March 6, 2021
Low standards in high places. High standards in low places. Sort of sounds like lyrics from a country song, no? In today's blog, publisher Bill Singer considers a FINRA regulatory settlement that cited alleged misconduct. As Bill concedes, the conduct at issue is wrong and half-assed, but he isn't quite sure it rises to the level of a regulatory violation. Frankly, Bill wonders why FINRA wastes time with crap like this. Likely, FINRA wonders why Bill wastes time with crap like this. Ahhh, a lovely crapfest!
In recent weeks, the press has been awash with stories about payment for order flow. You've seen it pop up in all its sordid glory via revelations about so-called Zero Commission trading -- to which I respond: TANSTAAFL (there ain't no such thing as a free lunch). With all the faux sincerity of Captain Renault, Wall Street's regulators are now blowing the whistle on crap that they either knew or should have known was going on for years. In a recent FINRA AWC, that rank hypocrisy is on display for all to see. In keeping with how bad press prompts better regulation, FINRA is now in a tizzy about what we in the trade call "Best Execution."
Whatever you do, don't lie to FINRA. I can't even begin to recount the number of times that I have given that admonition to a client. You wouldn't think that such a directive would be open to a lot of interpretation but, alas, folks have a tendency to stretch things to their limits. In a recent FINRA regulatory settlement, we come upon someone who submitted altered and fabricated documents to the self-regulatory-organization during an examination. The surprising thing about the matter is not that the Respondent got caught but the nature of FINRA's sanctions of the misconduct.
BrokeAndBroker.com Blog publisher, Bill Singer, is no fan of Wall Street's version of self regulation, as spearheaded by the Financial Industry Regulatory Authority ("FINRA"). At best, FINRA comes off as a glorified trade group on steroids; at worst, as a lap dog for its larger member firms. Pointedly, the industry's small fry -- the mom-and-pop brokerages and their hundreds of thousands of associated persons -- never quite seem to get the mercy, the benefit of the doubt, or the concessions that seem afforded to the industry's big fish. In today's featured FINRA regulatory settlement, it could be that FINRA has pulled its punches because of Covid. It could be that what's a "relevant" prior disciplinary history is open to broad interpretation. Maybe FINRA got it right and Bill is being overly sensitive. So . . . why don't you take a smell and see if you would eat this sushi?
FINRA placed Kimberly Springsteen-Abbott squarely in its regulatory crosshairs. After a hearing, FINRA's OHO imposed a Bar, a $208,953.75 disgorgement, and a $100,000 fine. On appeal, FINRA's NAC affirmed. The SEC tossed the case back into FINRA's lap with an order to say what you mean and mean what you say. On remand, the NAC whittled away at the sanctions; and, thereafter, the SEC did more whittling. By the time the federal circuit court received the appeal, the once mighty oak of a case was more like a toothpick.