As dire a picture as the above statistics paint, one can only imagine the further devastation caused by the Covid pandemic during the uncounted months of 2022 to the present. It appears inevitable and inexorable that the total number of FINRA Small Firms and then the overall number of FINRA member firms will soon fall under 3,000.
Smaller FINRA firms face an existential threat given their historic reliance on revenues from retail commissions and market-making profits. Exacerbating the smaller firms' survival is that the industry's self-regulatory organization, FINRA, appears captive to its Large Member Firms. As with the creation of a Black Hole, the FINRA community is collapsing into fewer but larger firms; and after the inevitable Big Bang, Wall Street will likely be a place with a few, very large, powerful brokerage firms.
Many FINRA Small Firms fled the imploding broker-dealer model for that of the Registered Investment Advisor ("RIA"); and others morphed into private equity firms, family offices, hedge funds, or whatever newfangled business models have and may yet emerge. Amid this exodus from the FINRA broker-dealer model, there are rumblings in the RIA sector as Robo-Advisors grab a greater market share -- which likely portends dramatic slashes to the traditional RIA management fee, and that will likely put the RIA community into a similar existential struggle as that now being fought by the FINRA community. From pillar to post. Out of the frying pan into the fire.
The Financial Professionals Coalition was founded out of a sense that the above-cited industry evolution -- the ripple effect -- puts enormous personal and professional stresses on the industry's small-firm entrepreneurs and their employees. The Coalition is a resource for the 1.2 million-plus folks who work at banks, broker-dealers, hedge funds, mutual funds, RIAs, and the rest of the industry's emanations. The Coalition is designed to serve as a clearinghouse of resources in order to help industry professionals navigate their careers, and to provide such services on a diverse and inclusive basis.
The Coalition reached out to veteran industry lawyers, recruiters, reps, and techies. After accessing the networks of our Founders, and then the networks of their networks, the Coalition plans to attract new members and then plug into their networks. Our goal is to take your query and find someone who will set aside the time to talk to you and offer you guidance. We will help you get answers; but also help you come up with the questions that you need to ask.
We're not offering legal counsel but may refer you to a lawyer, expert witness, or consultant.
If you're a candidate looking for a new job or you're a firm looking for staff, we may refer you to a recruiter or an organization that's hiring.
We will put you in touch with website developers and social media consultants to help you figure out likely costs of marketing your new business or expanding your current footprint.
Much of what prompted the creation of the Financial Professionals Coalition is anger . . . there's just no escaping that fact. Ask small firms and associated persons about their dealings with FINRA, and you will hear tales about gotcha regulation and regulatory speed traps seemingly designed to generate fines.
The FINRA community's employees (be they an actual "employee" or a 1099 Independent Contractor) are wholly disenfranchised at FINRA, with no vote on anything and no Governor's seat on the Board is designated solely for an associated person or registered representative. Voiceless and vote-less, the industry's associated/registered persons fear calling FINRA for guidance or help because the self-regulatory-organization is captive to the interests of its employer-member-firms. FINRA's rulebook reflects the influence of its larger, employer firms. FINRA's regulatory priorities shamefully fail to address workplace racism, sexism, and many predatory employment practices.
FINRA Small Firm Member employers have been gerrymandered out of a fair, proportionate voice on FINRA's lackluster Board of Governors. Although Small Firms represent 90% of FINRA's membership, they have less than 13% of the seats on the Board. And the effort to socially engineer the smaller firms into oblivion continues unchecked.
Making matters worse, some who serve on FINRA's Board or its committees often seem more interested in burnishing their resume or marketing their business. Promises were made to help the industry's beleaguered small firms or associated persons, but those promises are never kept. Inexplicably, FINRA Governors often pursue service on other boards (likely with stipends or honoraria), and, oddly, several Governors are frequently characterized as "Retired" or of a "Former" status; see, https://www.finra.org/about/governance/finra-board-governors#Composition. The self regulation of Wall Street ought not be a part-time endeavor, and FINRA Governors should be required to devote their full attention to the task of regulation. Service on FINRA's Board must be more than a mere sinecure -- it is an important role requiring competency and effort.
The Financial Professionals Coalition embraces the need for fair regulation. The public is entitled to effective regulation. The industry must keeps its own house clean and in order. The Coalition will not take on the role of an apologist for the misdeeds of the industry. To that extent, the Coalition welcomes the participation of both industry and investor advocates. We aim to set a large table with seating for everyone involved in the financial services community.
The Financial Professionals Coalition's goal is to enhance the professionalism of the men and women who work in the industry. We are open to all ideas. We know that there will always be differing views and internal dissent among our members, but we encourage robust debate and the clash of ideas in the marketplace. That's what fosters solutions and innovation. The Coalition is about making a difference, not a buck.
Securities Industry Commentator:
A legal, regulatory, and compliance feed
curated by veteran Wall Street lawyer Bill Singer
The Financial Professionals Coalition: Join Us Today (BrokeAndBroker.com Blog)
Blackbook Capital Versus FINRA: A Decade of Battle (BrokeAndBroker.com Blog)
JOIN the Financial Professionals Coalition, Ltd
Series 7 Exam: can I take it without a sponsor? (YouTube Video from Capital Advantage Tutoring / Kenneth Finnen)
How the SEC says twin brothers, 35, swindled clients for $5 million (Financial Planning by Tobias Salinger)
Justice Department’s Ongoing Section 8 Enforcement Prevents More Potentially Illegal Interlocking Directorates / Antitrust Division Continues to Focus on Competitors Sharing Company Directors in Violation of Section 8 of the Clayton Act (DOJ Release)
Colorado Man Charged with Sports Cards Fraud Scheme (DOJ Release)
Operators And Attorney Of Global Multi-Million-Dollar Cryptocurrency Ponzi Scheme "AirBit Club" Plead Guilty (DOJ Release)
Baton Rouge Man Sentenced to 57 Months in Federal Prison for Fraudulent Investment Scheme (DOJ Release)
Cape Coral Caretakers Plead Guilty To Stealing More Than Half A Million Dollars From Elderly Victim (DOJ Release)
Man Sentenced to 30 Months in Federal Prison for Defrauding Investors of 2 Companies, Evading Taxes (DOJ Release)
Central Florida Man Pleads Guilty To Committing Almost $20 Million In Fraud (DOJ Release)
Four Individuals Arrested for Investment Fraud Scheme Targeting Hawaii Residents (DOJ Release)
SEC Sues Utah-Based Crypto Asset Company, Its Founder, and a Recidivist Salesperson for Fraud and Registration Violations (SEC Release)
SEC Charges Rio Tinto plc with Bribery Controls Failures (SEC Release)
SEC Charges Pokerstars Parent Company with FCPA Violations (SEC Release)
SEC Files Emergency Action Against Miami Investment Adviser BKCoin and Principal Kevin Kang for Orchestrating $100 Million Crypto Fraud Scheme (SEC Release)
SEC Awards About $500,000 Whistleblower Award to Joint Claimants
Order Determining Whistleblower Award Claim
Meeting the Challenges and Fulfilling The Promise of Global Financial Markets: Remarks before the Institute of International Bankers by SEC Commissioner Mark T. Uyeda
Federal Court Orders Texas Energy Broker, Its Owners, and Affiliated Trading Firms to Pay Nearly $3 Million For Fraud, Trading Against Customers Without Consent and Failure to Supervise (CFTC Release)
FINRA Censures and Imposes $3 Million Fine on Webull Financial for Options Trading Supervision
In the Matter of Webull Financial LLC, Respondent (FINRA AWC)
FINRA Fines and Suspends Rep For Receiving Unemployment Benefits
In the Matter of Joseph Louis Menotti, Respondent (FINRA AWC)
FINRA Arbitration Panel Dismisses Something Involving Something Against Wells Fargo by Prominent Whistleblower Analyst
In the Matter of the Arbitration Between David William Maris, Claimant, v. Wells Fargo Securities, LLC, Respondent (FINRA Arbitration Award)
The $3.4 Million Tip: (FINRA Blog / FINRA Departments of Member Supervision and Enforcement)