An irreverent Wall Street Blog
by Bill Singer

Securities and Exchange Commissioner Luis A. Aguilar 's Sage Words About Effective Regulation

July 1, 2010

Longtime readers of BrokeAndBroker know that I am not a fan of the time-wastin' speechifyin', masturbatory roundtabling,  and high-fallutin' blue-ribbon panels that enervate our government.  Sadly, we are saddled with legislators and regulators who belatedly cobble together ineffective solutions for yesterday's problems, or opt for abject inaction that paves the way for tomorrow's crises.  In the end, we get neither an ounce of prevention nor a pound of cure.  E Pluribus Unum has been replaced with Too Little, Too Late. 

Among the worst examples of institutionalized procrastination is the United States Securities and Exchange Commission (SEC). On June 30, 2010, during an open meeting of the SEC, Commissioner Luis A. Aguilar gave a speech titled: "Preventing Investor Harm Should be SEC Priority Number One." It was with some surpise that I read Commissioner Aguilar's comments because he offered a superb description of what constitutes effective regulation.  Now, if only the astute commissioner could transform his vision into action, and drag his colleagues into the 21st Century! 

I commend his words to you:

Regulatory oversight functions best when we have a regulatory regime that prevents misconduct in the first instance-long before investors can be harmed. If the conduct is not affirmatively prevented, investors are harmed. It's true that once investors are harmed and lose faith in the integrity of our institutions-irreversible damage has taken place. Enforcement actions are rarely, if ever, able to make investors whole, sufficiently punish all the fraudsters, and prevent a loss of investor trust in these financial institutions and the securities industry as a whole. The best course of action is to prevent the significant harm in the first place. Prophylactic rules, consistent and effective inspections, and strong enforcement must work together to protect investors.

Read Commissioner Aguilar's Entire Speech at:  http://sec.gov/news/speech/2010/spch063010laa.htm

NEW FINRA MONTHLY DISCIPLINARY CASES
NOW ONLINE AND ANALYZED BY BILL SINGER

 

Regulatory lawyer Bill Singer has analyzed and posted the latest crop of FINRA disciplinary cases.  

  • Ever hear about a Client Verbal Instruction Form? See how one enterprising broker used that document to transfer customer funds to his own family member -- and not with the client's authorization.  READ HERE
  • Bet you didn't know that all it took for a broker to obtain credit cards attached to your bank account was one, simple, lousy, little-old phone call to the bank.  Think I'm kidding?  READ HERE
  • Elderly clients are increasingly falling prey to brokers.  Consider this one case.  READ HERE
  • Why would a broker keep customer-signed blank medical history questionnaires in his desk? READ HERE
  • Sometimes no matter what you do, you can't win. Imagine that you hire a third-party vendor to oversee certain account computations. Now, imagine that the vendor experienced a software glitch. How does that become your problem? READ HERE
  • You know that FOREX trading program that you want to offer your clients?  You better read this first. READ HERE

http://www.rrbdlaw.com/enforcement-actions/index.php?cid=1

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