Blog by Bill Singer, Esq. WEEK IN REVIEW

September 9, 2017

How Long Has This FINRA Violation Been Going On?

How long is too long for a Wall Street regulator to investigate allegations of misconduct and either file charges or settle? And when a regulator bites into an aging piece of meat, isn't there some obligation to present the facts with the benefit of such aged hindsight? In a recent FINRA settlement, we are confronted with misconduct that allegedly took place in 2009. Despite having eight years of accumulated wisdom, the self-regulator doesn't explain why a former employer characterized the misconduct as an outside business activity but FINRA charged a private securities transaction. Maybe another two years -- the passage of a decade -- might help to get everything nice and neat? READ

Veteran Sues USAA Investment Mgmt Over Alleged Mental Disability

A military veteran opens an account with a broker-dealer and allegedly informs the firm that he has a disability. Apparently, this veteran customer incurred some losses in his account and alleges that the brokerage firm should have known that his disclosed disability was mental in nature and precluded his ability to competently manage his account. Even after you read the FINRA Arbitration Decision, you're still going to be thinking about the facts and issues in this dispute. READ

The Merry-Go-Round Of FINRA Reform. This Time It Won't Be Any Different Again

Here we go again. FINRA says that it's going to listen to you. The self-regulatory organization promises. Reform is coming. Fairer regulation is coming. More effective pro-consumer industry oversight is coming. This time, FINRA says, it will be different. Sure, this time it will; except, you know, the last "this time" when FINRA said it was going to be different, turns out, it wasn't. 

If you read all the breathless press releases coming out of FINRA lately, the air is ripe with anticipation. FINRA is inviting us to tell them (yet again) what's wrong and what needs fixing. Armed with all this solicited advice, FINRA will likely impanel committees and hold roundtables and create working groups in order to consider all the ideas and suggestions. After the deliberations, I suspect we're going to be regaled with lots of progress reports about how various proposals are being drafted into formal rules. Of course, next comes the endless varieties of status reports, which are mainly clever devices to cover the fact that nothing has actually gotten done but, hey, we want you to know that we're working on it, tirelessly, and we're on top of all this reform stuff. After a year or so of drafting, revising, amending, commenting, further revising, further amending, more commenting, and a final draft, the whole shebang gets submitted to the Securities and Exchange Commission, where yet another round of masturbatory bureaucracy will delay and further dilute and send back an approved version that is likely unworkable but, not to worry, by the time we arrive at this stage there will be a new cast of characters at FINRA (or whatever the regulator will be renamed at that point).

Does anyone know where the lever is to stop this idiotic merry-go-round? READ

by Darrell Whitman,

In 2010, attorne Darrell Whitman became a Regional Investigator for the San Francisco Region Office of Whistleblower Protection Programs ("OWWP"), which was part of the United States Department of Labor's ("DOL's") Occupational Safety and Health Administration ("OSHA"). Beginning in 2011, Whitman and others in the San Francisco OWWP office complained that they were being hamstrung and short-circuited in their efforts to protect whistleblowers against perceived retaliation -- essentially being prevented from doing the job that they were being paid to do. In May 2015, Whitman was fired. How ironic that Whitman, an OWWP investigator charged with protecting whistleblowers from retaliation, found himself the victim of alleged retaliation by OWWP. In response to his termination, Whitman sued. 

In his GUEST BLOG published on the Blog, Darrell Whitman introduces his article by noting:

As the New York Times and other media reported Thursday, the investigation by Wells Fargo into its own banking practices has turned up another 1.4 million fraudulent accounts, this time created by signing up unwary customers to its on-line bill paying service. Altogether, that's at least 3.5 million fraudulent accounts identified by a self-interested internal company audit. It's not credible that this huge account fraud organized systemically across several consumer service operations could have been accomplished without the knowledge, if not the encouragement, of senior Wells Fargo managers and executives. Yet, to date, other than John Stumpf's leaving with a smaller than wished golden parachute, there has been no credible federal response to the mess.

While the media continues its slow drip of reporting on what appears to be criminal activity at Wells, there is only silence out of Washington and the Justice Department. A month ago, I wrote to Attorney General Jeff Sessions asking he confirm that the criminal investigation begun last September would continue and broaden to include the Occupational Safety and Health Administration, which failed to investigate and report the fraud at least as early as 2010. The silence to my request has been deafening, and it's now time to stop politely ringing the bell and knocking at the door and demand that Washington hold responsible officials at Wells and OSHA to account.