Bernie Madoff Trustee's Fees

The Wall Street Journal wrote an Op Ed piece in their paper today entitled "Madoff and the Mets". Mr. Irving Pickard, the trustee and New York bankruptcy attorney in charge of recouping the funds for the victims is benefiting financially from his role. According to this article in the Wall Street Journal, "He has billed for $175.5 million in fees." The WSJ article goes on to say that "...he seems more interested in collecting fortunes from public figures by humiliating them into a settlement, before his claims are ever tested in court."

For WSJ subscribers, you can read the article via this link:

http://online.wsj.com/article/SB10001424052748704559904576228482383879982.html?KEYWORDS=new+york+mets

One hundred seventy-five million five hundred thousand in attorney's fees is what I want to vent about. Why is this injustice allowed in the first place? There is no way that it takes $175,500,000 to do his job. Once again, this kind of injustice should never be allowed. In my opinion, you could have found 100 or more equally qualified individuals to do this job for a $1,000,000 a year flat fee. Anyone of these other qualified individuals would have had the victims best interest at heart and I guarantee you that they would have gladly done the job for $1,000,000 per year in a flat fee.

By my calculations, this trustee is being over paid by $174,500,000. Where is the outrage? Where are the victims of Bernie Madoff? Why aren't they screaming about this blatant rip off? They were already victimized once. Now they are just supposed to stand by and take this lying down? No thank you.

Come on you Madoff victims. Raise a stink, please.

FINRA Comes Up Shy of the Goal Line

FINRA, the Financial Industry Regulatory Authority in charge of protecting investors (yea right) is going to put brokers who've had their securities licenses suspended or revoked back in the FINRA Broker Check system starting November 30th, 2009. Previously, if you were a broker who lost your securities license, then all you had to do was wait two years and FINRA would automatically remove your record from the FINRA Broker Check system. Apparently, FINRA felt a little bit of heat after the Madoff Scandal by not having these rogue brokers in their system. You tell me. Why on earth was this loophole ever allowed in the first place?

Supposedly there are approximately 15,000 of these rogue brokers running around. That means there are about 300 per state if you do the math evenly across the fifty states. Of course, you can probably surmise that states such as California, New York, Florida & Massachusetts have more than 300 of these rogue brokers running around acting unethical still today. Then, if you further imagine that most of these rogue brokers huddle where the money is, then you probably have a good chance of doing business with one of these creeps if you live in South Florida, or Southern California or similar high net worth areas.

Take heart rogue brokers, especially those with criminal convictions. You have nothing to worry about. FINRA will not let anyone know that you have a criminal record. They are actually excluding the criminal convictions of rogue brokers in the FINRA Broker Check system. FINRA does not think it is relevant apparently. If this is not ass backwards, then I do not know what is. This just goes to show you that FINRA does whatever they want to do and protecting consumers is not one of the things they do, despite what their frilly commercials say.

I know a few rogue brokers and I am anxiously awaiting November 30th to see if these unethical people show up in the FINRA Broker Check system as advertised. I will have to see it to believe it. They put Bernard L. Madoff back in the FINRA Broker Check system to my surprise. The last time that I looked, he was not in there. Now that it doesn't matter, they put him back in there. Where were they when it did matter?

FINRA Special Committee Report

The Special Committee that FINRA put in place to review their failures related to the Stanford and Madoff cases is now available for download. You can get it here:

http://www.finra.org/web/groups/corporate/@corp/documents/corporate/p120078.pdf

Here is a quote from the Executive Summary:

"FINRA’s examinations of the Madoff and Stanford firms did not uncover these frauds."

Lately, I have been jumping up and down over FINRA's failures. In this report, they actually claim no knowledge of Madoff being a registered investment adviser firm. Their reasoning was that Madoff claimed to have no customers, so there was nothing to examine. Madoff made FINRA examiners believe that he was only operating as a trading and market making firm.

Frankly, I find it hard to believe that everyone at FINRA can lay claim to the fact that Bernard Madoff did not have any clients as far as FINRA knew. It was common knowledge that Bernard Madoff and his wife often attended private parties of the rich and famous at which he solicited clients. Ask Donald Trump if he was ever solicited. It defies logic that FINRA examiners who were well entrenched examining multiple New York broker dealers were not aware of Bernard Madoff having clients. This simply does not compute.

Another quote from the report:

"FINRA examiners did not have direct access to the Madoff firm’s IARD entries."

Here again, FINRA is trying to bolster their position that they did not have access to Bernard Madoff Investment Securities LLC, the registered investment adviser firm. I found a FINRA Broker Check report on Bernard Madoff Investment Securities LLC. Here it is:

http://www.firstcoastplanning.com/Madoff FINRA Broker Check Report.htm

Open this report up and look at the bottom of the far left column on page 3. It says:

"This firm is a brokerage firm and an investment adviser firm. For more information about investment adviser firms, visit the SEC's Investment Adviser Public Disclosure website at http://www.adviserinfo.sec.gov ."

Wait a minute. I am going crazy here or what? Did the Special Committee Report from FINRA not say that they did not know that Bernard Madoff Investment Securities LLC was a registered investment adviser? If what they say is true, then why does the FINRA Broker Check report on the firm, (not the person) Bernard Madoff Investment Securities LLC say that they know he is a registered investment adviser firm. It is right there in black and white.

Interestingly though, there is no FINRA Broker Check on Bernard Madoff the person. Normally, a record of a registered principal of a broker dealer is on the FINRA Broker Check site for two years. Where oh where did Bernie's FINRA Broker Check report go?

This brings me to another point that I reiterated before about the gaps in the FINRA Broker Check system. After two years, if you are working for a registered investment adviser firm and not a broker dealer, then there is not a record that you ever existed in the FINRA Broker Check system. Not only that, if you had your FINRA registered securities licenses suspended and it has also been more than two years, then there is no record in the FINRA Broker Check system. None.

My question is why was there ever such a huge loophole which is totally against the investing public? Supposedly, FINRA is "thinking" about correcting this gap.

Isn't it funny how a few weeks prior to the release of this Special Committee Report that FINRA is all over the airwaves with a commercial on how they are protecting investors? I know what they are doing. I have seen this public relations game plan before today used by other firms. Banks use this strategy all the time. When bad PR is coming out, then you blast the airwaves with warm and fuzzy commercials intent on softening the backlash against the firm.

The question is...do you feel better about FINRA watching out for you as an investor?

I for one do not.

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.