It is inexcusable that Wall Street as an industry and FINRA as a broker-dealer community tolerates unpaid securities arbitration awards - a point recently made, yet again, by PIABA in a compelling report. As such, I urge FINRA to create a Wall Street Anti-Fraud Fund, a proposal that I have made for some two decades and which continues to fall on deaf ears. Wall Street should have an "Anti-Fraud Fund" for the benefit of defrauded public customers who have proven the liability of a FINRA member firm but are unable to fully collect their compensatory damages, costs, and fees because of that firm's insolvency. I do not favor extending such a guaranty into punitive damages or "unreasonable" attorneys' fee and other charges. Fervently, I believe that the securities industry has the wherewithal and the moral/ethical obligation to put its money where its dirty mouth has been. There may be legitimate debate as to how best to fund the anti-fraud fund, but that only goes to the mechanics of doing the right thing.
There was a time, not many years ago, when crowdfunding was all the rage and the JOBS Act was supposed to democratize Wall Street. Desperate or naïve entrepreneurs looking to raise modest amounts of capital were attracted by the promise that their ventures would be posted on a crowdfunding website. Except, as industry veterans knew, the investors with the real cash don't waste time on crowdfunding websites. As such, after the crowdfunding sites collected their fees, more often than not, the listings sat, barely getting nibbles, wasting away. Worse, many of the offers for funding proved to be scams and frauds. Some folks raised money and launched their business -- that's great. If the laws had been better drafted, if the sector had been better policed, then we might have realized the vision. In the end it was just another one of those things that fizzled out without much notice or fanfare. And so we move on to the next flash in the pan. NFTs anyone?
Could two different whistleblower Claimants each filed hundreds of Forms TCR and Forms WB-APPs with the SEC when both were riled up about personal mortgage foreclosures? Sure, that's possible. Could it be that two people living in the same house and subjected to same foreclosure each submitted hundreds of filings to the SEC? Sure, that's possible too. Could it be that two unrelated people were each victimized by foreclosures and each went on a filing rampage? Sure, that's also possible. The thing is, however, that it might have been nice for the SEC to have clarified whether we're talking about one or two persons because the inference that I'm drawing is the same Claimant was permanently barred twice. See what you think.
Recently, SEC Commissioner Caroline A Crenshaw spoke about the aftermath of the 2008 financial crisis, better known in some circles as the "Great Recession." In recent years, I have welcomed the voices of a number of SEC commissioners, who have had the audacity to shake things up. Some voices have been strident -- at times, too much so. Some have voiced opinions that make me roll my eyes. At times, however, those same voices prompt me to reconsider long-held views or to ponder emerging issues that I had not anticipated. No, I do not favor the SEC or any big-government regulator devolving into a debating society. That's not their mandate and that's not effective regulation. On the other hand, sincere, rational, debate is the forge where we hammer out better regulations and enunciate developing enforcement policy. It is in that spirit that I applaud Commissioner Crenshaw's recent comments about the role of "risk" in our markets.