Blog by Bill Singer Esq WEEK IN REVIEW

April 15, 2023
There is the effective regulation of Wall Street. Then there is what I call the mere "appearance" of regulation. Effective regulation proactively detects fraud, pursues the fraudster, stops the fraud, and protects the investing public -- all of which entails harvesting tips, analyzing data, conducting interviews, filing charges, and sending trial staff into court. In contrast, modern-day regulation has devolved into self-serving publicity by senior regulators posting endless amounts of podcasts, videos, speeches, bulletins, guidances, alerts, and press releases. The bureaucracy tells you what it would like to do rather than what it has accomplished; hence, the appearance of regulation rather than the substance.
FINRA Code of Arbitration Procedure for Customer Disputes Rule 12904: Awards provides that an award "may contain a rationale underlying the award." If you'd like some rationale with your lawsuit, FINRA offers a so-called "Explained Decision" replete with the arbitrators' "general reason(s)" for their decision; however, that's gonna cost ya extra and requires your adversary's consent. I ain't gonna pull my punches here: FINRA Rule 12904 is absurd and anti-consumer. Bad enough that customers are forced to use FINRA's arbitration forum, but, worse, a FINRA Arbitration Award often raises more questions than it answers, as demonstrated in today's featured case.
In a recent FINRA Arbitration, the Panel determined that the registered representative Respondent had intentionally lied to the public customer Claimant about investments in Cambridge Capital Group. The lies were found to be particularly egregious because over 80% of Claimant's liquid assets were placed in the Cambridge investment. What should arbitrators do when they are confronted with particularly egregious lies involving the bulk of a client's liquid assets? Read today's blog for some ideas and answers.