Tuesday, September 15, 2009

SEC Investor Advisory Committee & Subcommittee

Okay. We are finally getting close to some movement on this fiduciary issue. Mercer Bullard, the esteemed Associate Professor of Law at the University of Mississippi Law School in Oxford, Mississippi is chairing the all important subcommittee called the Investor as Purchaser Subcommittee. This particular committee "will consider the fiduciary duty owed to investors by those who provide investment advice, as well as issues related to pre-sale and other disclosure, intermediary fees and compensation practices, arbitration, and technology.", as stated on the SEC press release site:


Looking at Mr. Bullard's Fund Democracy activities, I can see that Mr. Bullard has long been a proponent of the fiduciary duty owed to investors. See his article on Broker-Advisor at the Fund Democracy web site. Here is the link:


Mr. Bullard has made his position plain in the past and we must assume that his thoughts are only stronger after the events of the last year. Therefore, this is where we find out if the deep pockets of Wall Street can override the efforts of Mr. Bullard.

Mr. Bullard has also made his opinion known about broker sold mutual funds and how investors typically lose money by buying broker sold mutual funds as opposed to true no load funds. He is liable to make mutual fund companies and Wall Street firms squeal like stuck pigs when they find out he is chairing this subcommittee. The old way of making revenue from high load and commission mutual funds may just have a shot at disappearing. We will see a big fight in this area. That is for sure.

It looks like investors may actually have a shot at getting things done in their best interests. For the sake of investors everyone, let's say a prayer for Mr. Bullard's success.

Stay tuned.

Saturday, September 12, 2009

Bernard Madoff is Missing from FINRA Broker Check

I wonder why after going to Saveandinvest.org (see prior post) and following through to the FINRA Broker Check site, I simply cannot find any information on Bernard L. Madoff. There is no information available. I know his name. I know his firm CRD # 2625. I know his individual CRD # 316687. I know the name of his brokerage firm, Bernard Madoff Investment Securities, LLC. However, for some strange reason, I cannot find a FINRA Broker Check report on Mr. Bernard L. Madoff.

This points out a gaping problem in the FINRA Broker Check site in my opinion. Anyone and everyone who has ever had disciplinary actions while a FINRA registered representative and after they leave FINRA firms, should have their backgrounds disclosed. Just because he is in prison, makes no difference. Think about the people who maybe were just barred from the industry. All they have to do is wait for FINRA to drop their disciplinary history from the FINRA Broker Check site after two years, then they can go back to stealing money from investors.

Please tell me where I am wrong.

Are You Kidding Me? Saveandinvest.org

This morning while reading the newspaper, my wife pointed out that there was a commercial on television talking about protecting investors with direction to a web site call http://www.saveandinvest.org/. My first thought was... "have we finally found something good for investors?" To my dismay, it is a re-direct to FINRA's web site. FINRA is the organization behind the failure to catch Bernie Madoff, though you would not know it based on what is going on right now.

Here is the problem with FINRA and their Broker/Check site. If you were a licensed FINRA registered representative and you had your securities licensed revoked more than two years ago, then you do not have to worry about being found on the FINRA Broker Check site. FINRA gladly removes your entire corrupt licensing history automatically for you. They gladly protect their bad apples with this process.

Now, when I and everyone who has ever had a FINRA license knows this, it is incomprehensible to me that FINRA would put up a re-direct web site call http://www.saveandinvest.org/ with the pretense of protecting investors. Are you kidding me? They are not protecting investors. They are protecting their former members with bad disciplinary histories.

Bernard Madoff and FINRA

Bernard L. Madoff was the name of his NASD broker/dealer before he changed the name to Bernard Madoff Investment Securities LLC on January 1, 2001. Bernard Madoff broker/dealers were registered as broker dealers with the NASD/FINRA from March 25, 1960 until they closed him down on June 17th, 2009, the official closure date. What I would like to see is who from FINRA visited Bernard Madoff Investment Securities, LLC as a regulatory and enforcement person during the last 15 years. Apparently, someone from the NASD visited him. In the enclosed FINRA Broker Check report, it shows disciplinary actions initiated by the NASD(FINRA's predecessor organization) on July 6, 2005, February 26, 2007, February 27, 2007 and August 27, 2008. As you can read in this report, the issue was related to quotes. Apparently, he was not submitting quotes to the stock exchange for all of these purchases he was doing. Couldn't these FINRA gurus ask themselves the question, "maybe he is not submitting quotes to the exchange because he is not really doing any trading."

I am deeply afraid that the 400 odd page report lambasting the SEC is what was put forward to keep the limelight off of FINRA. FINRA has made overtures publicly that they want to be the self regulatory organization for investment advisers and broker/dealers. They did such a good job with Bernard Madoff Investment Securities, LLC. I guess they think they earned it.

Friday, September 4, 2009

Harvey Pitt Former SEC Commission is an Apologist for FINRA?

I was stunned last night watching Fox Business with David Asman. He had on his show two Madoff victims, Sue and Dominic Ambrosino, Larry Doyle of senseoncents.com and former SEC Commissioner Harvey Pitt.

The tide is beginning to turn against FINRA. Larry Doyle has long spoken out against FINRA on his blog at www.senseoncents.com. Last night on Fox Business, LD mentioned the fact that FINRA had money in Auction Rate Securities in 2007, but inexplicably got their own money out before the Auction Rate Securities collapse. I guess they are an investor watchdog, but not when it comes to saving their own bacon.

Sue and Dominic Ambrosino are wise to FINRA and their culpability in the Madoff Scandal. They pointed out that FINRA has not been too transparent about whether they too lost money with Madoff. The latest FINRA Annual Report does not disclose whether they did or did not lose money with Madoff or one of his feeder funds. Word on the street is that they did lose money as a result of Madoff.

Former SEC Commissioner Harvey Pitt, not one of the best SEC Commissioners we ever had by the way, seemed to me to have been given talking points. He kept trying to hide the fact that FINRA and its predecessor organization was responsible for the Madoff mess. Pitt kept trying to keep the blame squarely on the SEC. This was stunning to witness from my perspective.

David Asman pointed out that Mary Shapiro was the former head of FINRA and now she is the head of the SEC. I have nothing against Ms. Shapiro, but it seems like they got someone at the helm of the SEC who can probably keep FINRA out of it. However, time will tell. FINRA is guilty as sin in my opinion. You cannot convince me that FINRA did not look the other way when it came to Bernie Madoff.

As a former NASD Registered Principal, I had my office gone through with a fine tooth comb by an ex-NASD Examiner for several years. Of course, I always had good exams. I can guarantee you, the guy that examined my office would have easily discovered the Ponzi scheme Madoff was running.

There is something amiss with regard to FINRA being able to dodge the Madoff scandal up until now. Hopefully, with Fox Business getting a little nosy, the truth will come out about FINRA and their cosy little relationship with Bernie Madoff.

Stay tuned.