An irreverent Wall Street Blog
by Bill Singer

In 1918, Andrew Carnegie and his Carnegie Foundation established Teachers Insurance and Annuity Association (TIAA), a fully-funded system of pensions for professors. Funding was provided by a combination of grants from the foundation and Carnegie Corporation of New York, as well as ongoing contributions from participating institutions and individuals.  After World War II, in reaction to rising inflation and lengthening life expectancies, TIAA recognized the need for its participants to invest in equities in order to diversify their retirement funds. In 1952, TIAA created the College Retirement Equities Fund ("CREF") for that purpose. TIAA-CREF is a Fortune 100 financial services company that is the leading retirement system for people who work in the academic, research, medical and cultural fields. TIAA-CREF serves 3.6 million active and retired employees participating in more than 27,000 retirement plans and has $363 billion in combined assets under management. 

On January 4, 2010, TIAA-CREF announced its divestiture of holdings in PetroChina, CNPC Hong Kong, Oil and Natural Gas Corporation, and Sinopec because those companies maintain business relations with the government of Sudan and are furthering the suffering and genocide in Darfur.

Obviously, TIAA-CREF is not some fly-by-night Wall Street outfight but often regarded as among the cream of FINRA's member firm crop.  As such, I was taken aback when I noted that the Financial Industry Regulatory Authority (FINRA) had just posted an Acceptance, Waiver and Consent (AWC) settlement involving TIAA-CREF Individual & Institutional Services LLC.

According to the AWC, TIAA-CREF failed to

• report quarterly statistical and summary information to FINRA regarding a substantial number of customer complaints;
• establish,maintain and enforce a supervisory system reasonably designed to identify, capture, analyze and report customer complaints that are required to be reported pursuant to NASD Rule 3070(c);
• put adequate systems and procedures in place to ensure that all customer complaints were identified and forwarded to the appropriate firm personnel, adequately train all personnel who might potentially receive customer complaints regarding proper handling of complaints, and
  
• ensure that sufficient guidance was given to personnel who were responsible for reviewing complaints to determine which complaints were reportable. 

Although the imposed sanction of a Censure and a $100,000 likely underscores the relatively minor nature of the misconduct, it is still an eye opener to see such a highly regarded member firm cited for failing to properly intake customer complaints and to report same.