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Posts Tagged ‘Standard Investment Chartered vs FINRA’

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…)

Judge Rakoff Dismisses Suit Against Mary Schapiro and FINRA Under Absolute Immunity

Posted by Larry Doyle on March 1st, 2010 5:49 PM |

America should be reviled when those charged with upholding the law overseeing our markets are not held to that standard themselves.

Today is a very dark day for those in our country who cherish the virtues of truth, transparency, and integrity.

Why am I despondent? This afternoon, Judge Jed Rakoff issued a ruling dismissing the lawsuit brought on behalf of Standard Investment Chartered against Mary Schapiro and other FINRA executives. What is the basis for Judge Rakoff’s dismissal? He allowed the defense the cover of absolute immunity in the merger of the NASD with 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 |


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…)

Will America Learn This Thursday if Mary Schapiro is a Liar?

Posted by Larry Doyle on January 12th, 2010 12:20 PM |

Head of SEC, Mary Schapiro

Head of SEC, Mary Schapiro

January 14, 2010 at 4pm
U.S. Distict Court for the Southern District of N.Y.
Presiding Justice, Jed Rakoff

Will America learn this Thursday afternoon if SEC Chair Mary Schapiro did in fact lie verbally and in a proxy statement regarding the merger of the NASD with NYSE Regulation to form FINRA?

As I highlighted in my commentary yesterday, “The Financial Crisis Inquiry Commission Should Investigate…”, I believe FINRA and Mary Schapiro are truly the embodiment of the Wall Street-Washington cabal that stifles the truth, transparency, and integrity America so badly deserves.

For more details on this case and the upcoming hearing, I submit the following press release that came out this morning:

    Mary Schapiro and other NASD Managers Allegedly Lied to and
Shortchanged NASD Member Broker-Dealers in 2006 Merger with
NYSE and otherwise Violated Their Fiduciary Responsibilities.

Mary Schapiro Owes America Some Answers

Posted by Larry Doyle on December 21st, 2009 8:47 AM |

Who is willing to ask the hard questions? Who is willing to call people out? Who is willing to fly in the face of the Wall Street-Washington incest? Regrettably, very few journalists and media outlets have the character and courage to truly serve the American public interest. Who is not lacking in the courage and character department? Bloomberg’s Susan Antilla.

Time and again, Antilla takes on Wall Street and the financial regulators. In my opinion, her finest piece of work comes out this morning. Susan Antilla writes, Hot Seat for SEC Chief Schapiro Won’t Cool Off:

The chairman of the Securities and Exchange Commission has a past that is fast coming back to haunt her.

Mary Schapiro’s story has none of the lurid details of philandering celebrity golfers or hedge fund titans who get sued by ex-wives for concealing marital money.

Her history and two pending lawsuits, though, raise an important question for investors: Is the woman who oversees the U.S. financial markets someone willing to fudge the facts to get things done?

If what I heard in federal Judge Jed Rakoff’s New York courtroom last week is even close to accurate, I’d say that it’s time for some serious conversations as to whether Schapiro is the person we should entrust to the top SEC job.

I totally concur. Mary Schapiro, the current SEC Chair and formerly the head of  FINRA, possesses a wealth of information on a number of topics for which America would like greater detail. What are some of these topics? (more…)

How Big Was Mary Schapiro’s Lie?

Posted by Larry Doyle on December 17th, 2009 2:55 PM |

Will our chief financial regulators be allowed to operate above the law?

That plea of immunity is the foundation of the FINRA defense in the complaint filed against it by Standard Investment Chartered.  Recall that the very core of the Standard Investment Chartered vs. FINRA lawsuit is the premise that current SEC Chair Mary Schapiro and her then FINRA colleagues lied verbally and in a proxy statement about the details of a payment to FINRA member firms. FINRA paid 35k per firm and indicated that figure was the maximum allowed by the IRS.

I provided extensive details on this case in writing on October 22nd, NASDAQ Sale: Why Would Mary Schapiro and FINRA Execs Lie?

High five to Bloomberg’s Susan Antilla for doggedly pursuing this case. Susan reports on the hearing held yesterday on this case in United States Court in New York. Susan writes, Broker’s Lawyer Says FINRA Understated Offer to Firms,

A lawyer for securities firms suing the Financial Industry Regulatory Authority said sealed documents show its executives understated how much they could pay brokers in the 2007 merger that created the oversight body.

NASD, which became Finra after merging with the New York Stock Exchange’s oversight unit, could pay “something” from $70,000 to $111,000, Jonathan Cuneo, the lawyer for Benchmark Financial Services Inc. and Standard Investment Chartered Inc., said yesterday at a hearing, citing confidential Internal Revenue Service documents. NASD told brokerages in 2006 that IRS policy limited the payments to $35,000. (more…)

Kanjorski and Ackerman Undress the SEC and SIPC

Posted by Larry Doyle on December 15th, 2009 2:47 PM |

Having written about the massive regulatory failures on Wall Street for the better part of 2009, I am heartened by the House Finance Sub-Committee on Capital Markets hearing last week. The bell that tolled in this hearing deserves to ring loud, long, and clear across our great land. The regulatory and insurance failures on Wall Street deserve to be exposed far beyond Sense on Cents.

Rackets operate best in the dark. Well, let’s get that flashlight out again!

For those unaware, SIPC (the Securities Investor Protection Corporation) is an insurance fund in which member firms pay premiums to cover losses. From SIPC’s own website, we learn:

What SIPC Covers . . . What it Does Not

The cash and securities – such as stocks and bonds – held by a customer at a financially troubled brokerage firm are protected by SIPC.

Among the investments that are ineligible for SIPC protection are commodity futures contracts and currency, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

It is important to recognize that SIPC does not work the same way as the Federal Deposit Insurance Corporation in terms of blanket protection of losses.

For this insurance coverage, SIPC charged its member firms an annual premium of $150 from 1996 until April 2009. That is no joke. Wall Street firms paid a token $150 a year to promote the idea that your investments were protected. While SIPC did have a $1 billion reserve fund, that was woefully insufficient to cover the losses incurred in the Madoff scam. Make no mistake, though, the SIPC annual premium of $150 should also be looked upon as a scam.

Think of it. Individuals pay far more for auto insurance than Goldman Sachs paid for investor insurance for over 12 years.

Are you getting increasingly pissed off? America should be extremely pissed off. The SIPC coverage has been a critical part of the Wall Street racket. (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…)

Barrons, New York Times, and Sense on Cents All Request Transparency From FINRA

Posted by Larry Doyle on October 23rd, 2009 1:19 PM |

The drive for transparency in our financial regulatory system is gaining momentum. How so?

The complaint brought on behalf of Standard Investment Chartered v FINRA, NYSE Group, Mary Schapiro et al is receiving increased interest. As well it should. Why? As I have always maintained, for confidence to return to our markets and economy, it is imperative that we have transparency in our financial regulators and regulation.

In regard to this case, I wrote a Letter to Judge Jed Rakoff in re: Benchmark and Standard Investment Chartered v. FINRA on Thursday October 15th. I wrote:

. . . having attended the hearing in your chambers on October 6th on the above referenced case (I was the only member of the public or the press in attendance), I would request that you release unredacted documents pertaining to these complaints. The release of those unredacted documents would be of real public service. That service entails the ongoing public cry for real transparency in our financial industry at this time. That cry for so many of our citizens seems to go unheeded all too often. I could share dozens of comments left at my site echoing that cry.

I truly believe if a real measure of confidence in our markets and our economy is to return, it must be based on true transparency and integrity. While I have written extensively on the lack of transparency and integrity in our country, I don’t pretend to think that my site will change the landscape on this front immediately. That said, I am never discouraged to continue digging deeper, writing more, and asking the hard questions. On this front, I sincerely hope the adjudication of this case will highlight these qualities for all to see.

Barrons actually beat me to the punch and had requested a release of the same unredacted documents in a communication sent to Judge Rakoff on October 5th. Those interested in Barron’s request written by Jim McTague, the Washington D.C. editor, can access it here.

Today I learn that The New York Times is making the same request of FINRA. Stephen Labaton, senior writer for The New York Times in Washington D. C., made his request of Judge Rakoff this past Wednesday, October 21st. Those interested in the NYT request can access it here.

The drive for transparency in our financial regulatory system continues. With Barrons and The New York Times on board, that drive is gaining steam.

The American public deserves nothing less than total transparency and integrity in its markets, regulations, and regulators.


Related Sense on Cents Commentary:

Nasdaq Sale: Why Would Schapiro and FINRA Execs Lie? (October 22, 2009)
Attorney Richard Greenfield Brands Mary Schapiro and FINRA Execs as “Liars”
(October 19, 2009)

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