Today the Treasury Secretary began outlining his vision of a new Regulatory structure to replace the old one. This new system will save us all from another catastrophic meltdown in our financial system and make sure corruption and greed is caught early on. The SIPA response? Yadee Yadee Yadee…

With all due respect, why create a new broke system when we can enjoy the fruits of our old broke system? All the rules in the world are wonderful and make politicians and regulators alike feel like they re protecting investors but at the end of the day  if NOBODY enforces them what’s the difference?

Lets take a step back to our past to see why a ‘New” regulatory system is a waste of time unless there is fundamental changes in the mind set. Years ago I worked in operations for a wire house and would remember Brokers and correspondents running to the back office at 2:05 pm begging to get their mutual fund purchase/sale in. At this firm we required all Mutual fund tickets be in OPERATIONS HANDS by 2:00 pm eastern. Some where around 2003 the after hours mutual fund scandal broke due to the efforts of Elliot Spitzer (not a securities regulator). Billions and Billions were made by firms running tickets at 6, 7, sometimes 10:00 pm. The market closes at 4:00 pm yet for some reason, not one Securities regulator had a problem with a Mutual fund ticket time stamped at 8:00 pm? Since when is 4:00 not 4:00? This illegal and fraudulent behavior occurred for 10+ years yet we had to rely on Spitzer to out it.

Let’s look at the research scandals that also plagued Wall Street. I remember working Compliance and handing out the restricted list of securities the firm was involved with. We would prohibit any buy or sale until the updated recommendation was published. Yet for many years some of the larger firms on the street were putting out fraudulent reports about liking certain stocks while at the same time unloading their positions. They did this for many years yet once again it was the Attorney General who found the crimes. Think about some of the other scams and scandals that plague Wall Street and then ask your self if a new regulatory system would solve the apathy regulators tend to carry toward the elite Wall Street firms.

Now think about this: Lehman brothers , Bear Stearns and several other elite firms were so over weighted down with CDO’s and other toxic assets, yet no securities regulator ever questioned their risk management, their FOCUS reports or anything else. Once again, I draw upon my own previous experience when my examiner let me know during an audit that the firm currently had 12% of its total holdings in ABC stock. They informed me of the potential risk and we began restricting the stock and lowered our exposure. However, for some reason this same regulator sent employees into Lehman, Bear, Goldman and Merrill and saw absolutely no risk with holding billions in toxic assets or did they see the risk and just refused to say something?

Naked shorting of stock then cannot be readily borrowed has always been illegal, yet it wasn’t until last summer when the largest firms on Wall Street were being crushed by shorters that the SEC finally jumped in to enforce Short sale rules. Our Government is not without fault either in this mindset. For instance, the SEC took over Sanford Financial as well as several other small firms and hedge funds in the past year. A receiver was immediately appointed to oversee the day to day operations. Our government announces that AIG is broke and puts hundreds of Billions into the company but didn’t send a receiver be appointed? So now the Government wants to talk tough and take a 90% tax out of greedy bonuses that were given with the Fed Chairman’s consent?

At the end of the day it’s obvious that selective regulation does not work. Yet we have seen no indication of that mind set changing anytime soon. In fact, we fear the scandals can get worse then ever before for one simple reason: The large Elite firms now have ‘can’t fail status” due to tax payer money totaling 2 trillion and counting. Do you really think the Wall Street elite is now concerned that if they screw over investors with bad prints, bad research and inside information that it will have any effect on them? Chew on this for a moment: how are you going to levy a huge fine for future fraudulent behavior of you already have trillions invested in them? Imagine a fine of 100 Million for bad acts against Merrill for some atrocity all the while knowing they have a line of credit with the government and if they did pay, it would delay repayment of the TARP money. A new Regulatory overhaul will change what? Nothing.

The SIPA wishes a heartfelt congratulations to Mr. Alan Davidson of Zeus Securities, upon his election to represent the interest of small firms in the National Adjudicatory Council (NAC). The NAC reviews FINRA disciplinary decisions. The election is of special significance because it was contested and Mr. Davidson ran as an independent candidate. 

Despite the opposition supporting the FINRA nominee, Mr. Davidson won. And so, Mr. Davidson’s victory is truly a victory for small independent firms, which made their voices heard loud and clear.

The SIPA spoke with Mr. Davidson this morning:

SIPA: Congratulations. On behalf of the SIPA membership, we’re all excited about your win. Especially at this particular moment in time.

Davidson: Thank you. I’ve got a strong agenda, and I want to make sure that small firm owners and registered persons know that I will do whatever I can for small firms, and will work hard to get that agenda across.

SIPA: What particular issues do you see as a focus?

Davidson: Leveling the playing field. Sanction guidelines need to be reduced, and the limit needs to be raised for actionable issues; smaller issues need to be downplayed…

SIPA: What smaller issues?

Davidson: Well, for example, rule based violations that do not affect the customer. These issues need to be addressed more appropriately – letters of caution, for example.

SIPA:  That’s great. That’s certainly something we hear a lot about.

Davidson: And then there is the participation of small firms on the committees and boards of the FINRA. I’m going to encourage active involvement. Members of small firms should participate, and I encourage them to contact me, and to seek office too. I think it’s time to create a level playing field.

SIPA: Thank you for taking time to talk with us. We all look forward to your efforts going forward.

Davidson:  It’s been a pleasure!

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Rantings From A Confused American 

Is President Obama this Dumb?  Or is he Dumber?  The President is “outraged and shocked by the obscene bonuses AIG officials gave as bonuses to top employees”

Shocked?  Really?  President Obama, with all due respect, you are in for a very long four years if you are this naïve.  Obama, along with John “ I’m suspending my losing campaign” McCain both supported the TARP plan and the blank check for over one trillion dollars that went to the Banks and Brokerages. The SIPA at the time made it clear that “ These are poorly run, poorly managed, Corrupt Firms who should be laid to rest”

Everyone agreed that these firms were corrupt and unethical and were poorly managed with little or no vision other then to have million dollar rugs and gold faucets.  Now six months after pumping all this money into corrupt companies hands….you are “shocked “ that they took the money and spread it out amongst the all male club and ran???  What’s next?  President Obama will be “ shocked and outraged” that Iran has enriched some uranium, North Korea tested a long range missile and Brett Favre has decided he doesn’t want to retire??

TARP has been an unmitigated disaster and ALL of the Washington gang is to blame.  George Bush is the one who listened to the ‘Goldman Gang” in the first place and started bailing out, taking over and doing everything a Cuban Marxist would expect him to do.  Obama , like most in Congress followed suit and rubber stamped BILLIONS in tax payer money that was spent on bonuses to Goldman, Merrill and AIG employees.   This same circle of friends having been running amok of rules and regulations for 20 years yet now we are shocked that they took the money and ran?  This reminds me of an old fable about the Farmer and the Snake…

One winter, a Farmer found a Snake stiff and frozen with cold. He had compassion on it, and taking it up, placed it in his bosom. He brought the snake home, put it by the fire and rubbed oil onto its skin. The Snake was quickly revived by the warmth, and resuming its natural instincts, bit its benefactor, inflicting on him a mortal wound. The Farmer cried out in his last breath “why would you do that to me after I just took care of you and saved you”?

The snake replied” Because I’m a Snake”

Welcome to Wall Street’s elite Mr. President. 

CYA In These Crazy Times

As one of the leading voices of Registered Reps and their rights to Life, Liberty and the pursuit of higher returns, The SIPA has had an out pouring of e-mails and phone calls from Individual registered Representatives who are now being made the brunt of this cruel Bail-out Blarney.  As everyone knows by now, Bernie Madoff wasn’t the only one in town who figured the regulators weren’t looking.  Recently the SEC revealed that another Ponzi scheme in Texas was being perpetrated by none other than Alan Stanford.  The scary thing about this is not that he stole money for years without any regulatory intervention, but rather the fact the honest hard working Brokers tried to stop this and were turned away.  Click the image below to see the interview in its entirety.

Here is an honest and hard working Broker who is concerned for his clients, concerned for his firm and when he goes to his Compliance Officer he is shown the door and more shocking is that when he went to his regulator he was ignored.  Every broker should be taking steps right now to document each and every conversation and concern you have with your Supervisors and your Compliance officers.   Do not for a second assume that just because your compliance officer signed off on something that your job is done.  Right now it’s every man for himself and it appears that brokers may be the easiest thing to throw under the bus.  For instance, we recently heard from a top five Wall Street firm Broker that he had his Form U-4 marked for the first time in 20 years due to a complaint that he “bought FNMA preferred stock for his client three years ago”! It was recommended by this will known company and was triple A rated yet due to the collapse on Wall Street, he is now being treated like he is a boiler room caller in Long Island selling time shares for land in Wyoming!.

When your company touts a company…You need to seriously check out their motives.  Many brokers for large firms have this crazy notion that as long as my company is pushing a particular investment it must be in the best interest of the client.  WRONG!!!!  Just remember that if you are brought up on charges of unsuitable investments you can count on two things:

1. You Company will NOT have your back and
2. The Trial attorney would love it if they did

Why is this?  When these over zealous trial lawyers get going they are like sharks smelling a wounded whale.  They know that the more blood that is in the water the greater the bounty.  Your company will not have your back because they do not want a class action suit against them or commercials about their firm and investments running early in the morning.  As for the lawyers, they would love nothing more then to get their claws into one of these companies that does get your back and admits that they encouraged all reps to buy a particular stock.  Don’t believe me?  Without giving too much free publicity, check out the name of this web site:  www.SueMorganStanley.com

If you do get a customer complaint, we would urge you to do two things, let your compliance officer know and then contact your own outside counsel.  In-house counsel is paid to protect the firm first and foremost and anything that can open the firm up to exposure will be avoided.  This means that even if they know you did nothing wrong they may sit there mum and do nothing because you are just a pawn in their greater scheme.  We would urge all Reps to especially review and begin asking harsh and blunt question of their management in they helped raise capital for any hedge funds…especially if they were proprietary hedge funds.  You should demand total transparency of these funds and the fees and if they are unwilling to provide it….seek legal counsel immediately.  The SIPA is not a law firm nor are we offering legal advice…but if you drop us an e-mail we do know some quality lawyers with integrity and chutzpah 

I’m gonna start by saying that I am totally outraged the Bernie Madoff gets to go straight to jail without a long tedious exposure at trial, and I think it stinks to high heaven.

And I’ve had a real difficulty understanding why auditor after auditor found nothing awry at Madoff, when a 7th grader would have got it. And why the SEC refused to look into it, when presented with the hard evidence on multiple occaisions.

One can imagine that it could have been human fallibility; simple incompetence… Or even maybe a series of unfortunate coincidences… Occurring repeatedly, spanning more than a decade… Like a coin toss landing not on heads or tails – but on it’s edge… Ten times in a row…

But my mind rejects that as a possibility. My mind – simple and lacking grace – is a trader’s mind. Probabilities, odds, game theory, percentages  – are what bubble up in my head. I’m no genius, wish I were. All the same this simple mind understands that it is unlikely to see a coin land on it’s edge. Let alone four, five times in a row. Unlikelier still 8 times in a row. Experience and Natural Law informs that when one witnesses results like those, the game is likely rigged, the results are likely corrupt.

But what possible reason could there be for corruption to occur and then to continue and to actually expand in the Madoff case? Conspiracy theories are great entertainment, but we cannot rely up anything until it becomes 8 1/2 by 11…

And so I posit for your reading entertainment, an 8 1/2 by 11  potential clue to the mess. This “Clue” is in all probability noise, not signal – but then again, it is probably as likely as flipping an edge ten times in a row. Probably a lot more likely…

I recently saw an ad for the position of “Investment Associate” for the FINRA’s (estimated) $1.5 billion warchest. What was not readily apparent to me, but was pointed out by my associate is that the ad contained a job description; the investment methodology expected to be employed.

The Investment methodology would employ a significant allocation in “Alternative Investment Vehicles”. The percentage of the desired allocation in “Alternative Investments” was substantial, at 45%…

“The Investment Associate provides support for investment related work in private and marketable alternative investments for FINRA’s endowment portfolio. Alternative investments are targeted to be 45% of total endowment assets. The Investment Associate will work closely with the Director of Alternative Investments as it relates to private equity and real assets and the  Director of Marketable Alternative Investments as it relates to certain marketable alternative investments (hedge funds). ”

In fact, a review of the public record does indeed show a very significant investment by the FINRA in hedge funds… But it does not go so far as to say which …

-

Simply put: Could it have been Madoff?

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And if so, if the NASD had put a large number of eggs in the Madoff Basket  – could that have influenced the regulatory oversight?

Could the NASD, potentially skewered and hamstrung by Madoff – have not been physically able to extract the necessary funds to make a pay-out of more than $35,000 to members as part of the merger?

Was the FINRA’s alleged fraudulent misrepresentation that the $35,000 was “non-negotiable”, and the claim that the amount was allegedly “determined by the IRS as the Maximum Amount Possible” predicated by and based on the “reality” that they really did only have enough cash to do $35,000 – because they were up to their eyeballs in Madoff’s fraud?

And if the FINRA was indeed a Madoff Victim, wouldn’t they have been in a conundrum… Pull out funds and they would be front running the public. Bust the scam and they might lose that money forever… As well as have some serious egg on their faces. Whoa!

Okay, this is purest speculation; salacious entertainment value for feeble minds like my own.

But dear reader, my simple mind has a simple question: Where do YOU put the odds?

In what is a sign of the times, Rolling Stone Magazine has published an article by Matt Taibbi chronicling the regulatory failures and misteps that allowed for the largest financial crisis in history develop. What is sad is that this article is great, gut punching investigative reporting – the kind of reporting that the Bob Woodwards of this world will no longer touch because it might offend the interests of their corporate masters. So the investigative “hats off” of the day goes to Mr Taibbi, and to Rolling Stone Magazine, Outstanding Financial News Publication.

For Matt Taibbi’s complete report, “The Big Takeover,” check out Issue 1075 of Rolling Stone.
http://www.rollingstone.com/issue1075. 

By the way, the article below talks about the very same issues that the SIPA has been whining about for months. It is nice to have some independent coverage of those issues in the popular media - we know from experience that the Major Financial Publishers refuse to cover those important issues. Such is the state of jurnalistic integrity today. So go out and buy a subscription to the Rolling Stone Magazine; great writing like this needs to be encouraged. Article is available at the Rolling Stones Magazine website here: (http://www.rollingstone.com/politics/story/26793903/the_big_takeover/print )   

Here is the Article: (Warning – Strong Language; Curse Word Alert!!_)

The Big Takeover

The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution

MATT TAIBBI
Rolling Stone Magazine (http://www.rollingstone.com)
Posted Mar 19, 2009 12:49 PM

It’s over – we’re officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline – a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history – some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).

So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial – we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck – bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company’s CEO, actually compared it to catching a cold: “The marketplace is a pretty crummy place to be right now,” he said. “When the world catches pneumonia, we get it too.” In a pathetic attempt at name-dropping, he even whined that AIG was being “consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet’s investment portfolio down.”

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else’s financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its “pneumonia” was making colossal, world-sinking $500 billion bets with money it didn’t have, in a toxic and completely unregulated derivatives market.

Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town – and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.

People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve – “our partners in the government,” as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron – a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

For Matt Taibbi’s complete report, including the people behind the crash and a look at those who stand to profit from it, check out Issue 1075 of Rolling Stone.

Release in PDF <here>
Court Order in PDF <here>

New York, March 18, 2009. Today, the Second Circuit Court of Appeals revived a  previously dismissed class action complaint in Standard Investment Chartered Inc v. NASD, et al, Appeal # 07-3372-cv.  The defendants in the suit are the NASD now known as FINRA, former FINRA CEO (and now Chair of the Securities & Exchange Commission) Mary L. Shapiro, NYSE Group, Inc. (”NYSE”), Richard F. Brueckner and Barbara Z. Sweeney. Standard is a California-based broker dealer and a member of FINRA. The members of the Class are the approximately 5,000 broker-dealers who were members if the NASD and not currently members of the New York Stock Exchange.

The class action Complaint accuses the defendants of, among other things, misrepresenting to members of the Class why only $35,000 was paid to each of them in connection wth the now-consummated merger of the regulatory arm of the NYSE with NASD to form FINRA in 2007.   Standard claims that snce the NASD members’ equity was in excess of $1.5 billion as of the date of the NASD proxy statement seeking member approval for the transaction, each Class member was entitled to receive well in excess of the $35,000 one-time payment. The defendants deny plaintiff’s claims.

The case will now return to District Court Judge Shirley Wohl Kram for further proceedings.

Contact: Jonathan W. Cuneo, Esquire       202-487-8546 (cell)
202-789-3960 (office)
Richard D. Greenfield, Esqire     410-320-5931 (cell)

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Sweeping The Scene Clean of Madoff’s Victim’s Blood

Bernie Madoff plead guilty to 11 counts of fraud yesterday in Manhattan. While acknowledging that we are not Crime Scene investigators in New York, Vegas or Miami, the SIPA is shocked at the apparent cover up in the whole Madoff mess.  Although I’m no genius, I do consider myself a pretty good judge of common sense and human nature.   Why in the world would Madoff just plead guilty to all counts and go directly to jail without passing go or collecting his $200 bucks?  This is America damnit and nobody in this country is ever guilty…and even if they are, they say it was someone else’s fault.  OJ Simpson butchered two people and had bloody clothes all over his house….but he wasn’t guilty.  Robert Blake of Berretta fame excuses himself from dinner goes out back and kills his ex wife and then goes back to dinner about an hour later…But he was innocent too.  Now along comes Bernie Madoff and his now 64 Billion Ponzi scheme and all he can say is “ I’m guilty of everything”?   Please spare me talk about him owning up to his evil ways or remorse.  The guy is a total unadulterated scum and a con man. He would have kept his scheme going as long as possible…

But – Had Madoff plead innocent to all charges, he would likely have spent the next several years confined to his 7 million penthouse in the city.  He is 71 years old and any trial would have taken years due to the size and depth of this scam.  It is very conceivable that Madoff might have died of natural causes before ever spending a single nite in jail. So his guilty on all accounts has me concerned that the fix is in. It fails the common sense test.  Why would no defense be presented?  For instance, in the OJ case a police officer who once uttered the “N” word 12 years earlier became a two week sensation and a side show to divert attention away from the fact that OJ killed two people.  Despite the atrocities Madoff committed, there wasn’t a single smoking gun the lawyer could hang his hat on? 

And what about the Prosecutor? How could he have just let Madoff go quietly into the night when this is the sort of case a prosecutor dreams about for an entire career? A scumbag of mammoth proportions caught dead-to-rights. Under normal circumstances, the Prosecution of a cretin like Madoff would have been used to send a message. Particularly in light of the massive damage that Madoff inflicted – to confidence in our financial system – not to mention the actual ruined victims. 

There Were No Trades Done By The Madoff Fund. So… WHERE IS THE MONEY?

I believe the guilty plea should no be accepted because there are still so many questions out there to be answered. We know Madoff is scum,  but if we don’t know HOW we cannot prevent this from happening again.   A long drawn out trial would be in the publics best interest because it would allow investigators to see where tey failed and how to prevent it from happening again.  For example, as of today they are pegging the losses at 64 BILLION dollars!!!!!…Im going to repeat this again for effect..64 BILLION DOLLARS IN LOSSES.

Now im going to throw some sobering, shocking and quite frankly scary numbers at you.  They are scary because quite frankly they don’t add up and it may make you question our government.  The Madoff scam goes back approximately ten years and investigators now say they cannot find any trades run by his fund.

For the sake of keeping it simple, let’s assume that just about every day for the last ten years Madoff spent the money.  360 days a year for ten years Madoff spent the money.  If you divide the 3600 days into the 64 billion loss, that means Bernie spent 17 MILLION DOLLARS A DAY…do the math …its impossible to spend that much.  Had he been playing the horses, buying risky derivatives or some other venture….it still could not add up to 17 million per day.  They keep saying he had a lavish lifestyle, but come on, 17 million per day?  The plea should be rejected until we figure what we are charging him with. 

Instead the government and the regulators are almost like a cop at a grotesque murder scene telling pedestrians “Nothing to see here folks, keep moving”.  Blood and body parts are everywhere but the cop keeps the crowd control face on and just pretends everything is going to be ok…Just like the Madoff plea yesterday.. “Nothing to see here folks, He spent 17 million dollars a day every day for 10 straight years…keep moving folks”

Please note that additional information re Mr. Davidson’s Background is available in the FINRA’s NAC Election Information Package, available HERE. Previous SIPA commentary on this election is HERE. Below, is what the “Contested” Candidate (the small firm supported Candidate) has provided exclusively to the Members of SIPA – his pitch, as it were.

Subject: Why Vote For Alan Davidson – Independent Candidate, Small Firm NAC  Seat?

Good day ladies and gentlemen,

I welcome the opportunity to discuss my NAC candidacy in an election now taking place by paper ballot until march 6, 2009.  The following is noted:1. Since 1993, the National Adjudicatory Council had final authority over sanction guidelines for fines. These fines apply to all formal disciplinary actions, settled or fully litigated. In 3/2006 the NAC increased these guidelines. However, no adjustment was made on the $5,000 breakpoint for formal actions.  I shall work to increase the bar to $10,000.  This will allow more member cases to be dealt with informally.

2. A Regulator should assist members in avoiding compliance problems. As a former member of the district 10 committee, I proposed creation of the district 10 newsletter. The goal was to alert members to preventative compliance. I shall work to create a NAC newsletter prepared by the staff. Additionally, I shall reach out to the district committees to create similar newsletters.

3. The Regulators have failed in identifying fraud as per Madoff, etc.  as a result, the credibility of our industry and businesses has been damaged.  I shall work to create a whistleblower fraud program with appropriate incentives.

4. I am an experienced District 10 Committeeman and former NASD Governor. for over twenty years I have demonstrated pubic commitment to membership issues.5. I quickly generated true support of 153 members.  A FINRA Committee, behind closed doors chose my opponent.

6. I intend to provide leadership to the other six NAC members. I shall represent you and the membership.  I shall not follow a policy of “go along to get along.”

This election is very important to your membership interest.  A vote for Alan Davidson will insure representation of that interest.  If you have already voted, thank you. 
      

Please note that additional information re Mr. Jones’s Background is available in the FINRA’s NAC Election Information Package, available HERE. Previous SIPA commentary on this election is HERE. Below, is what the FINRA Supported Candidate has provided exclusively to the Members of SIPA – his pitch, as it were.

Dear Securities Industry Professional Association Participant,

My name is Jim Jones and I appreciate the opportunity the SIPA offered me yesterday to address you. I felt honored to have been nominated as a candidate for the upcoming small firm vacancy on the National Adjudicatory Council (NAC). As you know, the NAC’s purpose is to consider disciplinary decisions issued by FINRA hearing panels and matters on appeal. It also reviews statutory disqualifications and exemption requests. For the first time, instead of a regional composition, the NAC will consist of representatives that mirror the current FINRA Board of Governors. Its membership will now reflect the industry as portioned by firm size. This is the most critical time to bring a well rounded small firm perspective to any review. I feel I have the credentials, experience, and fairness that apply to such a responsibility. All candidates’ biographies may be found on the FINRA website, but allow me to briefly share my background. 

Crews and Associates began 30 years ago with seven individuals, most contributing the majority of their net worth to fulfill our dream. We gathered around a folding table centered with a single telephone. We could not have been much smaller or faced a more challenging environment. That core group still comes in to work each day and only the unexpected and untimely passing of three of our original partners has kept us from being completely intact. From the first day, members of Crews have always remained active in the regulatory process. Selfishly, we were motivated to become a better company and keep current on the latest issues. Since then, I feel we developed a further obligation to contribute back to an industry that builds and supports our nation’s infrastructure and provides a living to our employees and their families. Crews is proud of its history and reputation but my point is that I understand the regulatory burden that is being assumed by the vast majority of the FINRA membership entities, the small firms. Although acquired by a local institution, First Security Bank in 2000, we continue to be independently operated and face the identical challenges as you and other small firm members.

This NAC position should be filled by an election where one relates his or her experiences and qualifications and then simply allows the membership to determine who would best insure them a fair and reasonable hearing.