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HomeAmerivet Securities Files Complaint vs. FINRA for Release of Investment Information and More
Posted by Larry Doyle on August 17th, 2009 11:53 AM |
The temperature is rising in the FINRA kitchen!!
Major high five to ARS investor ED for pointing out a breaking Bloomberg story that strikes right at the heart of our financial regulatory failings over the last number of years. Bloomberg reports Iraq Vet Asks Why Securities Overseers Can’t See.
This complaint encompasses a number of questions Sense on Cents has been asking over the last several months. As Bloomberg reports:
Amerivet Securities Inc. v. Financial Industry Regulatory Authority, a complaint filed in the District of Columbia Superior Court on Aug. 10 against Finra, the regulator whose Web site boasts of “proactively addressing emerging regulatory issues before they harm investors or the markets.”
If you can stifle your chortling over Finra’s psychotic break of a self-description and pay attention, the Amerivet complaint is example of regulators and those they regulate at their farcical finest.
Plaintiff Amerivet is run by Lieutenant Colonel Elton Johnson Jr., a one-time Special Forces soldier who served two tours of duty in Iraq in the U.S. Army Reserve, earning a bronze star and other decorations. Johnson has a long history with Finra — previously NASD — whose enforcement arm first went after him in 1997, censuring and fining him for violations of minimum capital requirements and for failing to file municipal securities offerings on a timely basis.
Complaining to Bush
Most recently, Finra suspended him as a supervisor from December 2006 to June 2008 because he didn’t properly manage an employee. Johnson says in his stockbroker records that the case was retaliation by Finra, which didn’t like it when he wrote to President George W. Bush to complain about how Finra was treating him.
While it does seem more than a little weird that Finra would bring a case in 2006 based on actions that happened a decade earlier, it’s hard not to wonder whether Johnson — with Army obligations, a real estate license, a firearms business and a private-detective operation — is a guy who might be a tad too busy to keep up with the details that a well-run brokerage firm should attend to.
His lawsuit against Finra, though, provides a funhouse window into what’s wrong with securities regulation. (more…)
Real Regulatory Review: “Gut Check”
Posted by Larry Doyle on May 20th, 2009 6:00 AM |
The Washington Post reports the “Administration Weighs Creating New Regulator for Financial Products.”
Will the new regulator merely address the effects of lax oversights in certain targeted financial products, or will the public get some satisfaction and the regulator address the causes of the massive regulatory breakdowns? I am not optimistic, but I am adamant to address this topic. The Post offers:
The proposal, which remains fluid, would centralize the enforcement of laws that protect consumers of financial products. That task currently is spread out across a patchwork of agencies, many of whom regard consumer protection as a low priority. Some financial products are not regulated at all.
Any proposal could also trigger a major regulatory turf war, with agencies such as the Securities and Exchange Commission and the banking regulators fighting to preserve authority.
I am all for implementing effective regulation which levels the playing field and promotes free, fair, and equitable business practices. There is no doubt we need a thorough review of our existing regulations to see where they are sufficient and where they are delinquent. That said, as I wrote the other day, “Future Financial Regulations: Not a Question of Sufficiency, But Of Transparency And Integrity.”
In regard to housing finance, we need to develop effective oversight of the mortgage industry. We also need to accept the fact that our mortgage finance problems went a lot deeper than rogue mortgage brokers fraudulently underwriting unsuitable products to unsophisticated borrowers. If Obama and team really want to address the root causes, let’s return to the Congressional hearings throughout the 90s and up until 2006 and replay the testimony of the executives of Freddie Mac and Fannie Mae. The simple fact is the Clinton administration, with Congressional backing, promoted increased rates of homeownership without simultaneously implementing the necessary safeguards in the mortgage origination and underwriting process. (more…)
