If you look around many Wall Street offices today, the Friday before the July 4th holiday, you'll likely notice a thinning of the ranks. Some folks are on vacation. Some folks are downstairs getting iced coffee but they may or may not be coming back. Some folks say that they're going to the bathroom or an early lunch but they too may or may not be coming back. As understaffed as the Street may be today, Monday will likely be an even less well-attended workday.
In keeping with the extended holiday, I'm giving myself a bit of a vacation the next few days and going to step back from my hardcore analysis of the securities industry and simply publish a story about someone that I admire -- someone who has sacrificed much in order to take on the vested interests of Wall Street and the industry's so-called regulators. Readers of the BrokeAndBroker.com Blog know all too well that I do not publish hagiographies about the securities industry.
As a self-professed cynic, I know the story of one of the founders of that philosophy, Diogenes, who walked about in daylight with a lamp seeking out an honest man. Diogenes would have found walking Wall Street a formidable challenge.On the other hand, there are indeed decent folks who sell stocks, trade securities, and publish research. There are also decent folks who regulate the industry. It's not that they don't exist. It's that we need more of them. We also need to rid the ranks of the scoundrels in the business and regulation who pollute the industry.
As such, let me introduce you to Johnny Burris, a former J.P. Morgan financial advisor who alleged that he was coerced by the bank to sell company-owned financial instruments. Burris felt uncomfortable pushing some in-house product on his customers because he found the attendant higher costs inappropriate and unwarranted. He declined to drink the corporate Kool-Aid. As he tells the story in the video presentation below, in response for trying to do what he thought was in his customer's best interests, he became a whistleblower, for which he asserts that he was fired and retaliated against.
Burris asserts that top executives were aware of what he characterizes as illegal violations of banking laws and OSHA laws against discrimination and retaliation. He also warns that whistleblowers may find themselves in the cross-hairs not only of prominent industry firms but also of the industry's regulators. His is an unflattering view about the self-regulation of Wall Street, and he raises troubling questions about strings and who is pulling them.
I was honored to have made Johnny Burris's acquaintance in 2016 and to have championed his cause. His story is a testament to the integrity and decency among many of the industry's registered representatives. Sadly, his story is a shameful episode in the history of Wall Street regulation and beyond providing you with a link to FINRA's Acceptance, Waiver and Consent settlement with Burris, I will not dignify what I view as a travesty of regulation by discussing any aspect of that event. The backdrop to Burris's story is set forth as follows:
The bank, Mr. Burris's bosses explained, examines the amount of JPMorgan-branded portfolios of mutual funds that brokers sell. "If you look at our firm, 50 percent of all our sales go" to those investments, Mr. Haigis said. Furthermore, he said, such products draw less scrutiny from the Financial Industry Regulatory Authority, which polices Wall Street.
The more serious criticisms of Mr. Burris began to show up on his disciplinary record soon after he went public with his grievances against JPMorgan. In the course of two weeks, three client complaints showed up on his regulatory records.
During his arbitration case, Mr. Burris's lawyer asked a JPMorgan supervisor at his old branch in Arizona whether the client complaints were "written by someone at JPMorgan" or if any JPMorgan employee had "helped" draft them.
"Absolutely not," the JPMorgan employee, Umbreen Kazmi, responded to both questions.
It was only after the arbitration case was over that Mr. Burris tracked down the clients and learned that the letters had, in fact, been drafted by one of his old colleagues at JPMorgan, Ms. Gavin, a close associate of Ms. Kazmi.
Burris, who was fired in November 2012 over the incidents, filed a whistleblower complaint with Finra that same month. The New York Times wrote a story in March 2013 about his charges that JPMorgan pressured brokers to sell proprietary mutual funds, and followed with a story about his accusations that the bank manufactured client complaints to damage his personal and professional reputation.
"The firm has provided false documents, false statements under oath, pretext for termination and a myriad of other problems for [whistleblowers]," Burris' attorney, Robert D. Mitchell, wrote in a letter to Finra on August 1 in response to a Wells notice saying the regulator was likely to bring an enforcement action.
Burris said Finra is being pressured by JP Morgan to discredit him now because the Occupational Safety and Health Administration is expected to rule imminently on his request for protection against retaliation. He also contended that as one of Finra's largest member firms, the bank has undue influence over the industry-financed self-regulator
Now an independent RIA, Burris runs Burris Wealth Management in Surprise, Arizona, and serves mainly elderly clients. Two years after he initiated his OSHA whistleblower case, Burris says he got a got a call from Margery Shanoff, a FINRA enforcement attorney, in the spring of last year.
Burris said she told him that FINRA had completed a thorough investigation into his activities at JPMorgan.
"You are in big trouble," he recalls Shanoff telling him.
Burris said he asked how that could be, given that no one had called to get his side of the story. Shanoff did not respond to a request for her description of the conversation.
During this July 4th holiday, take some time to watch the videotaped remarks of Johnny Burris and listen to what a true American hero has to say about Wall Street: