FINRA possessed material non-public information and utilized it in the liquidation of its own $647 million Auction-Rate Securities position in mid-2007. Those unaware should know that the ARS market was failing at the time. Additionally, federal judges have designated the sales and marketing of ARS as to have occurred in a fraudulent fashion. Thousands of investors with upwards of $160 BILLION in ARS remain unable to access their funds. FINRA was charged with protecting investors. They did anything but protect. I submit from May 21st, 2009: “U.S. Attorney and SEC Investigating Lehman’s Auction Rate Securities Sales; They Should Also Investigate FINRA’s.”

If the specific case referenced by Barrons proceeds, Ms. Schapiro may very well have to recuse herself since the SEC, which she currently heads, would likely be involved in the investigation of FINRA, her former employer. As such, I repeat my question from a few months ago in regard to whether Ms. Schapiro would recuse herself. Her recusal would take real courage. I submit from June 4th, 2009: “How Courageous Is Mary Schapiro?”

If in the process of discovery and investigation Ms. Schapiro and her former FINRA colleagues are not cooperative in the public pursuit of truth and transparency, it may then very well be that President Obama and his financial advisers will be faced with an “Independent Investigation Required” much as I had written on April 21st , 2009 and repeated on May 21st, 2009 in writing “Mary Schapiro Still Not Being Questioned; Independent Investigation Still Required.”

As the temperature rises in Ms. Schapiro’s kitchen, Sense on Cents will continue to monitor developments very closely and continue to press for real transparency in the process.

LD






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