“Give me your tired, your poor, your financial industry professionals yearning to be free?” At FINRA, the powerful and corrupt Wall Street “watchdog” has caught some serious fleas.
Yes, actually. The careers and livelihoods of hundreds of thousands in the financial industry — who work to create wealth to pay for college educations, homes and save for retirement because they believe in the highest ideals and practices of the free market system — have sweated to get their education and licenses only to enter a business where they are controlled by corrupt and extralegal means that deny them due process rights under U.S. law.
Advocating for stockbrokers may never win any human rights awards, and it probably shouldn’t, but what is important to know is that these professionals are living with a specter just above their heads all the time.
Would it be shocking to learn that the purportedly impartial watchdog of the United States financial industry is a corrupt and underhanded organization that isn’t even a full governmental agency? With FINRA, the Financial Industry National Regulatory Authority, that is the case.
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Almost as routine practice, this shady and supposedly non-profit group strips hard-working men and women of their livelihoods, sometimes for life.
FINRA: The Watchdog That Needs to Watch Itself
Nominally charged with protecting the public from unscrupulous stockbrokers and bond traders, FINRA is a semi-governmental agency that uses an unconstitutional dispute resolution process to resolve cases of alleged improper conduct. Claiming to look out for Main Street’s interests, FINRA is granted its powers by the Securities and Exchange Commission (SEC), which then lets the bully do its dirty work.
Though a majority of Americans probably don’t even know FINRA exists, it is a powerful and impactful body charged with supposedly resolving financial industry regulations and disputes. If registered persons — the term FINRA uses for the nearly 600,000 financial professionals in this country — are found involved in illegal dealings, the same agency can then rob them of their ability to conduct business and earn money from their profession.
To conduct any business in the industry as an individual or firm — termed broker-dealers — members must agree to, and abide by, FINRA’s corrupt and extralegal dispute resolution and authorization process. If either get themselves on FINRA’s radar and a case is brought against them, agency-appointed members will make a decision on penalties or fines bestowed.
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FINRA can enforce rules and regulations or go after individuals or firms in two ways: by a regular review or an audit. Investigations can be initiated by information gained from tipsters or whistleblowers. Some receive lucrative rewards for this information.
After a complaint against a broker-dealer or registered person is filed, a FINRA employee will appoint a Hearing Panel to review the case and issue a decision. Hearing Panels are comprised of three members and are chaired by a Hearing Officer, an attorney appointed by FINRA.
If an appeal is desired after a case is decided, the sanctions can be reviewed. The problem is the case will be heard by members of the National Adjudicatory Council (NAC), the review arm of FINRA.
OK, fine, broker-dealers have to play by the rules, what’s wrong with that? On its own, nothing — except it doesn’t end there.
If a case is brought against a registered person and a decision is made, for that individual to continue working in the industry, they must either take the penalty — which can bar them for life — or retire from the business. In what universe is that a reasonable process or choice?
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This was the scenario when two men from modest means, Talman Harris and William Scholander, who worked their way up to become Wall Street professionals ran afoul of FINRA and were treated to lifetime bans, just days after Christmas.
Neither Harris nor Scholander had ever been investigated or disciplined by any regulatory authority previously. Both plan to make an appeal to the SEC. However, in the meantime, they are not permitted to make any money off their profession and have been stripped of their livelihoods.
FINRA: The Non-Profit That Always Profits
FINRA derives its powers from the Securities and Exchange Commission and sides with its appointed arbitrator’s in almost 100 percent of cases. And if a member feels they have been improperly found guilty of some esoteric or illegal conduct, an appeal is a lengthy process that can take up to two years.
Any appeals will eventually go to the SEC, the parent organization of FINRA. But not before these men, and anyone else FINRA capriciously decides to penalize, are stripped of their chosen profession and primary livelihood.
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The agency may affirm, modify or dismiss any of the NAC findings or sanctions imposed. The SEC cannot increase sanctions.
The filing of an application for review with the SEC holds the enforcement of any sanction other than a bar or expulsion. Any NAC decision appealed to the SEC and appealed again will be pending review in one of the United States Courts of Appeals. This process can take up to two years. In that time, an individual is not earning from their profession and often cannot afford to take this lengthy legal road all the way to a U.S. court. An appeals court may affirm, modify or set aside the order of the SEC in whole or in part.
In the United States, there is something called the Bill of Rights. In this instance specifically, the Fifth and Fourteenth Amendments to the U.S. Constitution that guarantee all accused due process, protections against self-incrimination and access to a fair, balanced and timely dispute resolution and arbitration system — protections which any first-year law student would be dragged out by the ear if they forgot. Somehow, though, this “governing” body has conveniently ignored.
It would be a difficult argument to call this this lengthy and muddled process impartial, timely or respectful of due process protections.
“Defending rich Wall Street guys’ rights is not the most popular item in the cupboard, but a process that prevents individuals from earning a living and denies their basic legal protections is a complete perversion of the most unique feature of the American democracy.”
Oh, and, non-profit FINRA’s CEO Rick Ketchum banks a hefty $5 million annual salary as the godfather of this shady organization. Nothing illegal here, right?
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Going after big Wall-Street types seems like the right thing to do on its face — except that the watchers are even shadier than the majority of the people it’s supposedly overseeing.
No one wants to run and cry for the poor, trampled-on stockbroker, but these are hard-working men and women, just like in any other business. And to be clear, most are not banker-shirt wearing, Gordon Gecko-inspired wannabes; that’s a myth.
Even in the movie “Wall Street,” Michael Douglas’ Gecko character explains his rise from unprivileged roots, which, in reality, is the case for most. And though it’s easy to scoff at Wall Street, the market does creates real wealth, that’s not a myth. It adds billions to the national economy as brokers help Main Street provide for their families, especially in the modern day of reduced pensions and unreliable retirement savings accounts.
In addition, as was the case for Harris and Scholander, these professionals often do not work for large, faceless institutions like Goldman Sachs or Merrill Lynch.
The majority who come under FINRA’s investigatory boot are hard-working individuals who have saved for their educations and went into finance for the best of reasons: to create wealth for 9-5 American workers.
