August FINRA Disciplinary Case Update by Bill Singer

August 18, 2011

Some folks think that Bill Singer leads an exciting life.  After all, not only do I author the popular Forbes blog "Street Sweeper," but I am also a high-powered, high-profile securities industry lawyer.  It humbles me to learn that I was the model for Dos Equis' "Most Interesting Man in the World." As you can tell, I also live a very rich fantasy life and have become a legend in my own mind.  So, yes, I speak French in Russian; I am the life of parties that I have never attended; museums allow me to touch the art, and I've twice won the same Lifetime Achievement Award!

Another little known fact about me is that every month I reads hundreds of regulatory and arbitration cases.  While that is a fairly pathetic use of my time, someone has to do it . . . right?  Otherwise, if not me, who is going to shine the bright, glaring light of truth, justice, and the American way on the dark secrets of unscrupulous brokers and conniving brokerage firms?

But enough about me, let's talk about what I uncovered in the August crop of disciplinary cases from the Financial Industry Regulatory Authority ("FINRA").  It's not a pretty picture.  Whether the market is up or down 600 points, someone in the securities industry is plotting to steal money from you or from an employer.  Meanwhile, some regulatory organization is also plotting to maybe investigate or start an investigation or eventually review the field notes of an investigation or maybe destroy all those files or maybe issue press releases about how they're doing a great job protecting investors.  It's a neverending struggle on Wall Street between those intent on breaking the rules and those intent on visitng porn sites on their government computers.


Among the most consistent and persistent targets of Wall Street's con artists and creeps are the elderly. In August 2011, FINRA reported a number of disciplinary cases in which senior citizens were victimized.  The misconduct ran the gamut from borrowing money but not repaying as promised, to outright thievery.

Test Cheating

We continue to see an influx of folks challenged by the concept of not cheating on various industry registration exam or continuing education tests.  In August we learn of folks who doctored failing grades on the official report or simply acquired the answer sheet to the test.


Emails, instant messaging, online forums, social networking - you name it and Wall Street regulates it. Unfortunately, given the proliferation of all the electronic communications variants, the rules may seem unclear at times - but what's clear is that many industry professionals are running afoul of what's okay.

Due Diligence / Private Placements

Kick the tires - that's what FINRA expects these days when a brokerage firm intends to solicit investment in a private placement.  For too many FINRA member firms, due diligence appears to be little more than reading the issuer's drivel or logging on to the issuer's website and giving it a quick once over. Of course, when you buy the private placement, you thought that your broker's firm actually delved into the details of the company.  Surprise. Surprise. Surprise.


Then there is an oddball case in which a broker was suspended by FINRA for a year because he wrote about $5,000 in bounced checks.