On October 6th, I attended a public hearing relating to complaints filed by Benchmark Financial and Standard Investment Chartered v FINRA (Financial Industry Regulatory Authority). This hearing was held in the United States Courthouse in New York City. The core of these complaints is the distribution that FINRA (NASD) made to its member firms from proceeds generated from the IPO (initial public offerring) of the Nasdaq Stock Exchange.
A major topic at hand in this case is the release of unredacted documents from FINRA. What are unredacted documents? Documents in which certain key segments are not edited or withheld.
These complaints were recently reassigned to Judge Jed Rakoff. He has received significant attention given his ruling in a case involving the SEC and Bank of America. Judge Rakoff commented that the business periodical Barrons had expressed an interest in the Benchmark and Standard Investment Chartered case versus FINRA. The point being that Barrons represents a public interest.
I sent a letter to Judge Rakoff yesterday requesting the release of unredacted documents from FINRA. I share my letter with you, the readers of Sense on Cents, in the spirit of full disclosure and because I believe strongly that our financial regulators must provide full transparency. I view that issue to be the core of this case and thus of significant public interest.
October 14, 2009
Honorable Jed S. Rakoff
United States Courthouse
500 Pearl Street
New York, NY, 10007
Re: Benchmark and Standard Investment Chartered v. FINRA
Dear Judge Rakoff,
Please allow me to introduce myself. I am currently a financial commentator. I operate my own website, Sense on Cents. The mission of my work and site is to help people ‘navigate the economic landscape.’ In light of the economic crisis and turmoil in our financial markets, I launched my site earlier this year in order to share my insights and experience with the public at large. What is my experience?
I am a Wall Street veteran of 23 years. I traded and sold a wide array of mortgage-backed securities. I worked at First Boston, Bear Stearns, UBS, Bank of America, and culminated my career in 2006 as the National Sales Manager for Securitized Products at JP Morgan. Having witnessed the decay in confidence in our financial system at large and our banks, brokers, and regulators specifically, I am hugely inspired to write and help people better understand the nature of our markets and economy. I certainly have not suffered from a lack of writing material.
I do not write for my former colleagues on Wall Street. My targeted audience is that cross–section of our country who wants to receive an unbiased and honest view of the markets and economy. My work has been extremely well received. In a relatively short time frame, I have thousands of people accessing my site. I take real pride in my work.
I am writing to you currently given my interest and that of many of my readers in the transparency or lack thereof in the financial industry overall. A keen area of interest for me and many readers is the lack of transparency specifically in the regulatory oversight of Wall Street. While working on Wall Street, I did not fully appreciate this lack of transparency. For the last eight months I have gained a real appreciation for it.
I have extensively studied the annual reports of FINRA and its parent organization, the NASD. I was flabbergasted to learn that this self-regulator is truly a large financial entity unto itself. In reviewing its finances, I have raised serious questions about potential conflicts of interests and questionable investment activities. At almost every turn, FINRA has largely rebuffed calls for real transparency. The public deserves to have a fully transparent regulator overseeing Wall Street.
Against this backdrop and having attended the hearing in your chambers on October 6th on the above referenced case (I was the only member of the public or the press in attendance), I would request that you release unredacted documents pertaining to these complaints. The release of those unredacted documents would be of real public service. That service entails the ongoing public cry for real transparency in our financial industry at this time. That cry for so many of our citizens seems to go unheeded all too often. I could share dozens of comments left at my site echoing that cry.
I truly believe if a real measure of confidence in our markets and our economy is to return, it must be based on true transparency and integrity. While I have written extensively on the lack of transparency and integrity in our country, I don’t pretend to think that my site will change the landscape on this front immediately. That said, I am never discouraged to continue digging deeper, writing more, and asking the hard questions. On this front, I sincerely hope the adjudication of this case will highlight these qualities for all to see.
I thank you for allowing me to share my feelings. I recall your having referenced Barrons back on the 6th. Sense on Cents is not Barrons, but for the thousands who have shared their passionate feelings with me on this topic, I am obliged to serve their interest as well as those who have yet to find my site.
With all due respect.
Sense on Cents