Small firms claim Finra targets them
|May 26th, 2011, 05:51 PM||#1 (permalink)|
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Small firms claim Finra targets them
From the NY POST:
Small stock brokerage firms say regulators are trying to kill them.
And they think the largest independent regulator of the securities industry -- the Financial Industry Regulatory Authority, or Finra, for short -- is nothing more than the hit man for large brokerage firms.
"I've been fighting with Finra for years. In some ways it's like an organized crime group," said John Busacca, founder of the Securities Industry Professional Association. "It's like paying protection money in Bensonhurst."
Busacca, who aired his grievances to me in a phone interview, complains that Finra won't take legal action against large firms but has become extremely picky when dealing with small broker/dealers.
Representatives of the small firms who sit on Finra's 22-member board are outgunned by those that represent big- and medium-sized operations as well as the 11 appointed public members.
Just a couple of years ago there were more than 6,000 small independents in the brokerage industry, providing thousands of jobs. That number is now down to around 4,100 and there's been a big drop-off in just the last few months.
Critics say Finra and other government agencies appear determined to force Darwinism on the industry, with the bigger firms gobbling up weaker, smaller ones.
The owner of one independent broker says he's been harassed by Finra for months and is often made to comply with regulations over which Finra has no authority. (Finra, mind you, failed to spot Ponzi schemer Bernie Madoff despite regularly examining his broker-dealer operations.)
And this source, who doesn't want to be named lest he be targeted some more, says he's hearing similar complaints from a lot of other broker/dealers his size. He believes it's either a vendetta against small firms or just plain ignorance of the rules on the part of Finra representatives.
"It's the old story. The big guys get to skate. To look tough, [Finra] beats up the little guy," he said.
And, Finra's detractors say, the regulator is causing these small firms to cut jobs at precisely the moment that Washington is attempting to foster employment at mom and pop companies.
Finra says it "regulates all firms equally, regardless of size, and investigates problematic conduct where it is found."
I've been fighting against Wall Street speculation in the oil market for years. And if you don't believe me, you can -- as we used to say -- look it up.
So I find it both encouraging and annoying that Washington is finally getting around to the issue.
Suddenly, as if a light just went on in Washington's collective brain, the Commodity Futures Trading Commission has filed suit against some oil traders and the president has spoken harshly about speculators.
Various members of Congress, meanwhile, have not only been mean to speculators, despite the fact they'll probably ask these same people for campaign contributions soon, but have also taken the politically safe route of being equally mean to oil companies.
Wow! There is suddenly a lot going on.
Why rush? The US economy is faltering again and the high price of gas is responsible for a lot of the recent decline. (But don't be misled: There are a lot of other problems besides gas prices holding down the economy.)
Yet Washington's new meanness toward oil industry profiteers isn't really changing the way these pirates operate.
Goldman Sachs, for instance, just a few days ago repeated a forecast made earlier this year that oil prices would soon climb rapidly. Between its two higher oil forecasts was one by Goldman predicting falling prices, suggesting the firm is doing nothing more than -- as they say on Wall Street -- "talking its book."
Talking its book means a firm made a prediction that helps it make money on the securities or commodities positions it already holds in its portfolio.
Goldman, of course, was bailed out by the Ameri can public during the 2008 financial crisis.
The folks on Wall Street are heavyweight consumers but nobody in the financial industry apparently owns a conscience.
If they did, Goldman and others wouldn't even think of trying to boost oil prices at a time when the cost of gas is already causing such hardship.
Read more: Small brokers says Finra targets them - NYPOST.com