The SIPA

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.

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.

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.

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

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.

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 [...]

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:

The SIPA wishes a heartfelt congratulations to Mr. Alan Davidson of Zeus Securities, upon his election to represent the interest of small firms in the National Adjudicatory Council (NAC). The NAC reviews FINRA disciplinary decisions. The election is of special significance because it was contested and Mr. Davidson ran as an independent candidate.  Despite the [...]

Rantings From A Confused American  Is President Obama this Dumb?  Or is he Dumber?  The President is “outraged and shocked by the obscene bonuses AIG officials gave as bonuses to top employees” Shocked?  Really?  President Obama, with all due respect, you are in for a very long four years if you are this naïve.  Obama, along [...]

Truth Is In The Eye Of The Beholder Last week the SIPA released documents that clearly contradict what NASD told member firms regarding the buy your vote sham merger of 2007.  Today we release even more shocking documents that once again hit at the nerve of regulation and forces all of us in the industry [...]

The 64 Thousand Dollar Question (isn’t that quaint? $64K? Try $1.25 Quadrillion on for size… No, $64K just sounds better. Sounds manageable)  nowadays is what should be done. The SIPA has polled members and has had conversations with many small firm owners compliance professionals regarding this issue. We are still a ways from a formal [...]

One of the smaller but nevertheless interesting informational items contained in the internal FINRA documents provided to the SIPA is that the FINRA, in planning it’s “Sell Job” for the amendments which would allow the merger is that the FINRA made use of so-called “Friendlies”. These were individuals at organizations who  promised support to the [...]

A SIPA Special Report Uncovers Deception At Every Level – And Has The Documents Which Prove It   John Thain, the former head of NYSE and most recently Merrill Lynch, has resigned his position after the takeover by Bank of America was announced.  Thain was is the classic face of Wall Street greed.  He was hand [...]

I say “got away with it” because – were he not to have turned himself in, and were he to not have been totally broke and inches from the fire – he would probably have never turned himself in and kept going as long as he could have. Such is the nature of that particular kind [...]

Believe it or Not, FINRA Wants To Be Big Brother – But Not To Protect And Serve The Public Last week, we reported some very disturbing facts. And people are just starting to understand the ramifications of what was uncovered. A pattern of potential fraudulent misrepresentations, used to buy votes, to disenfranchise Membership, and to [...]

The following is shocking in any context. We do not wish to spoil, we only want the truth. With that in mind, we ask humbly that you not punish the messenger. We didn’t start the fire, as it were. But as bizaar as you may find the following, keep in mind the implications. Furthermore, prepare yourself, [...]

One of my favorite quotes of all time is Sherriff Brodie in Jaws backing up slowly from the eyes of a monster with a cigarette butt dangling loosely from his mouth and whispering “ WE’RE GONNA NEED A BIGGER BOAT” Can any one line better sum up 2008 on Wall Street? Wall Street and our [...]

Is It Really Possible To Fail Your Way To The Top? Something stinks. Pretty soon the new regulators (and yes, they will probably be Federal) will have to don gas masks just to go to work. Between the Bulge Bracket failures, Madoff and whatever comes next, It’s becoming embarrassing to be in the Securities Industry. [...]

This morning we sent out an update regarding developments with Madoff and also with regard to the SEC’s admissions of failure. We intended it to go out last night, but were given pause when we saw the leak of Obama’s pending appointment of Mary Shapiro to head the SEC. We thought about adding that to [...]

“Gold, Schmold – Who cares, you can’t take it with you.” It’s no secret that the layoffs have begun in earnest at broker dealers, advisories, hedge funds, etc. With over 1,000,000 jibs lost in the US this year, wall street has been hit with a disproportionate number of layoffs – some 100,000 announced in the [...]

In several articles earlier this year, we broached the unthinkable: that the End Of FINRA was potentially at hand. Since then, we have seen much in the way of de-facto re-organization, with the Bulge Bracket firms – such as they still exist – coming under direct control of the Treasury. Ironically, what this means is [...]

The cost of corruption by our Government and the prospects for the future. On September 29th 2008 Citibank announced they were buying Wachovia Bank for a whopping $1.00 and that the Federal Government (FDIC) would provide them with up to 300 BILLION in bad debt protection. (cnn article here) The announcement caught this writer by [...]

On November 15, leaders of 20 nations will convene to create a framework for stabilizing and rebuilding the world financial markets. The meeting is being called Bretton Woods II, after the historic meeting that set the stage for dollar hegemony after WWII. While the meeting is set to review and determine such things as the [...]

The Demise of Wall Street's elite firms could reshape Regulation. The sudden and shocking demise of the Wall Street elite has left an industry in shambles and the American investor in jitters. The collapse of the largest names on Wall Street is being felt all across the world and has caused the Political landscape to suddenly pay more attention to the Economy and less attention to Governor Palin's "my space page". President Bush cancelled his fund raising campaign drive and Barrack Obama is already running commercials blaming the Republicans, while lost in all this is John McCain's suggestion that "Chairman Cox should be fired for betraying the public trust and falling asleep at the wheel"

by The SIPA Opinion The recent release by FINRA  to allow an all public arbitration system is apparently either the last step to allow the hounds known as the Bar association to completely conquer the brokerage industry or a last ditch effort by FINRA and the largest firms on the street to avoid some of [...]

While Minimizing Risk To Your Client, Your Firm and Yourself It’s no secret that investment commitments in private equity have gone ballistic over the last few years. And rather than crashing and burning, as many expected was just about to happen, and despite a lackluster market, commitments continue to hit all-time record levels. Advisors are becoming [...]

Though It May Not Be The Best Solution SIPA Members often ask for any information we might have regarding the relative merits of “Going Independent” versus staying an employee at a firm. In talking with advisors – be they RRs, IA’s or FPs, a more significant question has emerged. There seems to be a tremendous amount [...]