Blog by Bill Singer WEEK IN REVIEW

July 16, 2016

OPEN CALL For BrokeAndBroker.Com Blog Guest Contributors

If you would like to pitch a Guest Blog for the Blog, please send a brief outline of the proposed article to I don't open attached files from unknown senders, so make sure that your pitch is in the text portion of the email. I welcome all views and perspectives, even when they erroneously conflict mine. Please do not send me puff or marketing pieces. I am accepting serious regulatory/legal/compliance commentary on important cases and developing issues. Also, I am seeking thoughtful observations about investing and market trends. Customer advocates and unrepentant industry apologists are all welcome. There is no compensation offered; however, I am happy to include in any article your direct contact information and professional biography, as noted in this recent offering: "Get On Board With New FINRA Rule 2273 Before You On-Board Registered Reps'" ( Blog, by Myles Blechner, July 1, 2016). If you can demonstrate a responsive audience for your musings, I will even consider a permanent column for you on my site. If you've got the writer's itch, scratch it at the Blog. Send submissions to:

It was a simpler time when the bad guys wore Nazi uniforms and the world was divided between us and them. Today, as the terror ambles from one city to another, from one continent to another, and as the body counts pile up, we fraudulently convince ourselves that we are involved because we watch the events unfold on the small screens in our palms and we express our horror to a network of disembodied souls. We have become voyeurs in a digital age who ponder everything and resolve nothing. 

And thus the native hue of resolution
Is sicklied o'er with the pale cast of thought,
And enterprise of great pitch and moment
With this regard their currents turn awry
And lose the name of action.

Still, we man the water brigade and pass the buckets despite the futility of it all. In the end, even I am reduced to little more than a mere online, digital gesture. Truly, this must be a Canto of the Inferno. READ

A personal note from Bill Singer, Blog

Robert A. Muh is running as a candidate for the 2016 Financial Industry Regulatory Authority ("FINRA") Small Firm Governor seat on the self-regulatory organization's Board.  Bob is a far more temperate and contemplative advocate for FINRA small firms and industry reform than I, and, as such, we do not always agree on many issues. Notwithstanding our occasional disagreements, I have tremendous respect and admiration for Bob's intelligence and independence. Bob is committed to advancing the legitimate needs of smaller firms and has always stood up to speak out for industry reform. Bob's impressive background is set out on his nomination website.

Without reservation, I support Bob's candidacy for the 2016 FINRA Small Firm Governor and urge all Blog readers to press their FINRA member firm's Executive Representative to support Bob's candidacy for the Board.

All Along The Wall Street Watchtower

Bob Dylan wrote the lyrics. Jimi Hendrix turned it into an anthem for a generation. And as each successive generation has interpreted the song, we still wonder whether there is, in fact, some kind of way outta here. Bill Singer walks the Wall Street ramparts and climbs up the steps to the watchtower, where he sits at his desk and pens yet another edition of the Blog, but all the while, he hears, in the cold distance, the wind howling. Consider a recent contest of sorts between an incarcerated felon and the Securities and Exchange Commission.  Bill has been following this mess and brings it to your attention. Sadly, Bill is too old to get excited and much of what he is watching strikes him as a joke. At the end of the article, however, enjoy some wonderful music videos. READ

Coscia Sentenced To 3 Years In FIrst Spoofing Case

On October 1, 2014, Michael Coscia, a registered commodities trader since 1988, and the manager and sole owner of Panther Energy trading LLC, which he formed in 2007, was indicted in the Northern District of Illinois ("EDIll") on 6 Counts of Commodities Fraud and 6 Counts of "Spoofing." This Indictment was the first federal prosecution under the Anti-Spoofing provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. United States of America v. Michael Coscia (Indictment, NDIll, October 1, 2014). On July 13, 2016, Coscia was sentenced. READ the FULL TEXT Indictment.

Secret Customer Settlement Gets Stockbroker Fined And Suspended

It's one of those moments. You got a problem. You got two choices: Do the right thing or do the wrong thing. Except, you know, that wrong thing ain't so wrong and who the hell is gonna know if you do it . . . or so you think, at a time when you're mind is racing a million miles a second because you're figuring that your job is on the line. Looking back, you realize that you probably shouldn't have made such a decision without stepping back and taking a breather. Unfortunately, what's done is done and, wow, how the hell this all blew up on you is still a mystery. It all seemed so simple. The customer complained about losses. You didn't want to go through the whole compliance disclosure thing. You paid off the customer to keep quiet. Who was gonna find out? How would anyone get wise? READ

SEC Put Writing And Swap Case Slogs To Federal Courts

In today's Blog we wrestle with an ongoing Securities and Exchange Commission case. It is, in fact, a struggle to digest the various allegations and parse the misconduct among four different respondents. Ultimately, however, it seems that the SEC got it right and to the federal regulator's credit, there is ample content and context in its various decisions, orders, and opinions to allow readers to draw conclusions. That being said, we are also confronted with some interesting procedural disputes involving an attempt to stay the sanctions imposed. 

By way of brief introduction, during 2007 and 2008, Mohammed Riad was a Managing Director and Senior Portfolio Manager at Fiduciary Asset Management, LLC and Portfolio Manager of the closed-end investment company Fiduciary/Claymore Dynamic Equity Fund ("HCE"). Kevin Timothy Swanson was a FAMCO Portfolio Manager and a Co-Portfolio Manger of HCE with Riad. FAMCO was the sub-adviser to HCE and received a 5% sub-advisory fee. And from here, we enter the fray. 

In the three OIPs filed on December 19, 2012, the SEC alleged that the investment advisory firms and portfolio managers failed to inform investors of the use of purportedly risky derivative strategies (including writing out-of-the-money Puts and shorting variance swaps) that were among the factors resulting in the collapse of the closed-end fund HCE. The OIPs alleged that the non-disclosed strategies contributed to losses in excess of 45% of HCE's net assets or $45 million in September and October 2008 -- resulting in the fund's liquidation in 2009.

In announcing the OIPs on December 19th, the SEC noted that both Respondent Claymore Advisors and sub-adviser/manager Respondent FAMCO, had settled the charges without admitting or denying the findings and had agreed to a Censure and to a Cease-And-Desist from securities law violations. Additionally, Respondent Claymore agreed to distribute up to $45 million in compensation to investors, and Respondent FAMCO agreed to pay $644,951 disgorgement with $134,976 interest and a $1.3 million penalty. READ

I recently posted "Support ROBERT MUH For FINRA Small Firm Governor" ( Blog, July 5, 2016), in which I set out the case for a more meaningful and representative role for the Financial Industry Regulatory Authority ("FINRA") small firm community; urged the small firm membership to support qualified, sincere, and committed candidates for elective office at the self-regulatory authority; and expressed my support for Robert Muh's election as 2016 FINRA Small Firm Governor. 

In response to the July 5th article, I received an email from another candidate, Robert Keenan, who is seeking re-election as a 2016 FINRA Small Firm Governor. Please read "A Message From ROBERT KEENAN,Candidate For FINRA Small Firm Governor" ( Blog, July 8, 2016).

Also in response to the July 5th article, I received an email from another candidate, Stephen Kohn, who is seeking election as a 2016 FINRA Small Firm Governor. As was the case with Robert Keenan, Stephen Kohn and I had an excellent telephone conversation in which we introduced ourselves and discussed our views concerning FINRA's small firm community. Stephen and I discovered that we are in agreement on many issues involving the FINRA Small Firm community; and, in particular, on the need to cultivate fair-and-effective regulation that does not fall disproportionately upon smaller member firms. I look forward to working with Stephen in the future and making common cause. READ Stephen Kohn's Message

The FINRA small firm community now has three very capable, sincere, dedicated, veteran candidates for the 2016 FINRA Small Firm Governor seat. Get to know your candidates. Make your vote and voice count!  READ