Blog by Bill Singer Esq WEEK IN REVIEW

December 24, 2022
Far too many brokerage customers believe that they are entitled to an extension of time on a margin call. They think that the firm has to give them some form of courtesy notice. Could be the customer finds some extra cash. Could be the customer painfully decides to sell some shares. Could be the customer hopes that the market will move higher by the end of the day and all will be forgiven. Could be that the customer monitors incoming calls and never picks up the one from the brokerage firm's Margin Department. Ah yes, life and Wall Street are filled with lots possibilities. Then, of course, there's the cold, harsh blast of reality. When it comes to margin calls on Wall Street, there ain't no courtesy. Even during the holiday season, it's often little more than leave the gun and take the cannoli. Y'know -- it's all business.
In that old Dr. John tune, he sings that "I been in the right place, but it must have been the wrong time." You're right, they just don't write 'em like that anymore! In a recent federal lawsuit against Wall Street's self-regulatory-organization FINRA, we have a Plaintiff who seems to have sued in the wrong court at the wrong time -- not exactly parroting the lines of the song but sort of capturing the spirit.
FINRA the self-regulatory-organization apparently examined Citigroup Global Markets Inc. the FINRA Large Member firm during 2008 through 2022 because the regulator cited the firm's Reg SHO aggregation misconduct in three AWC settlements. Notably, the fines increased in each ensuing AWC. At some point, FINRA has to have an epiphany, however, that simply ratcheting up each ensuing fine on CGMI and other Large Member Firms doesn't accomplish anything. At best, the fines are an inconvenience for the violators. At worst, they are of no consequence. When it comes to Small Member Firms and the industry's hundreds of thousands of associated persons, FINRA selects sanctions seemingly designed to inflict pain. For the industry's big boys, well, y'know, it's more in the fashion of charging a modest toll on Wall Street.
After a guilty verdict is rendered in a criminal trial, a convicted defendant often battles on via appeals. For some, it's about delaying the inevitable incarceration and fines; for others, it's a belief that the law was not followed. Following a 2018 conviction for both conspiracy to commit securities fraud and securities fraud, one defendant battled on and on . . . and on. As the last month of 2022 fades, the convicted insider trader lost yet another appeal; however, as the calendar turns to 2023, perhaps there will be more appeals to come.