November 2, 2019
You got your obvious and you got your obvious. I mean, you know, there are some things in life where it just goes without saying. Take, for example, the case of a convicted felon who was sentenced to over three years in federal prison and ordered to pay over $1 million in assorted fines, disgorgement, interest, and costs for his role in conspiring to commit securities fraud. Without over-thinking it too much, you wouldn't likely argue against barring such a fellow from Wall Street, right? Well, go figure, the SEC is wrestling with that very issue. Our publisher Bill Singer is torn by the dilemma of not quite understanding why there's any hesitation but (because Bill's an attorney) also understanding why the federal regulator is striving for consistency with its decisions. None of which comforts Bill when it comes to why Whistleblower cases are languishing at the SEC without timely payment but, hey, bureaucrats got their priorities.
Arguments about economic inequality are inevitably couched in moral terms. The rich are "greedy," but they object to having their "hard-earned" wealth "stolen" from them and given to the "undeserving." Liberals have no monopoly on this. Last week I passed a pro-Trump demonstrator with a placard "Jail the Banksters." Jailing the banksters requires the very same moral judgment you would hear from a Bernie Bro.
In a recent SEC Order, Administrative Law Judge ("ALJ") Jason S. Patil discussed character witnesses and respondents' alleged inability to pay. Given ALJ Patil's concise explanations and rationale, this is a superb opportunity to briefly consider those two issues that often arise during regulatory proceedings.
In 2015, a former J.P. Morgan Securities associated person sought over $800,000 in damages arising from alleged harm to his book of business by his former employer. It all set up as a fascinating dispute. Unfortunately, it ended in what seems a 2017 fizzle of a FINRA Arbitration Decision in favor of JP Morgan. Julius Caesar famously said "I came, I saw, I conquered." In the FINRA arbitration, the Claimant and his counsel essentially said "I came, I couldn't come back, but I tried, but I couldn't make it, and asked for an adjournment, and, I lost." It just doesn't have the poetry of the older pronouncement. On the other hand, the case may well last two more millennia as it makes its way through the federal District and Circuit courts -- perhaps all the way to the Supreme Court.
It's said that speed kills. On Wall Street, speed supposedly gives you an edge. The faster you get data, the better informed your trades. The faster you enter your trades, the better your execution. The need for speed permeates the markets, and there are companies that sell you speed. Of course, the faster you go, the more apt you are to make mistakes -- which often prompts lots of lawsuits and lawyers, which, go figure, slows everything down to a crawl. See how this all came together in a recent lawsuit.