Penalty Bid Rule needs to be overhauled

Posted On: July 18, 2011

It is illegal to fix the price or control the price of any security; that rule is one of the basics of a fair marketplace, and the function of government regulation, i.e. FINRA, is to make, or create, the perception that the market is fair to all bidders. With the vast amount of cash looking for a home the expected boom in underwriting and new issues is exploding, and market makers have sounded the call for FINRA to change the Penalty Bid Rule. Pitting market makers and issuers of new securities against savvy investors, this will be a bloody battle. Penalty bidding permits the underwriter to fix the bottom price on any new issue during initial distribution. Also known by its evil-twin name “pegging” it is permitted under SEC Rule 10b-7 but only for syndicate managers and underwriters of new issues. Fixing prices of securities is the antithesis of fair markets and the implausible arguments used by FINRA to support the Penalty Bid Rule are under attack. Keep tuned for more follow-up on this page. If your financial advisor has been pegging your account then you have the right to file a complaint. Contact a securities fraud lawyer in South Florida for more information about abuses and corrupt practices of financial advisors if you feel like you have been the victim of securities professional.

What is FINRA and what became of the NASD ?

Posted On: July 15, 2011

FINRA is the Financial Industry Regulatory Authority; it regulates securities firms in the United States. FINRA licenses and oversees the over 630,000 men and women in the securities industry. Its mission is to make sure the industry operates “fairly and honestly”. Overseeing over 4500 brokerage firms with over 160,000 branch offices is a big job. Most of us see the job as poorly done, do you agree?
Congress is paying the 3000 employees of FINRA to oversee, regulate and make “fair and honest” the entire spectrum of the financial securities industry in the U.S. FINRA is the “champion” of the small investor. OK?
If you want to contact FINRA you can write them at 1734 K Street, Washington, DC 20006, or call them on the telephone at (301) 590-6500. I do it all the time; they do actually answer the phone. There is a broker hotline where you can check out the history of your financial advisor: call the hotline at 1-800-289-9999, or go online to the FINRA homepage and go to the broker-check area. You’ll see a brief history of the advisor’s credentials and complaint(s), if any. The NASD was dissolved and its job taken over by FINRA.

How to Win a Claim against Your Broker

Posted On: July 7, 2011

Don’t tell anyone, but it’s all in the paperwork. Remember when you signed up with that superstar? Remember the forms? Where are they? Did you keep them?
When I speak with clients the mantra is save your paperwork. Here’s why…..when you signed up with your “top” broker you filled out some forms about your risk tolerance. Risk tolerance? Yep! And when you file a FINRA claim against your fallen “superstar” over some Estonian CDO Hedge Fund that went long on Madoff notes….you want to parade in front of the FINRA arbitrators your risk tolerance as very low. If you don’t have your intake forms where are they? Your rising “star” has it in his computer and will promptly buy a new hard drive when you file with FINRA. So, here’s the deal…here’s what to do:
Call your “brilliant” broker’s Sales Assistant today, not tomorrow, and tell him/her you are re-building your paper files and need a copy of the original intake forms you signed. Get it today, before the market dips and you sing a chorus of the hobo broke blues. If you don’t you’ll be with the other 30,000,000 out of work and broke Americans who are living la dolce vita life on unemployment checks….for sixteen weeks…..then to the Church commissary for some canned vegetables. Get your paperwork today and I’ll greet you in my office with the good news that the claim was settled and here’s your check.

Goldman and JP Morgan cut deals with the SEC

Posted On: July 5, 2011

Is beauty truth, or truth beauty or does it matter to JP Morgan? The SEC began legal action against JPMorgan Securities for not disclosing material facts to investors about a CDO vehicle. Sounds familiar? It should because recently Goldman Sachs was taken to the woodshed over the same issue. Not to worry, the woodshed won’t hurt too much as the money is small.
JPMorgan settled with a $156.3 million dollar check, Goldman Sachs settled for $550 million dollars. Whasss up? It’s all about failing to inform investors that a hedge fund was created and they were short. Oooopps.
No executives were tagged on this one and the penalty was corporate, so no real pain, and no changes. The street goes on and on and on.
The only refutation came from commentators who didn’t like the disparity….between $550 million and $156 million. Bloomberg spoke on this saying JP Morgan was given favored treatment, others pointed out, correctly, the differences in the case(s).
The SEC said nothing and went back to what it does so well…..doing very little.