by Bill Singer WEEK IN REVIEW

May 9, 2015

The Blog was named the top securities industry legal/regulatory blog and cited as a daily read by Investment News8 Blogs You Should Follow (Investment News, Reporter Alessandra Malito, May 2015).

Sympathy For The Bankruptcy Devil In A FINRA Arbitration

Today's Blog takes us to a FINRA arbitration involving a trust, allegations of unsuitability, and a bit of a dust-up among the arbitrators as to whether the disclosure of a trustee's bankruptcy involved a ploy to gain undue sympathy. One arbitrator argued that the bankruptcy revelation was so prejudicial that it prevented the panel from reaching a fair decision. The majority of the arbitrators, however, echoed Mick Jagger's observation that, hey, it's just the nature of my game. Alas, the Devil is always in the details. READ

Today's Blog has some 50 shades of gray involving an online dating scam and a victimized Wells Fargo registered person. Unfortunately the victim, in turn, sort of victimizes her employer and, well, in the end, it all ends very badly with a lot of pain. READ

There may come a time when you get called to testify. You may be a party in some lawsuit or you may be a witness. You're more than happy to answer questions under oath but it's the date of the proposed testimony and/or the proposed location for your testimony that's a problem. You can't get away from work. It's too expensive for you to travel. You have a pressing family situation or a personal medical condition that makes the trip impossible. These and other considerations routinely come up.  A recent Securities and Exchange Commission ruling sheds some interesting light on how such problems are addressed. READ

It is said that a fish stinks from the head down. As such, the failure to police Wall Street is rarely the fault of examiners, investigators, or staff lawyers; and the blame should more aptly be placed on the political appointees and the brown-nosers who wind up setting and implementing policy. As far as I'm concerned, things would immediately improve if we fired about 80% of those in senior management positions in regulation; and, thereafter, more regularly promoted from within based upon merit. 

Also, it's time to get Wall Street's cops back on a neighborhood beat. We must end the ever-expanding staffing of Washington, DC-based bureaucracies where there is no stock market, no commodities market, and, frankly, nothing beyond political waste and corruption. More seems to get done by District-based U.S. Attorneys' offices than by those in the home office at the Department of Justice; more gets done by those manning the SEC's regional offices and FINRA's districts than by the bulk of those sitting in the organizations' DC headquarters. Which is not to discount the valuable contribution of the lower-level staff working in our nation's capital  -- it is, as I admonished, a direct shot at those in senior management and their failed agendas. In the end, we are saddled by federal bureaucracies that sow dragon's teeth and reap a harvest of often useless executive titles. Take a gander at the chain of command at most DC-based bureaucracies: A Director, Assistant Director, Deputy Director, Assistant Deputy Director, Deputy Assistant Director, Acting Director, Special Assistant to the Acting Deputy Director, Special Deputy Acting Assistant Director, and so on. 

You are free to disagree with me; however, I ask that you reserve judgment and first join me for a brief stroll down memory lane.  I want you to consider the past successes that have been trumpeted by Wall Street's federal, state, and self-regulators and ask yourself -- honestly -- is this approach to regulation working?  Is it effective -- or, is it time to throw the baby out with the bathwater and bring in new management?  By way of example, let's look at the recent record of regulating Bank of America. READ

As reported in "FINRA Named As Defendant In Case Alleging Altered Electronic Files" ( Blog, April 24, 2015), iThaddeus J. North and Mark P. Pompeo, Platintiffs, v. Smarsh, Inc. and Financial Industry Regulatory Authority/Department of Enforcement,Defendants (Complaint, DDC, 15-CV-00494, April 6, 2015), Plaintiffs North and Pompeo sought at least $3,000,000 in damages and relief against Defendants Smarsh and FINRA for spoliation, tampering and destruction of evidence and to prevent use of such spoliated and tampered evidence. READ

You had your day in court. You lost. You didn't plead guilty to the criminal charges but chose to throw the dice at trial. Unfortunately, a jury convicted you. Now imagine that you were in the brokerage or investment advisory business and the underlying crimes involved frauds involving your advisory role and financial institutions. How difficult do you think it would be for the Securities and Exchange Commission to bar you from the biz? How long a process do you think would be involved?  Today's Blog might surprise you. READ

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The incomparable Dinah Washington. What a voice. But did you know that she was also one hell of a Wall Street regulator, who was way ahead of her time when she warned against holding leveraged Exchange Traded Funds beyond one trading day.  Ah, yes . . . what a difference a day makes! READ