Reform the NASD!

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The Financial Industry Association (FIA) has announced its plans to fully contest Committee elections in all NASD Districts.  On the heels of last year's dramatic contested elections in which NASD's nominated candidates were defeated in three districts and on the national Board, FIA intends to continue its effort to reform the self-regulatory organization. 
 
The FIA represents the coalition of the "Dissident" and the "Reform" movements of NASD member firms and registered persons.  FIA is dedicated to fair and reasonable securities-industry regulation.
 
For more information on the current contested elections, please visit:
 
http://rrbdlaw.com/2006/nom06.htm 

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The Financial Industry Association is a free organization depending on donations?  Why is that?
If it were a truly meaningful group--such as SIA or the Bank Dealer's Association or the Security Traders Association, or the Bond Traders Association--they would be charging massive dues and the firms would all belong.
I've been watching with modest interest as these dissident nominees are being elected in some of the districts.  The firms the dissidents represent are the questionable firms--not just the small ones.  It's as if the criminal side of the business is making an attempt to become legitimate by becoming active in their local districts.
Years ago they did it by bidding ridiculously low interest rates on bond offerings, winning the deal, selling the bonds at a loss but considering the loss to be well spent because they were building respect.
What must be remembered is that the NASD was allowed to be created by the SEC. While it is theoretically a self regulator organization it clearly dances to tunes being called by the SEC.  The Maloney Act can be repealed by Congress just as it was passed.
A good analogy would be the United Nations.  The fact is the world is run by half a dozen great nations--yet the UN is a cesspool of nonsense with its agenda being driven by third world schidtholes.
If the NASD becomes controlled by the brokerage industry equivalent of third world countries the SEC will simply ask Congress to repeal the Maloney Act and will take control once again with their very heavy hand.
If you think the NASD is heavy handed, or favors the big firms, wait till the SEC wraps its loving arms around the brokerage industry.
The NASD is a welcome buffer between the industry we know and the industry the bureaucrats would create if the NASD were gone.
The SEC views electing questionable characters to the NASD leadership as a bull views a red cape being waved in its face.
This FIA and its agenda is a horrible idea.

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It might be a terrible idea to you, but you must remember that you were a corporate suckass, with all your 'committee work' and all, and therefore you would want all of the authority of a self regulating body concentrated in the hands of your corporate masters.  There are those who believe that the NASD as it stands wields too much power in areas where it rightfully has no business, and as a consequence should be brought back to a more centrist position where it represents ALL of the industry.

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Philo:
FIA is dedicated to restoring the equilibrium between the regulator and the regulated.  I hope that you will join with us.  There are no mandatory membership fees as we are not going to waste our time and money on funding lobbyists to lunch with the politicos --- that never gets smaller members anywhere.  The big boys can always outspend us.  We're also not going to print up expensive brochures and charge admission to two-day seminars that no one can afford to go to.  This is a movement by smaller firms and registered people, and for them.
Isn't it odd that smaller firms who challenge the NASD are always called "criminal?"  Funny though, who was behind all the recent criminal cases involving massive research fraud, market timing, and the Enron-type scandals?  I thought the press cited the wirehouses --- those upright citizens as some would pretend to see them.  Ultimately that's what FIA fights for. We need to educate the public that bigger isn't always better.  That firms on television aren't always more reputable than the smaller, regional firm in your hometown.  That a world of only Starbucks and Walmart isn't necessarily better than local, mom-and-pop businesses that have ties to the community.
Finally, I will not respond to any posting by NASD Newbie and would hope that all serious members of this forum will do the same.  That poster is simply a malicious troublemaker intent on disrupting any meaningful dialog and should not be rewarded by attracting the attention he or she so desperately craves.

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rrbdlawyer wrote:
Finally, I will not respond to any posting by NASD Newbie and would hope that all serious members of this forum will do the same.  That poster is simply a malicious troublemaker intent on disrupting any meaningful dialog and should not be rewarded by attracting the attention he or she so desperately craves.

Nah, I am the voice of experience.
The NASD exists because the industry approached Congressman Maloney back in the late 1930s asking for permission to form a self regulatory body to insulate the broker/dealers from the heavy hand of the SEC.
After holding hearings and all the other drills the Congress engages in the Congress passed The Maloney Act of 1939 which granted Wall Street to regulate itself--so long as they put some real teeth in their efforts.
For close to 70 years the NASD has fulfilled that mission admirably.  Yes they have rules and yes those rules are arguably more onerous on the smaller firms.
However, the unintended consequence of electing officers of questionable firms such as Gunn Allen to the leadership of the NASD invites the SEC to revisit the issue.
For that matter the NASD itself could revisit the issue and ask Congress to revoke its own charter--after arranging for the Securities Industry Association, or one of the other legitimate trade groups, to hire the staff and transfer the self regulatory powers.
Populist ideas have a certain appeal, however there is always a lot more to the story than what appears on the surface.
As I said earlier, if you think the NASD is onerous remember that the SEC has the right to simply take over the "Sell Side" of the industry which has been pretty much left to the NASD since 1939.
The saying, "If you like the Post Office you'll love government regulated health care" goes for this industry as well, "If you like the Post Office you'll love government regulated broker/dealers."
Support organizations like this goof ball idea at your own peril.

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]As I said earlier, if you think the NASD is onerous remember that the
SEC has the right to simply take over the "Sell Side" of the industry which
has been pretty much left to the NASD since 1939.

NEWBIE: Your statement above shows your lack of understanding...
It is the NASD regulators that do not want the SEC to take
over...WHY????   Glad you asked:

Survey: Salary of SEC's Cox Eclipsed by Most Others (bondbuyer.com)

This is a report that came out that showed the top guy at the SEC
gets 150k a year....but the top 8 at NASD now have a ONE MILLION BASE
SALARY PER YEAR!!
don't drink the kool aid LOL

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DBCC wrote:

This is a report that came out that showed the top guy at the SEC gets 150k a year....but the top 8 at NASD now have a ONE MILLION BASE SALARY PER YEAR!! 

The SEC is a government job, the NASD is not a government agency.
Regardless, what's your point?

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what's the point?   Its pretty obvious....if the top brass at the NASD all are multi millionaries, they would cringe in fear if the SEC took over because their pay would be cut from millions to a hundred thousand or less....Also, I will ask you the same thing I always challenge the NASD Regulators with:  Name five reasons why direct supervision from the SEC would be bad for the 4000+ small firms out there?
With the NASD, technical violations get trumped up into huge fines by their buddies at NAC....With the SEC, they have to go to federal court..so they better have rock solid proof and utter disregard...also, the SEC staff operates in black and white...the NASD operates in grey areas....one firm gets a 25k fine, another 5k for the same infraction.

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DBCC wrote:
what's the point?   Its pretty obvious....if the top brass at the NASD all are multi millionaries, they would cringe in fear if the SEC took over because their pay would be cut from millions to a hundred thousand or less....Also, I will ask you the same thing I always challenge the NASD Regulators with:  Name five reasons why direct supervision from the SEC would be bad for the 4000+ small firms out there?
With the NASD, technical violations get trumped up into huge fines by their buddies at NAC....With the SEC, they have to go to federal court..so they better have rock solid proof and utter disregard...also, the SEC staff operates in black and white...the NASD operates in grey areas....one firm gets a 25k fine, another 5k for the same infraction.

The leadership of the NASD is not motivated by their paychecks--those who operate in the rarified air of $1 million or more per year are fully capable of walking away without diminishing their lifestyle because as those of us who earn less than that know a family can only spend so much money, can only enjoy so many vacation homes and so forth.
If one firm is fined $25,000 for the exact same offense that another firm received a $5,000 fine they should appeal it.  Arbitration between the NASD and its member firms is open to appeal--it's when non members arbitrate with members that final and binding kicks in.

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Having been in a firm that was subjected to SEC aand NASD oversight and concurrent exams, I'll tell you with 100% objectivity that although they "shared notes", the SEC was way more professional, knowledgable, effective and way smarter. 
NASD, especially enforcement, is a joke. It's full of self-serving people looking to better themselves on someone else's back. 
Reform NASD? Forget it. Here's the single most important way to do that.  MAKE THEM LEGALLY ACCOUNTABLE FOR THEIR ACTIONS.
I will be first in line to sue them.

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NEWBIE
First, You actually believe $$ doesn't motivate individuals at the NASD??  They are not motivated by their pay?  Wholly crap!  Are you serious when you say that?  Becuase if they are not motivated by pay, why should they take more then Chrmn. Cox?  After all 150k a year is not too shabby....Not motivated by pay...You are one funny guy....I thought we were dealing with the NASD here , i didn't realize they were the Monks of New Skete LOL
 
second:  Im waiting to hear 5 reasons why members would not want direct supervison from the SEC???
 

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Philo Kvetch wrote:It might be a terrible idea to you, but you must remember that you were a corporate suckass, with all your 'committee work' and all, and therefore you would want all of the authority of a self regulating body concentrated in the hands of your corporate masters.  There are those who believe that the NASD as it stands wields too much power in areas where it rightfully has no business, and as a consequence should be brought back to a more centrist position where it represents ALL of the industry.bump

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DBCC wrote:
NEWBIE
First, You actually believe $$ doesn't motivate individuals at the NASD??  They are not motivated by their pay?  Wholly crap!  Are you serious when you say that?  Becuase if they are not motivated by pay, why should they take more then Chrmn. Cox?  After all 150k a year is not too shabby....Not motivated by pay...You are one funny guy....I thought we were dealing with the NASD here , i didn't realize they were the Monks of New Skete LOL
 
second:  Im waiting to hear 5 reasons why members would not want direct supervison from the SEC???
 

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DBCC wrote:
NEWBIE
First, You actually believe $$ doesn't motivate individuals at the NASD??  They are not motivated by their pay?  Wholly crap!  Are you serious when you say that?  Becuase if they are not motivated by pay, why should they take more then Chrmn. Cox?  After all 150k a year is not too shabby....Not motivated by pay...You are one funny guy....I thought we were dealing with the NASD here , i didn't realize they were the Monks of New Skete LOL
second:  Im waiting to hear 5 reasons why members would not want direct supervison from the SEC???

I do believe that the highest paid executives are not motivated by their paychecks--that you refer to $150,000 as "not too shabby" indicates that you have absolutely no idea what it's like to associate with people who are making millions but are motivated by things like power and prestige.
As with all private sector employers the most senior people receive compensation that is allocated to them by their board.  If people are motivated by money why did Christopher Cox accept $150,000 to head the SEC instead of becoming an executive of NASD, SIA or one of the other organizations that lavish their people with compensation that would make a potentate proud?
As for five reasons why it would be bad to be regulated by the SEC--it's a nonsense game.  Why not make it ten?  Fifteen?
How about one--government doesn't do anything well.

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I do know that when government quits regulating things; ie utilities (see Enron, et al) or Glass Steagall, bad things happen.

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no idea wrote:I do know that when government quits regulating things; ie utilities (see Enron, et al) or Glass Steagall, bad things happen.
Well then, you want to be sure to vote for a Democrat every chance you get.
It would be fun to read how deregulation led to Enron's implosion?
It would also be fun to read how the dismantling of Glass-Stegall has led to "bad things."

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NASD Newbie wrote:DBCC wrote:
NEWBIE
First, You actually believe $$ doesn't motivate individuals at the NASD??  They are not motivated by their pay?  Wholly crap!  Are you serious when you say that?  Becuase if they are not motivated by pay, why should they take more then Chrmn. Cox?  After all 150k a year is not too shabby....Not motivated by pay...You are one funny guy....I thought we were dealing with the NASD here , i didn't realize they were the Monks of New Skete LOL
second:  Im waiting to hear 5 reasons why members would not want direct supervison from the SEC???

I do believe that the highest paid executives are not motivated by their paychecks--that you refer to $150,000 as "not too shabby" indicates that you have absolutely no idea what it's like to associate with people who are making millions but are motivated by things like power and prestige.
As with all private sector employers the most senior people receive compensation that is allocated to them by their board.  If people are motivated by money why did Christopher Cox accept $150,000 to head the SEC instead of becoming an executive of NASD, SIA or one of the other organizations that lavish their people with compensation that would make a potentate proud?
As for five reasons why it would be bad to be regulated by the SEC--it's a nonsense game.  Why not make it ten?  Fifteen?
How about one--government doesn't do anything well.

 
I do regularly associate with highly compensated individuals, and I'm here to tell you that they are motivated by money, albeit to a lesser extent than an individual struggling to make ends meet.
You're out of your depth here, Putsy.  Drop it now before your ignorance REALLY shows.

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You're correct Put. There were no problems in either the utility & financial services industry after deregulation. I apologize if my previous comment made you soil your depends.
 

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no idea wrote:
You're correct Put. There were no problems in either the utility & financial services industry after deregulation. I apologize if my previous comment made you soil your depends.

Child, all I did was ask you to cite an example of how deregulation led to probems.
Surely you have an example.  I am laboring under the assumption that Enron imploded due to dishonest accounting involving the formation of partnerships which were portrayed as being obligated to pay huge debts rather than the corporation itself.
You're saying that I'm wrong, that it was deregulation.  I'm just all ears as to why you think that is it rather than what I think.
Then you brought up Glass Stegall--and said that as it's been dismantled bad things have happened.  Just what do you have in mind in that area?
If it's nothing as you say, why did you say it?

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no idea wrote:I do know that when government quits regulating things; ie utilities (see Enron, et al) or Glass Steagall, bad things happen.

Actually, I think you have that backwards. When the Government regulates business and tries to control, meddle, manipulate, fiddle with the free marketplace and the economy, THAT'S when things get screwed up.
It's like a bunch of monkeys trying to tune up your car.  They look busy and make a lot of noise, but they really screw up the engine.

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the nasd is more efficient the the Government??? LOL
Again:  if you want to do ad hom. attacks to avoid the question, fine, but there really is no big deal with the SEC being our regulator because.....they already do!  We all get SEC audits and requests...they are fine by me...Unlike some 2 year examiner claiming to be a Supervisor trying to get his pound of flesh to make a name for himself.
the NASD is setting up fake Broker Dealers to run sting operations with the FBI ( check out Shimoda-Atlantic vs NASD)..doesn't this make them a quasi govt aganecy anyway?
I'll make it easier...give me three reasons why we wouldn't want the SEC to regulate us directly without the NASD?...
 

Anonymous's picture
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Just so this doesn't get lost in the mix:
The Financial Industry Association (FIA) has announced its plans to fully contest Committee elections in all NASD Districts.  On the heels of last year's dramatic contested elections in which NASD's nominated candidates were defeated in three districts and on the national Board, FIA intends to continue its effort to reform the self-regulatory organization. 
 
The FIA represents the coalition of the "Dissident" and the "Reform" movements of NASD member firms and registered persons.  FIA is dedicated to fair and reasonable securities-industry regulation.
 
For more information on the current contested elections, please visit:
 
http://rrbdlaw.com/2006/nom06.htm 
 
And for those of you who truly thing being regulated by the SEC is worse than by the NASD, keep in mind that at the SEC you have Fifth Amendment rights, due process rights, and all constitutional protections.  You have NONE of these at NASD.  Now, to make it clear, I prefer to reform the NASD to make the process fairer.  I think the NASD can work if we can restore some symmetry between the regulator and the regulated.  But the present state of affairs cannot continue.  The NASD is simply a handmaiden to wirehouses and international financial institutions --- it seems clearly antagonistic to the needs of smaller and regional firms, and seem intent to socially engineer those firms out of business.
 
If you haven't been the subject of an NASD disciplinary charge, then you likely have no idea what many folks are talking about.  Be thankful.  But if you ever make an inadvertent error --- a miscue on TRACE or with your WSPs --- remember what FIA stands for when you pay $10,000 in legal fees and pay a $20,000 fine because you simply goofed.  And then take a look at the SEC's 21(a) cases against the NASD and the NYSE for their own regulatory misconduct --- odd, isn't it --- not a single regulator was fined or suspended.

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DBCC wrote:
the NASD is setting up fake Broker Dealers to run sting operations with the FBI ( check out Shimoda-Atlantic vs NASD)..doesn't this make them a quasi govt aganecy anyway?

No, idiot, the FBI is setting up fake Broker/Dealers with help of the NASD--just like the FBI might set up a sting with any other citizen.
Do you think it's good that the FBI try to stop crime in the industry?

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rrbdlawyer wrote:
The Financial Industry Association (FIA) has announced its plans to fully contest Committee elections in all NASD Districts. 

 
The FIA announced--how did you do that Mr. Singer, stand in the lobby with a little placard as the several hundred SIA staffers came to work?
 
Why not join forces with SIA if what you're doing really has merit?  Stop in and ask for Gerry Quinn--see if you can get him to introduce you to Marc who is normally around on Tuesdays and Wednesdays.

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The Maloney Act is something like the McCarthyism. Both obsolete. The NASD is like a virus feeding of the host of its members and the FIA is the cure. 
There doesn’t have to be any analogy to explain what is happening with the NASD and the FIA. This is a classic case of a blotted, out of touch bureaucracy composed of bureaucrats who are unable to cut it in the private sector trying to control the creative, thinkers and doers of the organization. NASD Newbie we are the NASD. You’re just some cog in the wheel, punching in and out, watching the clock and hoping for a pension when you retire. You don’t have a creative thought in your whole body.
NASD Newbie, your time has come. When the FIA regains control of the NASD, you and the rest of the sorrowful bureaucrats working at the NASD will be out of a job. Try and get new position in the private sector after listing your previous work experience...... professional bureaucratic and see how far that takes you.
Who knows maybe when all this happens you will have enough time in to collect that meager pension you have been working toward.

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I_hate_the_nasd wrote:
When the FIA regains control of the NASD, you and the rest of the sorrowful bureaucrats working at the NASD will be out of a job.

Regains?  When did they have control in the past?  How did they lose it?

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NASD Newbie wrote:I_hate_the_nasd wrote:
When the FIA regains control of the NASD, you and the rest of the sorrowful bureaucrats working at the NASD will be out of a job.

Regains?  When did they have control in the past?  How did they lose it?

Attaboy, Putsy.  When you're caught out, obfuscate.
You're still a moron.

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Just so there is no confusion....
Im still waiting for reasons why we would not want direct supervison form the SEC and Newbie sees nothing wrong with STING operations by the government using OUR SRO???  

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The FIA announced--how did you do that Mr. Singer, stand in the lobby with a little placard as the several hundred SIA staffers came to work?
 
Why not join forces with SIA if what you're doing really has merit?  Stop in and ask for Gerry Quinn--see if you can get him to introduce you to Marc who is normally around on Tuesdays and Wednesdays.

Did you read the salary report I gave you earlier?  The head of SIA makes ONE MILLION base as well!!!....you don't think he's in the big boys pocket?  Plus those same guys endorsed ( illegally according to their own bylaws) Dave DeMurro and his clan....They could have embraced the Goble slate and made a statement....but they are sheep who will soon be led off the cliff.  Why won't the SIA stand up for brokers rights either?  The leaders of the FIA have advocated a Brokers Union...this way, when the NASD and SEC shove worthless self serving rules down their throats, they can convene the union and call a stike...Imagine the market on say, a friday in October of all months, and CNBC is reporting that hundreds of thousands of brokers across the country will not be reporting for work on monday and even if they did show up, they will only accept unsol. orders??????  Chew on that thought for a moment.....I'd bet the market would be down 500 points or more at the mere thought of it.   Why are we not organized like other industries????
 

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Marc makes 1.2 million--I suspect Don makes 800,000 and the other senior staff at least 500,000 apiece.  Wall Street, above all else, is hedonistic.
But so what?  It's a private industry and the members pay the dues that makes those compensation packages possible.
You really do not understand the mindset of a broker if you think that they'd want to be organized as a union---they're businessmen and businesswomen.
Even those who are employed with the tightest golden handcuffs and proprietary products are more free enterprise inclinded than any union member.
Unions are for losers--there is no way in hell you'll ever convince brokers that they're losers, much less than they want to join forces so they can all be paid as if they were teachers.

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LOL...Do you read what you write?  Ok...for starters, Brokers are tired of being treated like blood sucking vipers by the NASD and by the large wire house type firms....they want to be able to build their book and be able to MOVE without Pru, merrill and the rest putting them out of business all becuase they wanted to be an OSJ with a smaller firm...Unions are for losers hmmmm....Thats funny becuase the last time i checked, the Transit workers in NYC shut down a city and got what they were fighting for....Why can't brokers pay a fee of say 50.00 annually to have somebody fight for them?  Hell, the NASD and the states charge these same brokers a couple thousand EACH YEAR just to renew their licenses ...
 
FWIW: I have been a broker.  I have written busines.  And Im still on the sales side and i make more money then God...but Im fighting this fight for what is RIGHT....why is the NASD so afraid?  why do they want the FIA to go away?  Sounds to me like there are some scared people there....its ok....you don't have to be afraid...unless of course you have some sort of financial position at stake...isn't money always at the root of all problems?  Whats the first thing you noted on this thread? You criticized the FIA for being funded by donations.....why can't the SIA do that???  well, not if you have a couple million dollar men running the organization, and as we all see now, money is at the heart of the problems with the NASD and SIA.

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It would help your windmill tilting if you learned that the first letter of sentence is capitalized when writing in English.

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The reason that brokers don't join organizations portraying themselves as being a union is because unions are for losers.
Yes the transit workers were able to shut down the system--but you're not going to be able to convince a producing financial advisor that they're the same as a guy who drives a subway, or opens and closes the doors.
What their union won for them was a pay increase--but they all earn the same thing.
Do you believe that every stockbroker in the country should be paid by the hour, with double time for Saturdays?  As if they were driving a bus?

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You ask why the NASD is afraid.  Who says they're afraid?
I suggest they are no more afraid of you than somebody who is trying to kill a cockroach is afraid of the roach.
Do you understand that electing somebody from GunnAllen to the District Board is actually not something that honest people look on as a win for them?
It appears that you believe that there are more dishonest brokers in the country than honest brokers.  You're dead wrong--but when you only associate with crooks you can easily become convinced that everybody is as sleazy as you.

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I 'll tell you what....Since you refused to answer the question about the SEC...I'll give you a 2nd option....Let's pull up the CRD records of Merrill and Gun Allen.....Which do you think is bigger, Badder and thicker???  Come on, take the Pepsi Challenge....How about Smith Barney?  Or Mogna Stanley? Come on..post up up here ( if you can even download them...Lehman's record almost collapsed my computer it was so big!)

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Im starting to see a trend here....a big claim is made and then nobody wants to back it uo....Hmmmm
"YOU DO NOT WANT TO BE REGUALTED BY THE SEC"!!!
can you give me three or four reasons why? 
no.
"GUNN ALLEN IS A BAD FIRM!"
Do you want to compare the records of the largest wire houses?
 
silence is golden
 

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....here is somethig to chew on...pull up Gun allen on the broker check and it says they have 12 regulatory actions an 7 arbittrations.....I tried pulling up Goldman Sachs and Merrill and here is the message i got!!
 
Dear NASD BrokerCheck User,Our records indicate that you have recently requested a NASD BrokerCheck report to be delivered to you via e-mail.The report that you have requested is greater than 1.5 Mb in file size.Currently, NASD BrokerCheck does not support e-mail delivery of reportsgreater than 1.5 Mb in size.If you would still like to receive this report via US Mail, please take the followingsteps to ensure successful delivery: 1) reply to the e-mail address above; 2) ensure that the e-mail addressing information is not altered; 3) provide your full name; 3) and provide your full mailing address for US Mail delivery.We regret any inconveniences that this may have caused you,NASD BrokerCheck

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I go by infractions per employee.
If a firm has 10,000 brokers and 100 violations, that's a 0.010/per broker ratio.
If another firm has 100 brokers and 5 violations, that's a 0.050/per broker ratio which is 5 times as much.
 

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I agree.  MER will obviously have a longer report than GunnAllen, but what is the ratio per rep?  I'm sure that Merrill's is much smaller than a bucket shop like GunnAllen.

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MER's infraction per rep ratio is much smaller than Gunn-Allen's but to be fair, perhaps Gunn-Allen is trying to clean itself up a little. Their new General Counsel, David Jarvis, is an ethical guy.
On another note, I guess getting on Chris Cox' butt once in a while does work. Looks like he's coming around a little:
http://www.sec.gov/news/speech/2006091406cc.htm
I think one of the other Commissioners may have shown him this month's issue of RR which features bucket shops on the cover. He (Chris) actually said, "bucket shop" which is a term he probably was not familiar with a year ago.
If any of you guys are football fans, I would appreciate you pulling for the Trojans against those Cornhuskers tonight (even if Reggie Bush might have gotten us in trouble)!

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 I went to the game Saturday it was great. To bad for Norte Dame, but Michigan look great. As for the FIA and Nasd I vote for reform, not just for smaller firms but also, for the registered rep.

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advisor1 wrote: As for the FIA and Nasd I vote for reform, not just for smaller firms but also, for the registered rep.
What is the reform that you think is necessary?
Do you favor rolling back the regulations that attempt--poorly albeit--to control the damage to the industry done by the stock promoters and penny stock chop houses?
Why do you suppose this organization--the FIA--is nominating stock promoters and penny stock firm executives for places on their district boards?
One of the most notorious chop houses was the firm First Jersey Securities.  It was formed by a guy named Robert Brennan.
Would you consider it to be a plus for the industry if Mr. Brennan was elected to the NASD Board of Governors just because the small firms wanted him to be a Governor?
I assume you would, but am wondering what your logic would be.  Please share it with me and the others who read these forums.
Thanks

ymh_ymh_ymh's picture
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Having a guy like Brennan or Frank Michelin (LH Ross) on the NASD's Board of Governors would be akin to having Ivan Boesky as Director of Enforcement at the SEC.
I want squeaky clean non chop house Governors on the NASD's BOD.
 

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ymh_ymh_ymh wrote:
Having a guy like Brennan or Frank Michelin (LH Ross) on the NASD's Board of Governors would be akin to having Ivan Boesky as Director of Enforcement at the SEC.
I want squeaky clean non chop house Governors on the NASD's BOD.
 

Do you, in your heart of hearts, think that Bill Singer does too?

ymh_ymh_ymh's picture
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Yes, because he has represented elderly women clients whose hubbies got fleeced by the chop house boys in Brighton Beach a few times and felt very sorry for them. Gavaroot pa Russki mob?
I guess their hubbies were afraid to sue for fear of swimming with the beluga.
Our definition of squeaky clean may be a little different, however. I like the Boy Scout type (no need to be Ivy League, but it helps). Take a look at Roel Campos' CV and you'll see why he's my favorite SEC Commissioner.
Bill, if you're reading this how about explaining your definition of squeaky clean. Who's your favorite SEC Commissioner? That says a lot about a person.
 

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The gangsters like to hire ex enforcement types becasue it is believed that the best way to get around the rules is to use a guy who knows them from the other side.
I would wager that every chop shop on the street as a lawyer on staff, or retainer, who used to be an NASD or SEC enforcement lawyer.
Anybody who champions the election of a guy from GunnAllen to the NASD district board is not a friend of the honest segment of the industry.

ymh_ymh_ymh's picture
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I know the chop shops like to hire ex SEC guys. On Gunn-Allen, let's hope they're trying to clean up their act. David Jarvis (newbie GC) is too nice of a guy to soil his reputation if they're not.
The 2 Gunn-Allen cold call brokers (stock jockeys) who tried to strong arm that retiree friend of mine in Philly don't know jack about stocks, that's for sure. One would think if they want to snag some new biz, their first few tips should be in the money, don't you think?
On hiring ex SEC guys or NASD ones, there's a saying on the Street, "if you can't beat them, buy them."

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ymh_ymh_ymh wrote:
I know the chop shops like to hire ex SEC guys. On Gunn-Allen, let's hope they're trying to clean up their act. David Jarvis (newbie GC) is too nice of a guy to soil his reputation if they're not.

I do not know David Jarvis, but I do know that a lot of guys will be more than happy to cast their lot with a questionable firm if the compensation package is nice enough that they can retire once the tour of duty is over.
If done right the high priced compliance officer will be able to build enough plausible deniablity into their role so they don't go to prison.
If they do go, it will generally be for a fairly short time in fairly benign quarters and when they get out they'll have a hell of a party favor in an off shore account.
That's the damn shame.  Hundreds, even thousands, of suckers lose millions of dollars buying an imaginary cure for cancer.  If the NASD/SEC is able to make a case, and if they are able to win the case, a few of the principals will be barred for life and perhaps sentenced to some time at Eglin or somewhere like that.
When they go home they're still rich while their victims are eating cat food, pretending it's yellow fin tuna.

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Joined: 2006-06-20

In the end the only real reform will be creating a regulatory system that isn't tied to firms regulating brokers but an independent system similar to the RIA structure and the 1940 act that includes commissions and fees. The idea you can "reform" while retaining the essential disfunction of the broader premise of the NASD is doomed and unexciting.
70% of current b/d staffing might be eliminated, that would help consumers and brokers alike. Compliance and support should all be portable and unbundled. It's the zero sum system that distributes all blunders and costs to every producer, consumer and firm and the underlying socialist culture that can't be reformed. It can only be eliminated completely. 
 
 
 
 
 

ymh_ymh_ymh's picture
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Joined: 2005-09-05

The system is broke and does need major reform, that's a given. I feel sorry for every single boiler room/bucket shop/chop house victim.

BrokerRecruit's picture
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Joined: 2005-04-19

ymh_ymh_ymh wrote:
MER's infraction per rep ratio is much smaller than Gunn-Allen's but to be fair, perhaps Gunn-Allen is trying to clean itself up a little. Their new General Counsel, David Jarvis, is an ethical guy.
On another note, I guess getting on Chris Cox' butt once in a while does work. Looks like he's coming around a little:
http://www.sec.gov/news/speech/2006091406cc.htm
I think one of the other Commissioners may have shown him this month's issue of RR which features bucket shops on the cover. He (Chris) actually said, "bucket shop" which is a term he probably was not familiar with a year ago.
If any of you guys are football fans, I would appreciate you pulling for the Trojans against those Cornhuskers tonight (even if Reggie Bush might have gotten us in trouble)!

I live in the heart of Husker Nation and I absolutely loved the result.  I only wish USC would have put up another 28.  The saddest part about that was that we actually had a tornado touch down in Omaha and got anywhere from 2-5 inches of rain, 1/2"-2" diameter hail and 80 mph winds.  Instead of breaking to the weather to update us, they simply split the screen so all of the Husker-loving tools would be happy and showed the radar - couldn't hear anything the meteorologists were saying.  Completely incredible.

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