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Great American Ed Morrow Lashes Out at Mary Schapiro

Posted by Larry Doyle on April 20, 2010 1:10 PM |

Edwin P. Morrow, Chairman & CEO of IARFC

I am heartened when great Americans across our country are willing to stand up and lash out at those involved in the Wall Street-Washington incest. I crossed paths with just such an American this morning in Ed Morrow, the chairman and CEO of the International Association of Registered Financial Consultants, a non-profit educational society for the financial planning industry.

Ed wrote to his representaitve John Boehner (R-OH) on financial regulatory topics which he feels are vitally important to his members. I thank Ed for his courage to speak his mind and his willingness to let me run his letter here at Sense on Cents. Thank you to our great American Ed Morrow for writing the following:   

The Office of Inspector General was set to release its Report of Investigation that indicate the many opportunities, some going back as far as 1997, for the Securities & Exchange Commission and its sub-agency, FINRA (formerly NASD) to reveal and prosecute the Ponzi scheme of Allen Stanford – another multi-billion dollar scam.  This report was dated March 31 and was to become public last week.  This report is the Investigation of the SEC’s Response to Concerns Regarding Robert Allen Stanford’s Alleged Ponzi Scheme.

The agency that is charged with responsibility for addressing consumer complaints has been FINRA (Financial Regulatory Authority) formerly known as NASD (National Association of Securities Dealers).  NASD was not a true association, but a regulatory agency.  NASD/FINRA was headed up by Mary L Schapiro, who president Obama promoted to head of the SEC.  It was under her (failed) leadership that Bernie Madoff, Allen Stanford and many others were defrauding many Americans.

There is a rumor that the SEC’s announcement to request an indictment of Goldman Sachs, was merely a PR blast to divert attention from the very real issues brougnt forth in the OIG-526 Report cited above – and that nothing will ever happen with Goldman Sachs, just a lot of noise.

Shapiro was responsible for the failure of securities broker dealers, the issuance of so-called “Gilt-Edged Mortgage backed Collateral securities that were the packaged debt instruments that created the financial crisis of 2008-2009.  She is either incompetent or a crook, and you can expect that more failure to properly supervise investment firms will come to light.

Meanwhile, Senator Dodd and Congressman Barney Frank are seeking to re-structure financial regulations – and would give even more authority and control to the SEC and Schapiro. We do not need more laws and more oversight. What we need is proper performance and the effective administration of current regulations.

Incidentally, when Ms. Schapiro was “promoted” from FINRA to SEC she received final compensation deferred compensation and a multi-million “pension plan buyout” – Sounds like the pay of NYSE Grasso! Not bad pay for failure to perform…..

While serving as head of FINRA Schapiro failed to act against large FINRA members Lehman Brothers, Bear Stearns and Merrill Lynch in connection with their roles in the subprime mortgage securities scandals; failed to warn investors about Auction Rate Securities (ARS) problems, after FINRA had liquidated its own ARS holdings in mid-2007, but before the ARS market “froze” and there were any public disclosures about the risks inherent in such “investments”; failed to follow up on tips relating to Madoff and Stanford.  But she was able to attend board meetings of Kraft (who paid her $675,000) Duke Energy (who paid her over $750,000 on whose boards she served). Schapiro’s salary at FINRA was $2,750,000 and she received a pension plan payment of over $5 million when she left to take the job at SEC which will pay only $162,900. Doesn’t that make you wonder where she intends to make up the pay difference?

Judge Jed Rakoff issued a ruling dismissing the lawsuit brought on behalf of Standard Investment Chartered against Mary Schapiro and other FINRA executives. What was the basis for Judge Rakoff’s dismissal? He allowed the defense the cover of “absolute immunity.”

Ed Morrow, CLU, ChFC, CFP, RFC
International Assn. of Registered Financial Consultants

Mr. Morrow’s message may not necessarily be new news to regular readers of this site, but the fact is he chairs an association with 8000 members. What do you think these members are communicating to their clients about Ms. Schapiro specifically and the Wall Street self-regulator FINRA?

American investors may not be getting satisfaction on Wall Street or in Washington, but if the case of Wall Street-Washington incest grows in the court of public opinion, I have a strong feeling as to what the verdict will be.

Thank you Ed Morrow for standing up and speaking out!!


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