The SIPA

By Larry Doyle Sense on Cents FINRA can talk about transparency and integrity all it wants. We all know talk is cheap. FINRA’s board and executives need to show America how they truly define and embrace transparency and integrity. How so? FINRA is scheduled to hold its first Annual Meeting in almost three years on August [...]

The SIPA is pleased to announce that the petition candidates for the FINRA Board of Governors have obtained the necessary number of petitions and will be on the ballot as a slate this summer. The candidates contested previously appointed Board members of FINRA and have worked diligently to obtain not only your support but your input and have made themselves available to al FINRA members with concerns or questions.

changes the Safe Harbor rule limiting your expansion capabilities (makes you ask permission from FINRA for virtually any new lines of business or expansions beyond “safe harbor”). Again, preventing you from potential revenue while the district takes its time to approve.

Let’s take a look at 2 brokers in 2 different offices both looking at British Petroleum for their customers for two different reasons. The first broker believes the spill is overblown and that with 64 billion in net profits the previous year and a dividend yield now approaching 9% it’s certainly worth a 10,000 share investment. The second broker believes the worst is yet to come and thinks BP could go bankrupt from this massive oil spill so he decides to take advantage for his customer who favors aggressive investing and he wants to go short 10,000 shares of BP.

One would think that in light of the financial meltdown as well as the Financial Reform being proposed by Congress that FINRA would seek to reform or maybe even change its current Board and get new blood in the system…But no, not FINRA. FINRA re nominated the existing Head Governor as well as numerous other existing board members to new terms. This makes sense only if there is a bigger picture which fools like me often overlook.

The Securities Industry Professional Association and the Independent Broker-Dealer Association today called the recent FINRA Board nominations “a back room closed door process.” In an unusual joint release, they charged the FINRA Board Nominating Committee with appointing “selected” proxies who will continue the dysfunctional policies of the Board.

 April 18, 2010             SEC Criticized For Inaction On Stanford The SEC suspected investment advisor Robert Allen Stanford of operating a Ponzi scheme as far back as 1997, but took no action to stop the fraud until nearly a decade later, according to an independent audit released on Friday. http://www.ft.com/cms/s/0/efecc51c-49a8-11df-9060-00144feab49a.html [...]

As I read the SEC press release on Friday charging Goldman with fraud I couldn’t help but laugh and wonder if they contacted Mario Puzo and asked for advice on how to get the swirling controversy around them to subside. The fraud charges are comical at best due to the fact that one person from Goldman was named in the SEC indictment.

Securities Litigation & Regulatory Report March 30, 2010 SEC Asks Financial Firms About Repurchase Agreements The SEC is looking into the use of repurchase agreements by about two dozen financial institutions. The agreements, dubbed “Repo 105,” involve the use of an accounting method that allowed Lehman Bros. to hide its leverage ratio. Read On.    [...]

Recently The SIPA has been working with Independent Broker-Dealer Association (IBDA) on regulatory reform and has supported their efforts to speak on behalf of the small firms and registered representatives face to face in front of Congress. We encourage all members to continue to support their efforts and to get active in the fight for regulatory reform that makes sense. IBDA and SIPA member Tomi Olsen has recently met with Rep. Barney Frank and enclosed is a brief recap of her work .

The SIPA has been waging battles for your rights for a few years now but long before we picked up the sword and decided to run with it, others were fighting the fight. Allan Davidson is one of the original if not THE founder of the dissident movement against unfair regulation.

Rants and raves from the SIPA C & C music factory had a whole generation of people uttering these now famous words back in the 1990’s. As we review some of the changes that are occurring right before our eyes with the financial system, its apparent that there is more confusion then ever before instead [...]

This is either the biggest farce or the most ingenious way to bilk and abuse investors and then obtain help from FINRA in making it impossible to get redemption. It is our humble opinion that investors who were out 50 million would give anything to get a $25 million settlement right now, yet that chance has come and gone.

Perhaps congress can get together and grant the Fed the right to control interest rates while they are at it? Maybe Congress could give the SEC the power to curb or eliminate things like naked short selling, buying mutual funds yesterday with today’s news and cracking down on illegal ponzi schemes?

mediocre stockbroker duped Wall Street titan Merrill Lynch into believing he was a portfolio powerhouse -- deserving of a $780,000 loan his first day on the job -- then used the dough to buy a Ferrari and split, prosecutors said yesterday.

Perhaps America will learn more about these issues soon. Why? Next week, FINRA’s Board of Directors will address alleged wrongdoings by Ms. Schapiro et al. What are the issues? Please review this release put out this morning highlighting a number of questions I have been asking for the last year.

The Washington Post reported yesterday that employees and high ranking officials of the Securities and Exchange Commission were accessing pornography sites and watching hours of porn every day for a long time.

Has there ever been and administration as crossed and confused as this one? The Bush administration was consistently Pro business and in many respects Consistently poor!. However, the Bush administration made clear its intent to allow free markets to prevail no matter what and even if Oil hit $500 per barrel, a free market system was better then Government intervention. The Obama administration however is trying to be all things to all people.

The new Obama administration promised change and change was delivered all right. Trillions of dollars were borrowed from China in an effort to get the economy and more important the jobs created. One year later and the administration is learning the hard way what all of us in the Brokerage world already know: The Government does not create lasting jobs, the private sector does.

Now that the figures are finally released I would like to take a moment and remind everyone that members of the original dissident group known as the Financial Industry Association (FIA) were called liars because they claimed that the merger could pay to members much more then the mere $35,000 that the NASD was offering in exchange for giving up their voting rights. In fact, the former head of NASD even said in a podcast to all members that “It just isn’t true what members of the FIA are saying”.

There is no excerpt because this is a protected post.

In Shakespeare’s Julius Caesar, Marc Antony gives the stirring eulogy that was supposed to pump up Brutus while stomping on the grave of the murdered Caesar. The opposite occurs as he delivers an impassioned speech that has the citizens mourning for the good old days of Julius Caesar’s rule. Over the years we have been a very vocal critic of FINRA policies and deservedly so in our opinion. We have even speculated that FINRA may be on the way out the door due to the failures of Wall Street’s largest firm and the Madoff debacle. Today however, we come to praise FINRA!

New rankings show that Delaware is a better place to hide money than Switzerland. While this may come as a surprise to most Americans, financial sector analyst Heather Lowe says that it is not a surprise to the world’s criminals. Question: Would that be in, uh, Dollars? Spin, spin spin… Watch Video…

The greatest transfer of wealth in history is old news – but now that baby Boomer recipients are beginning to retire, on the heels of the meltdown, how will this affect the industry? Changing client investment parameters are leaving some firms scrambling to adapt. The aftershocks of the Financial crisis are reverberating in portfolio allocation, [...]

The SIPA has been receiving countless e-mails and phone calls from members and non members asking how they should vote. Based upon the NAC election many feel comfortable the SIPA will give them a blunt and honest assessment of the candidates. We would love to wave a magic wand and tell thousands across the country how we think they should vote but quite frankly, the SFAB is a quite confusing and mostly ineffective group

Now that the NAC election is over, and the next big election is on the horizon, the Board of Governors, it is probably time to discuss the FINRA election process

Small firm voice being heard…Board of Directors next? Stephen Kohn’s contested bid to win a seat on the FINRA National Adjudicatory Council was a smashing success for all small firms. Although FINRA does not release the actual figures, an independent poll conducted by SIPA indicated that the vote was overwhelming. The SIPA congratulates Mr. Kohn [...]

The SIPA has been granted unprecedented access to recently released and soon to be released Court documents that basically prove beyond a shadow of a doubt that members of then NASD were mislead and even deliberately lied to by the powers that be in order to obtain their vote.

Recently members of the SIPA have been sending us articles and links to various trade organizations that suddenly seem to be banging the small firm drum beat and are actually concerned for the first time ever about the Registered Rep. One in particular is aghast about the increase in assessments for firms and representatives. In an article in Investment News another trade organization is up in arms about the ridiculous increase in fees FINRA is seeking.

My opponent, the FINRA Nominating Committee choice sent you a letter urging your support on firm letterhead declaring his NYSE Membership to the World. No comment of any FINRA Membership was made. Is this who he intends to represent? NYSE firms? The FINRA selection fails to understand this is a small firm NAC election. Perhaps he should be seeking a position with the NYSE where his interest obviously rests.

he question is: are they worth it? I think we have to define what worth it means. Is it a monetary value? A sales opportunity? An educational value? A networking value? Is it a golf outing or a couple of days away from the office, spouse and kids? The answer is that it is probably, to some extent, all of those things. Obviously the further away from your home the conference is the less of a monetary value it is. But most conferences that have two a year alternate between the east coast and the west coast. How much can you learn if you go to more than one a year? The answer to that depends on how many years you have been in the business. But even the most experienced or jaded of our flock can pick up one nugget of information that might help them through the next exam, make their jobs a little easier or help them with the corporate powers that be. Is that worth it? I personally believe it is.

“The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Citigroup Global Markets, UBS Securities and Deutsche Bank Securities a total of $425,000 — and ordered the firms to make payments to customers that could total $420,000 — in connection with the firms' failure to adequately supervise communications with their customers in the initial public offering (IPO) of Vonage, LLC in May 2006.

Kohn has to pay his own way while FINRA is using YOUR money to hire proxy services, Call Rooms, Marketing Firms and anything else they can think of in order to defeat Kohn. Why is that? What is FINRA afraid of? Perhaps it’s that Mr. Kohn will not be seduced by the powers that be? For instance, I’ll bet many of you did not know that a position on NAC pays approximately 40K per year?

A judge who finally gets it right NEW YORK – A federal judge on Monday rejected a $33 million settlement between the Securities and Exchange Commission and Bank of America Corp. over bonuses paid by Merrill Lynch. U.S. District Judge Jed Rakoff called the proposed consent judgment "inadequate." Rakoff wrote in an opinion that the $33 million settlement was a "trivial penalty for a false statement that materially infected a multi-billion-dollar merger."

Please contact us when your ready and we will point you to a PCAOB Accountant that is in your area and price range. Eventually we will be posting as a resource to all readers of BDexchange’s Newsletter and The SIPA will be posting the contact info on its site shortly. If you are one of the lucky firms that has a PCAOB Accountant that has not taken advantage of the new requirement then let us know and we would be happy to add him or her to our growing list.

Effective January 1, 2010, FINRA is increasing the regulatory fees that are paid by all broker dealers. The Personnel Assessment (“PA”) is doubling. In their August 20th rule filing, FINRA explains that due to increased enforcement, rulemaking and examinations costs, they must “stabilize its revenues and provide protection against future industry downturns.” I guess losing all that money in the market took its toll on their budget, but that’s a different article.

The marketing of the new FINRA was also very strategic for all firms. What used to be an ‘Association’ of brokers is now a ‘Regulatory Authority’. What used to be a ‘Notice to Members’ is now a ‘Regulatory Alert’. All mention of membership or ‘Self” regulation has disappeared. The only way we as small firms can make our problems heard and our needs known is through those we choose to elect as our representatives to the many FINRA arms: the District Committees, the SFAB, the NAC, and the Board of Governors, as well as the trade organizations that we choose to align with.

The last few years we had decided to stay on the sideline and watched as the bias against small firms continued and the in fighting between small firm organizations grew. Today however, that has changed and for the first time the SIPA will be actively supporting a candidate in a FINRA election. The reason is quite simple: For the first time in almost three years we see CANDIDATES who actually get it.

Previously, we here at The SIPA have questioned the investment losses of FINRA and wondered out loud if they may have invested in Madoff….well we could be about to find out.  A lawsuit has been filed against FINRA by a member firm that alleges conflict of interest as well as demands the books of FINRA [...]

On Monday August 3rd the SEC announced it was bringing charges against Bank America for fraudulently representing to shareholders that bonuses would NOT be paid to Executives of Merrill Lynch and then disbursing over 5 BILLION in bonuses simultaneously with the approval. Incredibly, BOA announced later that day that they had agreed to terms with the SEC and would pay a 33 million dollar fine to settle all charges.

SMALL FIRM SIPC TAX! How the Government is taxing small businesses Recently sticker shock had eyes popping out of their head all across America as Firm owners received their SIPC bill. For nearly 14 years the SIPC insurance cost of a brokerage firm was $150.00 flat fee paid annually. That changed dramatically for firms in [...]

States are desperate for revenues. Now some are mulling the possibility of going after sales taxes for business conducted for clients within those states, adding yet another layer of fiscal burden for Broker Dealers and individual advisors registered in those states. David Sobel covers this developing story. The current budget crisis has hit many states [...]

A film by Francis Bush Obama STARRING! The SEC as “Luca Brasi”  * Kenneth Lewis as “Carlo Rizzi” * Hank Paulson as “Sonny Corleone” * Timothy Geitner as “Michael Corleone”   * Barney Frank as “Tom Hagen” And introducing in his first starring role! Ben Bernanke as “Don Corleone” The most awaited financial movie in [...]

Wasting Away Again In Regulatorville… Another day, another new Regulator or Czar appointed by the government.  The latest creation is the new and improved super regulator that will over see the SEC and FINRA as well as the institutions themselves.  Before we get into this latest and greatest Regulatory overhaul, I think is important to [...]

With each passing day we read and hear about the vital signs of the economy like it was a patient at a hospital on life support. Every little sign of improvement seems to be accompanied by pundit’s proclamations that the worst is behind us. Even bearish commentators like me have admitted to seeing signs of life that the economy is improving and that capital formation appears to be gaining some legs. Are we to believe that this 2000 point rally in the market as well as surging oil prices is a sign the recession is over? Well, take a deep breath and brace yourself for what I’m about to say:

By Larry Doyle Everybody knows Auction Rate Securities (ARS) were cash or cash-like, correct? FINRA certainly did NOTHING to protect investors from the ARS sales and marketing scam perpetrated on investors. FINRA spokesman Herb Perone would like to wash his hands and those of FINRA of any negligence or incompetence in regard to FINRA’s investments [...]

Do nothing, get what you deserve. Timothy Geithner, in his infinite wisdom, has said that he will regulate salaries at US financial institutions by placing caps on the amount that can be earned. He also says that he has the legal authority to do so. I’m calling BS. While I may rant and rave that there [...]

How to tell when the real Bottom has occurred Lehman Brothers, Bear Stearns, AIG, Washington Mutual and Wachovia Failing, TARP programs, 4500 point Dow Drop, Housing Crash, Credit Crunch, Layoffs, Foreclosures, more Layoffs, Credit Crunch, More TARP money, Bankrupt Automakers, Government Takeovers, Pick a Ponzi, Bernie Madoff, Sanford, Harbor private funds, Wall Street Bonuses, 3 [...]

Let’s assume you own a broker dealer. And lets also say that you have an Advisor who helps you manage your money, as most in your position would. Now - What would you say if your Investment Advisor told you that his well considered opinion is that you should take your entire portfolio and allocate [...]

Linked Articles: “Was FINRA A Madoff Investor” (the SIPA) “FINRA Oversees Auction Rate Arbitrations After Exiting Market” (Bloomberg) FINRA is currently processing 344 investor arbitration cases over losses generated by the complete collapse of the Auction Rate Bond market. But FINRA itself actually had owned some $862 Million of the toxic assets prior to the [...]