February 23, 2019
Alchemy appears alive and well at FINRA. A Respondent in a FINRA Arbitration allegedly transferred $X from his bank account into a new brokerage account at Claimant Vanguard Marketing, and then transferred the same $X from the brokerage account to some third-party. $X in. $X out. Somehow, that in-and-out produced over a half million dollars in damages.
To say that Amazon is just an online retailer is to miss it. Yes, Amazon sells things online, beginning with books. But that's nothing special. Amazon's real power comes from the fact that almost half of all online sales flow through it. Amazon achieved that market dominance by suffering years of losses and reinvesting all its cash into long-term infrastructure improvements. All this made Amazon more like a utility than a retailer. Utilities, like telephone, power, water and cable companies, provide essential services. No one wants to diminish what they do, because we need them. But they can only serve their purposes as natural monopolies controlling expensive large-scale infrastructures. They are all regulated, not because we want to cut them down to size, but because we understand that otherwise their bigness would allow them to say "F-you" in too many places.
In furtherance of a regulatory settlement, FINRA fined and suspended a registered representative for allegedly failing to provide his employer firms with prior written notice of two outside business activities and an away brokerage account. Not exactly earth-shattering news, but given the frequency with which such violations occur and are sanctioned, now is as good a time as any to highlight the issues and consequences.
Let's play a game. I'm going to give you one paragraph of clues and I want you to try and guess the name of "Company-I." See if you can take a bite out of the fact pattern and get to the core of the answer:
Company-I was a global technology company headquartered in Cupertino, California that designed, developed, and sold consumer electronics, computer software, and online services. Company-I was a publicly traded company whose securities were listed on the NASDAQ Stock Market. In terms of market capitalization, Company-I was consistently among the most valuable companies in the world.