SEC Sanctions FINRA

November 2nd, 2011
in econ_news

sleeping-at-desk Econintersect:  The director of FINRA’s (Financial Industry Regulatory Authority) Kansas City office has been accused of falsifying records through altercation prior to an audit by SEC (Security and Exchange Commission) inspectors.  The documents in question were three cases of minutes of staff meetings held in 2008, the year when the financial crisis came to a head.  FINRA is the securities industry self-regulating organization.  The SEC is the government agency responsible for regulating the securities industry.

Follow up:

In case you are thinking the SEC was doing a great job to uncover this, according to a Bloomberg article in the San Francisco Chronicle:

"'As a regulator, Finra must always hold itself to the highest standards,'' Finra Chief Executive Officer Richard Ketchum said in a statement. ''We self-reported the Kansas City matter to the SEC and have fully cooperated with the agency's review. Following our own internal review we took decisive action, including appointing new leadership in our Kansas City office.''

The Kansas City office director cited in the SEC order wasn't identified by either agency.

According to Bloomberg, FINRA “consented to the SEC order without admitting or denying wrongdoing.”  That flies in the face of the established pattern of behavior:  Bloomberg says this is the third instance of altered documents at FINRA in eight years.

Editor’s note: Why aren’t such clearly documented cases of control fraud prosecuted?  How long can corruption be committed without admitting or denying any wrongdoing?

Source:   San Francisco Chronicle

Hat tip to Roger Erickson









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