March 11, 2017
On March 10, 2017, the Securities and Exchange Commission ("SEC") filed a dramatic 56-page Complaint in the United States District Court for the Southern District of New York ("SDNY") alleging that a Ukraine-based trading firm was involved in a layering manipulation of the United States securities markets, and, further, that said fraud was facilitated by FINRA member firm Lek Securities and its owner Samuel Lek. Securities and Exchange Commission, Plaintiff, v. Lek Securities Corporation, Samuel Lek, Vali Management Partners d/b/a Avalon FA Ltd, Nathan Fayyer, and Sergey Pustelnik a/k/a Serge Pustelnik, Plaintiff, Defendants
, United States District Court for the Southern District of New York, March 10, 2017). READ Full-Text Complaint
If you wet your finger and hold it in the air, you can feel the change in the direction of the wind flowing from the Financial Industry Regulatory Authority. With the ascension of new Chief Executive Officer Robert Cook, change is in the air. At first blush, it's a nice, steady breeze.
Some call me FINRA's leading critic. Others call me an annoying gadfly. Others (mainly my wife) call me a pain in the ass. There's probably merit in all three characterizations. That being said, I have taken my service as a long-time critic of Wall Street self-regulation and of NASD and more recently FINRA as a badge of honor. I have battled long and hard against the pernicious influence of too-big-to-fail FINRA member firms and I persist in championing smaller member firms and the individual men and women who labor in our biz. At my core, I am a staunch advocate for industry reform, a critic of mandatory customer and intra-industry arbitration, and an unrelenting proponent of fair regulation and commonsense.
Maybe, just maybe, FINRA CEO Cook and I can bury the hatchets. Unfortunately, I've seen the new brooms before. They sweep clean at first. Then they get put away and the steamrollers come out to pummel the small fry and to level all opposition. I've managed to avoid becoming part of the pavement for many years. I intend to remain light afoot for now.
In that spirit, today's BrokeAndBroker.com Blog is complimentary of a FINRA regulatory settlement and the helpful advice that it offers. My commentary also includes yet another diatribe about counter-productive FINRA policies and practices. Reform often moves at a glacial pace. You can't always see the progress but it's there. Let's see how much further things move after this column makes the rounds at FINRA: I'm guessing that a few more darts get thrown into the dartboards with my face on it. READ In the last decade, life settlements were all the rage but, alas, as with so many "hot" products, once we hit full boil, the enthusiasm steamed off, the problems surfaced, and we were left with more than a few burnt pots in the form of customer lawsuits and regulatory cases. Today's BrokeAndBroker.com Blog considers a recent FINRA regulatory settlement involving the legacy of life settlement sales. READ If you're gonna sue a big firm like Merrill Lynch, ya gotta think big. In a recent FINRA arbitration, an unhappy customer filed a claim against the brokerage firm and demanded a humongous amount of damages. Lots and lots of zeros. A breathtaking amount of zeros. Unfortunately, the customer sort of showed up to a gunfight with only a knife because he represented himself and his adversary was defended by lawyers from a prominent law firm. Take that as a spoiler alert. READ I am formally calling upon the august Wall Street self-regulatory organization, the Financial Industry Regulatory Authority, to stop putting Peeps into vacuums -- and to stop putting Peeps into Oreo cookies. As three recent FINRA regulatory settlements show, the regulator's Peeps protocol produces putrid policies. READ
A recent FINRA regulatory settlement presented us with a registered representative Respondent who seemed to have done some incredibly stupid stuff involving validated office parking. On the other hand, nothing about the allegations or assertions appear to add up to anything warranting a self-regulator's involvement. Which makes me wonder: Do we have all the pertinent facts? Was the underlying violation worse than the settlement document makes it seem? Or, in the end, was this simply about another little guy getting bulldozed by dubious regulation?
After publication of the original BrokeAndBroker.com Blog article, an anonymous industry reader offered his insights on some of the possible office policies at issue. Perhaps things were worse than what the AWC implies? Then again, maybe the newly provided commentary is off the mark and doesn't apply to the Wells Fargo office involved or to the cited registered rep. As I lamented in the original article and have done so often before, FINRA's AWCs are not paragons of content and context. READ