June 23, 2018
SEC Chairman Jay Clayton: The Devil We Know Champions Main Street (BrokeAndBroker.com Blog)
Like it or not, there is Realpolitik on Wall Street and with its regulation. You and I may agree that it is unfortunate, even shameful, that large firms and influential folks escape justice. On the other hand, at this moment in history, with the Trump Administration in power, it would be absurd to expect that the SEC will pursue a robust enforcement agenda targeting large banks and broker-dealers. Given the cynical times we live in, I accept, for now, a trade-off in which the SEC reorients itself to small ball on Main Street rather then waste time and resources by going through the motions of investigation and prosecution of vested interests who will inevitably escape meaningful sanctions. It is, after all, an imperfect world we live in -- one that frequently elicits imperfect solutions. As imperfect as the Clayton SEC may be, at least it's erring on the side of getting between the crooks and the little guy. I'll accept the devil I know. Frankly, he doesn't come off as such a bad fellow.
For the intrepid few among you who still give a crap about this farce masquerading as Wall Street regulation, Polonius died of his wounds, Rosencranz and Guildenstern were hung out to dry, Ophelia got all wet and did not respond to CPR, Laertes got stuck on a point and bled out, Hamlet took a stab at setting things right and died of his wounds, Gertrude had one drink too many, Claudius had another drink too many, and, well, you know, there's this guy Fortinbras who seems to be taking over but, wow, who the hell names their kid Fortinbras? As such, enter stage right Zipper and Dakota. Enter stage left Horatio (remember him?) and FINRA. The curtain rises on Act XXXIV: In the Matter of FINRA Department of Enforcement, Complainant, v. Bruce Martin Zipper and Dakota Securities International, Inc. Respondents (FINRA Office of Hearing Officers Hearing Panel Decision, Disciplinary Proceeding No. 2016047565702 / June 18, 2018)
In today's BrokeAndBroker.com Blog we consider a compelling FINRA regulatory settlement involving a member firm's deficient written supervisory procedures. The self-regulatory-organization provides its members with something amounting to a primer on how to debug various policies and procedures. Those of us who are veterans to the industry's compliance scene know all too well the many written procedures that are littered with such useless terms as "[INSERT NAME]" or "TBD". Imagine there's a fire in your building and you come upon a fire box that says "In the event of fire pull handle" but there's no handle. Not a great time to be thinking up a Plan B. Notwithstanding FINRA's strong case, the regulator still has some explaining to do. Sort of like the fire department inspector who should have noticed during each and every inspection over the last five years that there was no handle attached to the fire box that was supposed to have one.
Becoming Yourself On Wall Street: Josh Brown And Alexander Palumbo (BrokeAndBroker.com Blog)
Josh Brown remembers where he came from and not with particular fondness. Josh's broker-dealer experience propelled him to leave the whole FINRA-member-firm platform and build his future via a registered investment advisor or RIA as we call it in the biz. Long ago, I abandoned much faith in the future of the FINRA-regulated broker-dealer model and see it as a wasting asset doomed for obsolescence. Suffice it to say that I am an ardent proponent of creative destruction. As a disciple of the great Yoda, I have embraced his wisdom: "The greatest teacher, failure is." Today, however, I come not to bury FINRA or its member firms but to praise Josh Brown's recent video "Being a Younger Advisor," which features Josh Brown, 41 (the older but debonair guy on the left of the screen) and Alexander Palumbo, 26 (the too-goddamn-young-and-handsome bearded guy on the right of the screen). Sadly, I have underwear older than both of them!
Power Play Short Circuits Broker's Career (BrokeAndBroker.com Blog)
To be a grand thief is often the stuff of legend. We seem to idolize crooks who think big, even when they get caught. We quote Willie Sutton. Al Capone, Jordan Belfort, and Bernie Madoff are the subjects of books and movies. The petty thief, on the other hand, is often viewed with little more than scorn: as if the turnstile jumper and pickpocket should have aspired to more. Master thieves are champs. Petty thieves are chumps. You ask me, they're all losers but, then again, that's just me. In a recent FINRA regulatory settlement we got a stockbroker who threw it all away for a few hundred bucks. At some point in time, he said it was all a mistake. Yeah, sure -- that's an original explanation. Mistake or not, it all comes off as both sad and pathetic.