Econintersect: There are continuing stories about the abysmal record of FINRA (Financial Industry Regulatory Authority) in the area of protection for individual investors.  An article yesterday (01 April 2014) in On Wall Street (‘Should Dozens of FINRA Arbitration Cases be Reopened?‘) is just one of the most recent disclosures of a regulation process that seems focused on protecting the interests of investment firms and ignoring abuse of retail investors and individual employees and representatives of the firms.
Protection for Individuals a Masquerade
Last weekend (29 March 2014) Barron’s carried an article which focused on whether FINRA was justified in “collecting details on 70 million brokerage accounts daily“. This was not a complaint about abusing the privacy of individuals, however, but was made by the Securities Industry and Financial Markets Association (SIFMA), “Wall Street’s most muscular trade and lobbying association“. Ira Hammerton, executive vice president and general counsel for SIFMA is quoted:
“Why should the government — I will put Finra under the government’s umbrella — conduct a mass-surveillance program monitoring all of your financial transactions, your personal information related to those transactions, the movement of funds in and out of your brokerage accounts? Why is this an essential government service?“
Econintersect would suggest that this is a disingenuous statement of concern for individuals and is merely covering a self-serving objection to an encumbrance on the operations of Wall Street firms. As such it is simply a further manifestation of the armor-plating of investment firms masquerading as a concern for individuals. As the Barron’s article stated:
FINRA has a well-deserved reputation for catching small-fry scoundrels and letting big dogs run wild.
When Mark Mensack, whose arbitration case has been covered by GEI News and is discussed further later in this article, was asked about the Barron’s article today, he told Econintersect that statement from SIFMA was missing a great deal of relevant information:
While it is reasonable for Mr. Hammerton to classify FINRA as “government,” there is a huge caveat. Unlike a government agency, FINRA is not subject to the Administrative Procedures Act; therefore, unlike a government agency, Americans have no protection from FINRA’s abuse. In FINRA’s Motion to Dismiss my federal lawsuit, despite the proven acts of fraud, FINRA argued that it was not possible for FINRA to have violated my civil right to due process because it was not a government agency. Perhaps worst of all, the US Supreme Court, in Standard Chartered v. FINRA,  ruled that FINRA is immune from prosecution.
