October 26, 2019
Today's featured FINRA Arbitration reminds me of the famous Monty Python's Flying Circus "Cheese Shop" sketch. As the SEC finds on appeal, FINRA doesn't actually offer any arbitration services, well, at least to the extent that FINRA doesn't actually review an arbitrator's award to ensure that the document complied with the self-regulatory organization's rules. As the SEC writes this sketch, FINRA doesn't actually run an arbitration forum by its rules. As the SEC sees it, FINRA is merely a minister at its own arbitration forum -- it merely prepares and serves the awards of its arbitrators, and, moreover, does this service without ensuring that its done by the FINRA rulebook. The SEC insists that this FINRA cheese shop can't be sued for not providing a service that it doesn't offer. Do you have arbitrations? Yes? Can I have one that is adjudicated according to your rules? Ummm . . . no.
Sometime around 1990, Aegis Frumento and his friend Gordon were lunching in the stately old Oak Room of the Plaza Hotel. Midway through dessert, in walks this guy in a dark winter overcoat. The man looked around, shuffled over to a table, and sat down. The man in the coat was Donald Trump, then married to Ivana. The woman at the table was Marla Maples. We are not told what Aegis and Gordon ate for lunch or who paid. Then again, Aegis is known for bolting many a restaurant without actually paying for his meal -- likely Gordon got stuck with the tab.
A few things that you may not remember about 1993. For starters, Czechoslovakia ceased to exist. Bill Clinton was sworn in as the 42nd President of the United States of America. The World Trade Center was bombed. "Unforgiven" won the Best Picture at the Academy Awards. The Maastricht Treaty took effect and the European Union was established. President Clinton signed the North American Free Trade Agreement. Robert Michael Burns was a Junior Advisor with limited authority at Olde Discount Corporation. Who's Robert Michael Burns? What was Olde? You never realized that the Czech Republic and the Slovakia had replaced Czechoslovakia?
There are many times when a stockbroker will swear on a stack of Bibles that he and a customer had a conversation about a given trade, and that the trade was executed with the client's knowing authorization. In response, the customer may insist that the trade was never authorized. As these things go, sometimes the customer is full of crap and exhibiting an immoral case of buyer's remorse at the expense of the stockbroker's good name. Other times, the stockbroker went rogue. Frankly, in such disputes, the customer often has the stockbroker dead to rights. Speaking of dead to rights, did you hear the one about the stockbroker who claimed to have spoken to his customer three and six days after the customer's death -- and, go figure, it all had to do with trades that the stockbroker entered three days after the customer's death.