Friday, July 9, 2010

FINRA Event At Woodlands With Paul Kanjorski- Dog And Pony Show

Two days ago Congressman Paul Kanjorski appeared on the Steve Corbett Talk Show on WILK News Radio. At 10 minutes and 14 seconds he tries to proffer that HE has an "Open Town Hall Meeting" and "fortunately we have 300 people coming to it". Kanjorsk states that the event is "sponsored by FINRA" after he requested they put on the forum.

From his own remarks Kanjorski admits using a non-profit, FINRA, to sponsor a forum that is nothing more than a "political stump" for himself but at the expense of the non-profit.

According to their website (FINRA) The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,700 brokerage firms, about 167,000 branch offices and approximately 635,000 registered securities representatives.

In today's fast-paced and complex global economy, FINRA is a trusted advocate for investors, dedicated to keeping the markets fair, ensuring investor choice and proactively addressing emerging regulatory issues before they harm investors or the markets.
So how well did this "independent regulator" work to prevent our recent economic meltdown?

Larry Doyle, a Wall Street veteran, offers his perspective on this FINRA event involving Congressman Kanjorski at the Woodlands Resort in Plains on June 21, 2010.

I can be heard on The Sue Henry Show this morning, shortly after 11am ET. Sue’s show is broadcast on WILK Newsradio in Wilkes-Barre, Pennsylvania.

We will be talking about our favorite financial regulator, FINRA. Representative Paul Kanjorski (D-PA) is scheduled for a dog and pony show with FINRA in early July (details here). The fact is, Kanjorski is a member of two Congressional subcommittees which received a letter from the Project on Government Oversight (POGO) questioning the very validity of the self-regulatory model on Wall Street. Those questions are embodied in my commentary from February 23rd, Is FINRA’s Future in Doubt?.

Kanjorski should forget the dog and pony show and call FINRA on the carpet to answer for the massive shortcomings and transgressions within its purview over the last few years..

In another post Mr. Doyle writes that FINRA member firm Amerivet Securities has submitted seven proposals to be included in the FINRA proxy materials. The FINRA board and executives owe their member firms, and ultimately America, the opportunity to address and then receive complete answers on each of these proposals.

Proxy Proposal 1 – Disclosure of Compensation of FINRA’s Top Ten Most Highly Compensated Employees

Proxy Proposal 2 – Independent Study of Current and/or Former FINRA Officer and/or Director Involvement with the Madoff Family- FINRA shall commission an independent study of the dealings between present and/or former FINRA officers and directors, on the one hand, and Bernard L. Madoff, members of his family and/or their respective affiliates on the other.

Proxy Proposal 3— – Transparency of FINRA Investment Policies, Practices and Transactions

Proxy Proposal 4—- FINRA Board of Governors Meetings to Be Made Public Except When Absolutely Necessary

Proxy Proposal 5 – “Say on Pay” for Top Five Most Highly Compensated FINRA Employees

Proxy Proposal 6 – Creation and Employment of an Independent Private Sector Inspector General- Beginning on September 1, 2010, FINRA shall employ an independent private sector inspector general (“Inspector”) on a standing basis to investigate claims of misconduct by FINRA executives and employees or others acting on its behalf.

Proxy Proposal 7 – Disclosure of IRS Correspondence Concerning $35,000 NASD Member Payment

Steve Corbett prided himself as a spokesperson for the masses. He usually is methodical on information. He explodes every time more corruption is exposed in Lackawanna and Luzerne County. I am having a hard time understanding his kids gloves treatment of Kanjorski. He should be pounding him hard over any group that has concerns over transactions by Bernie Madoff.

Steve, I challenge you to ask this question. Who paid for the food served at this forum? Free FINRA Investor Forum Featuring Top Regulators, Congressman Kanjorski Slated for July 8 in Wilkes-Barre

Admission to the forum, which includes a complimentary buffet dinner, is free – but because space is limited, registration is strongly encouraged. Those who wish to register may do so online at or by calling toll-free (877) 586-2737.
Thursday, July 85:30 p.m. – 6:30 p.m. Registration & Buffet Dinner
6:30 p.m. – 8:00 p.m. Program

The Barletta campaign issued this press release about the FINRA event on June 29th.

“The FINRA event is nothing more than dinner theater from Paul Kanjorski and his Wall Street pals,” said Vince Galko, Mayor Barletta’s campaign spokesman. “Those who attend this event will be treated to dinner and a show, but they will not hear what Kanjorski should explain – how he can claim to remain a regulator of the industries that gave him more than $4.25 million in campaign cash.”

Was Larry Doyle's criticism the type that Corbett questioned Kanjorski about on his show?

Maybe Corbett should revisit his interview with Kanjorski and ask about FINRA's attachment to an alleged ponzi scheme as highlighted in this Fox Business News report- Al Lewis: Finra a Career Path to an Alleged Ponzi.

Regulators often join the ranks of the regulated.

It pays better.

But do they really have to become compliance officers for the biggest alleged Ponzi schemes in history?

Bernerd Young spent decades working for the National Association of Securities Dealers, which is now known as the Financial Industry
Regulatory Authority.

In July 2006, Young went to work for the now indicted and imprisoned R. Allen Stanford.

Finra barely makes mention of Young's embarrassing career move in a recent mea culpa report on how it missed the massive Bernie Madoff and Stanford debacles.

"Finra's Dallas office is a long-standing NASD-legacy office." the report said in a footnote. "From 1999 to 2003, the office was headed by Bernerd Young. In 2003, Young was replaced. ...

"After serving for a period of time as a securities industry consultant, Young was hired as the Managing Director of Compliance for the Stanford firm in June 2006, a position he held through 2009."

Finra, however, does not want anyone to get the idea that Stanford hired a former Finra guy to ward off Finra and sustain his alleged $7.5 billion Ponzi for a few more years.

"The interviews of current Finra employees and review of exam files identified no information to suggest that Young's presence at the firm compromised Finra's subsequent examinations," the report said.

Finra began getting tips that Stanford was running a massive Ponzi scheme in September 2003, the report said. But Finra failed to act upon them.

And, despite its lengthy report citing a litany of excuses, Finra has failed to understand why.

The report is based solely on interviews with Finra employees who dropped the regulatory balls. This is like interviewing stupid people to try to learn why they are so stupid.

Stupid people don't always know that they're stupid. And regulators don't always know a potential Ponzi scheme from a potential employer.

Young did not return an email and a phone call I placed to his office in The Woodlands, Texas.

Guess "the Woodlands" must have more than one meaning.

Finally read this article about the future of FINRA from the Wall Street Pit. The letter in it is the same letter referred to by Larry Doyle above.

Are the days of Wall Street’s self-regulatory organization known as FINRA numbered?

In the opinion of the very credible Project on Government Oversight, they should be. Why? Significant failures, massive conflicts of interest, and more. POGO’s comprehensive and scathing letter to four separate House and Senate committees touches upon every failing within FINRA, with the exception of the integrity of the proxy statement used in the formation of the organization itself. Strong allegations in a current lawsuit against FINRA make the case that Mary Schapiro lied verbally during roadshows and in the proxy statement.

America deserves to be introduced to the organization that, in my opinion, squarely has a foot in both the Wall Street and Washington camps. I make no excuses in categorically stating that FINRA defined the Wall Street-Washington incestuous relationship.

I have no interest in vindication of my writing so much about FINRA over the last thirteen months. I have every interest in exposing the issues embedded in this organization. America needs to truly learn about the issues surrounding FINRA and how and why this organization failed to uphold its charge to protect investors.

I congratulate POGO for bringing these issues to the Hill. I humbly submit and STRONGLY recommend you read, review, and share this letter with friends and colleagues.

The pursuit of truth, transparency, and integrity within the Wall Street financial regulatory system goes to a whole new level with this letter:

February 23, 2010

House Committee on Financial Services
House Committee on Oversight and Government Reform
Senate Committee on Banking, Housing, & Urban Affairs
Senate Committee on Finance

Dear Chairman and Ranking Member:

The Project On Government Oversight (POGO) is writing to raise concerns that Congress’s efforts to reform the financial regulatory system have not adequately addressed the failures of the private self-regulatory organizations (SROs) that are tasked with protecting the investing public and maintaining the integrity of our financial markets. Specifically, we urge you to take a much closer look at the Financial Industry Regulatory Authority (FINRA)–an SRO that regulates thousands of securities brokerage firms–and to consider whether FINRA can ever be an effective regulator given its cozy relationship with the securities industry.......


Danielle Brian
Executive Director

And the cozy relationship with Paul Kanjorski.

No comments: