February 6, 2021
On Wall Street, Aegis Frumento is a prominent lawyer. At home, well, you know, Aegis is a dad who just doesn't quite get it. Last weekend, one of his kids wanted to short GameStop (GME). Dad, being dad, gave his son a lecture about the mechanics of shorting, and the challenge of selling and having to buy back what you don't own. But dad, came the plaintive cry, it's just a meme, and it's going to fade, and GME will crater. Ahhh, out of the mouths of Wall Street lawyers' babes!
In a recent FINRA Arbitration, an associated person Claimant sued his former firm and lost. On appeal to the federal courts, Claimant argued that two of the three FINRA arbitrators were wrongly characterized as "Public Arbitrators," and they should not have been allowed to sit (or remain) on his hearing panel. Frankly, it looks like the facts are on Claimant's side. Ahh . . . but so much for appearances. In the end, it all comes down to a question of timing. Better late than never? Not this time.
Sometimes you read a FINRA AWC settlement and you shrug. They're barring the guy for this? Really?? Other times, you read an AWC and you're trying to figure out just what kind of adding machine FINRA used -- how the hell did all these violations add up to such a tepid sanction? In today's featured AWC, I'm wondering if FINRA has been social distancing too long and needs to take a bit of a break from its self-imposed quarantine. Open up some windows. Step outside. Clear your head. Get some fresh air.
FINRA's expungement process routinely comes under attack from all quarters. Public advocates decry the seemingly facile and questionable manner by which serious allegations of consumer fraud are deleted from public databases. Those who represent associated persons complain that unsubstantiated and even fraudulent aspersions are unfairly memorialized, and that the time and costs of removal are prohibitive. A recent FINRA expungement case highlights many of the problems inherent in the flawed process.
Speakin' of being stuck in a lousy rut, the SEC is once again ferreting out prime bank note scammers. Wow, here we are 2021 and we're still dealing with nonsense that was all the rage over a decade ago. I guess if it ain't broke, ya don't need to fix it but, c'mon, have a little pride when you're running a hustle. The good thing is that the SEC is all over this. The bad thing is that the hustle is still being run. Sadly, it ain't lookin' like we're going to see sunshine, lollipops, and rainbows any time soon.