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Wall Street Regulation Is So Lax That Even WALL STREET is Getting Burned.

The venerable Wall St. firm of Morgan Stanley filed suit to "claw back" the signing bonuses it had paid to two former brokers, Eric Butler and Julian Tzolov who were convicted of selling bogus products to their clients.

Morgan Stanley's claim was that the payouts were originally loans, which could become bonuses, after the brokers successfully completed a number of years with the firm. Because of the convictions, that condition was not met.

Like almost everything else on Wall Street, this dispute went to arbitrators. This one was a so-called "self-regulatory organization" called the Financial Industry Regulatory Authority (or FINRA).

It was FINRA who ruled that the advances were bonuses, and not loans, that pre-dated the mens' misconduct. Therefore, they would get to keep them, thereby weakening any attempt to claw back compensation of rogue brokers or executives.

Sometimes, even Wall Street gets hoisted by its own petard.