In pressing for government regulation and intervention into the ESG arena, FINRA Chair Eileen Murray seems to have forgotten that she speaks as Chair of a non-governmental, so-called self-regulatory-organization, which many -- including this author -- finds an outdated, conflicted, and failed approach to the regulation of our financial markets. FINRA is run by a Board of Governors for which the voting for elected Governors is limited to its FINRA member firms to the exclusion of the hundreds of thousands of the industry's associated persons and countless millions of public customers. Given the stakeholders excluded from voting at FINRA and the self-regulator's gerrymandered Board, it is truly ironic that the clarion call for ESG reform via government intervention comes from such a compromised organization.
In these pandemic times, FINRA arbitrations have resorted to virtual hearings, or required proof of vaccination or a negative Covid test within 72 hours of the start of live hearings. Further, FINRA implemented various safety protocols for in-person hearings. Notwithstanding those efforts to best respond to the health crisis, you're still going to have moments when parties or counsel are feeling ill. What happens if that occurs on the eve of a scheduled hearing?
Yet again, another FINRA member firm is a no-show at a public customer arbitration hearing. Yet again, the customer wins. Yet again, the firm seems to have dissolved. Yet again, FINRA, Wall Street's much-promoted self-regulatory-organization, seems to respond to the customer's predicament with a shrug. Not only do Wall Street's customers often wonder where the hell FINRA was when all of the alleged fraud was underway in their accounts, but, after they prevail against a member firm in court or arbitration, those same customers wonder where the hell FINRA is when it comes to getting their Awards paid.
Today's blog involves a margin call generated when an underlying stock fell dramatically in price and the customer was on the wrong-side of the trade with options. A sell-out ensued, which prompted a negative balance in the customer's margin account. The customer blames TD Ameritrade. The firm blames the customer. The customer sued. The brokerage firm counter-claimed.