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HomeWhat Truly Happened? The Top Ten Unfinished/Untold Stories of Our Economic Crisis
Posted by Larry Doyle on July 24th, 2012 8:23 PM |
With the development of internet applications and various social media sites, do you ever find yourself looking back to see what happened to specific situations or individuals in your past?
I am going to guess most people have navigated back down the road to do just that at least once over the past year or so. Perhaps sometimes you learn what truly happened to people and situations in your past, and sometimes you don’t.
In this spirit, let’s take a break from the daily flow of news and scandals and look back in time. (more…)
Can Congress Read? Does It Open Mail Re: FINRA?
Posted by Larry Doyle on June 29th, 2011 1:59 PM |
Do those in Congress know how to read? Do they open their mail?
News is leaking that Congress may be inclined to have Wall Street’s self-regulator, FINRA, gain oversight of the investment advisory industry. That industry is currently regulated by the SEC and operates under a fiduciary standard.
The industry is fighting tooth and nail NOT to be regulated by FINRA which regulates broker-dealers under the less stringent suitability standard.
While the investment advisory industry and FINRA are duking it out, let’s return to my initial questions. Do those in Congress know how to read? Do they open their mail? Why do I ask? (more…)
Lieutenant Colonel Elton Johnson on Way to Afghanistan Calls Out Finra…AGAIN!!
Posted by Larry Doyle on February 11th, 2011 7:07 AM |
I first wrote about Wall Street’s self-regulatory organization, FINRA (the Financial Industry Regulatory Authority) in January 2009. At that point and ever since I have believed strongly that for a revitalization of the health and confidence of our capital markets, our economy, and ultimately our nation itself that FINRA needed to become a MUCH more transparent organization. Regular readers of Sense on Cents know how passionately I feel.
Regrettably, though, outside of those regularly involved in the financial industry, I believe few people in our nation even know who FINRA is or what they do regulating Wall Street. I strongly believe that reality needs to change. Who would seem to share my belief? Amerivet Securities’ Lieutenant Colonel Elton Johnson, a member of the United States Army Reserve. (more…)
Calling All Auction-Rate Securities Holders
Posted by Larry Doyle on August 10th, 2010 6:42 AM |
Without information there can be no real truth. Without truth there can be no real justice. Without justice, what is the quality of our nation and ultimately our civilization?
Why do so many Americans remain enraged at the economic travesty of the last few years? For the very simple reason that those regulators who were charged to protect American investors not only failed in their initial charge but to a large extent have continued to fail investors by not aggressively pursuing justice where financial improprieties–if not outright fraud–transpired.
To this end, why am I not surprised that many auction-rate securities holders have quickly directed their attention and focus to the state of Colorado where securities commissioner Fred Joseph has filed a complaint against E*Trade for improperly marketing and distributing auction-rate securities. Other ARS holders are hoping Commissioner Joseph will take a similar tact on their behalf against other firms for the same reason.
In order for the Colorado state securities commissioner to pursue the truth, he needs the information. (more…)
Great American Ed Morrow Lashes Out at Mary Schapiro
Posted by Larry Doyle on April 20th, 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: (more…)
FINRA Fraud Team Must Look in the Mirror
Posted by Larry Doyle on April 16th, 2010 10:14 AM |
A report released yesterday by MarketWatch highlights the fact that the Wall Street self-regulator FINRA is launching a new initiative to target fraud within its purview of the financial industry. This initiative, designated the Office of Fraud Detection and Market Intelligence, will be headed by a longstanding FINRA employee, Cameron Funkhouser. Let’s navigate and offer insightful critique and analysis.
From the MarketWatch report entitled, Wall Street Watchdog Promises to Show More Teeth:
Wall Street’s self-regulatory body that self-admittedly failed to detect 2008’s major financial scandals has a plan to not miss the next one. The Financial Industry Regulatory Authority is touting its new fraud team as the key to spotting another Bernard Madoff. (more…)
Mary Schapiro and Mark McGwire
Posted by Larry Doyle on January 15th, 2010 10:22 AM |
“I’m not here to talk about the past.”
Mark McGwire, the steroid abusing home run hitting phoney, may have issued a massive mea culpa this week, but his career will forever be defined by his March 2005 Congressional obfuscation.
In my strong opinion, Mary Schapiro is the financial industry’s equivalent of Mark McGwire. How so? In McGwire’s 2005 testimony, he very much wanted to position himself as a positive influence for future developments regarding the use and abuse of steroids in baseball. Fast forward to January 14, 2010 and we witness Mary Schapiro very much trying to assume the same positive position in her testimony and answers to the Financial Crisis Inquiry Commission. In Schapiro’s opening statement, Testimony Concerning the Financial Crisis, she states as much:
To assist the Commission in its efforts, my testimony will outline many of the lessons we have learned in our role as a securities and market regulator, how we are working to address them, and where additional efforts are needed. I look forward to working with the FCIC to identify the many causes of this crisis.
Oh, how kind. (more…)
Auction Rate Security Anxiety Continues
Posted by Larry Doyle on December 29th, 2009 10:03 AM |
Still they wait.
$150 billion dollars.
Thousands of investors unable to access THEIR funds frozen in Wall Street’s greatest fraud, that is the world of auction-rate securities.
While an initial court ruling against Union Bank of Switzerland defined the sales and distribution of auction-rate securities as a fraud, recent court rulings have shifted the burden of responsibility onto investors.
When I worked on Wall Street, I was never involved directly or indirectly with the sales or trading of auction-rate securities. That said, I understand full well the explicit and implicit guarantees that brokers and salespeople made in distributing this product. The fact that those entities which distributed ARS have not been held to full and total account is an unspeakable travesty. The lives of investors who have been dramatically impacted get little to no attention from the media. Shame on them.
Our federal financial regulators housed within the SEC are nowhere to be found. FINRA remains in bed with the industry and would just as soon not draw attention to its own liquidation of $647 million ARS in mid-2007 as the market was failing.
Days, weeks, months, and now years pass. Where is the justice and retribution for those ARS investors still frozen and unable to access that $150 BILLION!!! (more…)
Wall Street Journal Goes in the Tank for FINRA
Posted by Larry Doyle on September 25th, 2009 9:18 AM |
When did real journalism move from asking the hard questions and demanding answers to the mere parroting of a party line? Recent polls indicate a lessened confidence in the media in our country. Why? Journalism has largely abdicated its responsibility to be the public conscience. I see evidence of this ‘parroting’ in today’s Wall Street Journal, which reports After 27% Fall, FINRA Plays It Safe.
FINRA, the Wall Street self-regulatory organization, has been under increasing pressure lately with the spotlight focused primarily on its investment portfolio activities. FINRA has provided virtually little to no transparency and, as such, currently faces 3 lawsuits by member firms. There is no doubt in my mind that today’s WSJ article is an attempt by FINRA to display a degree of transparency in order to keep the wolves at bay. Is FINRA fully transparent? Not in my opinion.
Did the WSJ pursue this story or was it conveniently placed to deflect the heavy criticism and charges FINRA faces in the lawsuits? Make no mistake, the WSJ has been largely absent in aggressively covering developments in and around FINRA. The returns generated by FINRA’s investment portfolio and its shift to a conservative strategy have been widely disseminated over the last few months and were highlighted here at Sense on Cents on June 29th when I wrote “FINRA 2008 Annual Report: A Special Type of Hubris”:
I personally believe it is very important for a financial self-regulatory organization, such as FINRA, to be totally transparent in every regard. Why? Very simply, transparency promotes confidence and FINRA’s position as a financial regulator should begin and end with that goal.
Against that backdrop, FINRA should not directly manage any of their own funds. To do so is an open invitation for conflicts of interest. FINRA’s own investment portfolio, managed by an Investment Committee, generated a negative 26% return in 2008. In April 2009, the FINRA portfolio shifted to a lower volatility approach but in 2008 it continued to have exposure to hedge funds, fund of funds, and private equity. As much as I believe this is a very big deal, it pales in comparison to the major issue I, and others, have with FINRA: their involvement with Auction-Rate Securities.
Why do I feel so strongly that the WSJ is serving as a mouthpiece for FINRA rather than truly digging for total transparency? Let’s zero in on how the WSJ addresses this auction-rate securities angle. As we do this, please recall the following:
1. $165 billion ARS remain frozen in investor accounts
2. A federal judge has designated the sales and marketing of ARS to be a fraud
3. FINRA did not post on its own website the failing nature and ultimate total failure of the ARS market until 2008, well after it liquidated its own position.
The WSJ, a proud financial periodical, provides less than cursory coverage to this piece of the FINRA story, in writing:
Finra used an outside consultant, Jeffrey Slocum & Associates of Minneapolis, to help choose money managers. In 2006, Finra hired as chief investment officer Boris A. Wessely, then treasurer at the Rockefeller Brothers Fund. Ms. Schapiro succeeded Mr. Glauber as the agency’s CEO in mid-2006.
One early step by Mr. Wessely’s team was the mid-2007 sale of about $650 million of auction-rate securities. The sale wasn’t influenced by any sign of weakness in the auction-rate market, which froze in 2008, but instead was a move to diversify Finra’s short-term investments away from such a niche product, people with knowledge of the move say. (LD’s highlight)
People with knowledge of the move say?? That is the best the WSJ can do to pursue what truly happened with FINRA’s sale of ARS? That statement is the equivalent of FINRA or whomever the ‘people with knowledge’ stating, ‘you’ll have to trust us on this.’
I would put forth that the days of blind trust are over and that for the thousands of investors sitting with those $165 billion in frozen ARS the days of verification are upon us.
I reiterate my longstanding call that FINRA must reveal all the details surrounding its ARS liquidation. Those details include the date of liquidation, the proceeds, the dealer or dealers through whom FINRA liquidated the ARS, and most importantly whether FINRA possessed material, non-public information and acted upon it.
I fully appreciate that my writing and questions here are aggressive, but at this point in our country’s history the American public deserves nothing less than full and total transparency from its financial regulators. Regrettably, both FINRA and the WSJ fall woefully short in providing it.
Comments, questions, constructive criticisms always appreciated.
LD
