The Blog Of The Securities Industry Professional Association


In the midst of perhaps the greatest collapse in Wall Street history, FINRA is hard at work not protecting American Investors across the country, but instead is working behind the scenes to once again consolidate even more power away from small firms and place it in the hands of a few.  The SEC is currently asking for members to comment on this latest FINRA proposal that would eliminate free elections for the National Adjudicatory Council and replace it with a majority of Public members who are outside the industry. From FINRA’s filing with the SEC:


The restructured NAC would therefore consist of 14 members, including seven

industry members, two of whom are “at large” and five of whom are designated

specifically as representatives of large firms, mid-size firms, and small firms, and seven

non-industry members, three of whom are public.9 The tenure of NAC members is

generally three years and the terms of the NAC members are staggered. The proposal

would not disrupt the process of approximately one-third of the NAC members

completing their service in a particular year and being replaced with newly appointed

NAC members. The proposal would result in a Small Firm and a Large Firm NAC

Member joining the NAC near the beginning of 2009; a Mid-Sized Firm NAC Member

joining in 2010; and a Small Firm and Large Firm NAC Member joining in 2011

Is this the best FINRA can do for its members right now?  Wall Streets elite have collapsed and every one is blaming lack of regulation as the reason.  Presidential Candidate John McCain has called for the resignation of SEC Chairman Christopher Cox and the organization that failed at the front line to stop the abuses of Bear Stearns, Merrill, Goldman and Lehman wants to instead focus on eliminating another layer of Self regulation?  Naked Short sale abuses, Hedge funds trading with 40:1 leverage at the largest firms on the street and Stock Brokerage firms holding trillions of dollars in bad mortgage derivatives and this is what is important?  Is it any wonder we are in this mess?  Now is the time to comment and let your voice be heard. Please click here for the full notice.


It’s obvious that the merger of two regulatory bodies has failed the industry and the public. Why on earth should we continue this path toward eliminating the rights of small firms?  Since FINRA was formed over a year ago we have had:


  •          The Collapse of Lehman brothers, a fixture on Wall Street for 158 years.
  •          The collapse and Fire sale of the largest Brokerage firm in the U.S, Merrill  Lynch.
  •          The Collapse and federal intervention and fire sale of the Second largest Clearing Firm in the U.S , Bear Stearns.
  •       The Treasury Secretary has designated that Goldman and Morgan can become Bank holding companies.

Maybe its time to admit that a single regulator with ties to the largest firms on the street may not have been a good idea.  After all, The Chief Compliance Officer of Lehman was a fixture on the NASD board for many years.  John Thain of the NYSE who also pushed for the merger with NASD became head of Merrill Lynch a few years ago.  Too close for comfort in our opinion.  Its time to focus on Self Regulation and Investor protection, not one preserving regulatory power for the privileged few. 

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October 9th, 2008



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