Reform the NASD!

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Sep 7, 2006 8:36 am
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 
Sep 7, 2006 9:11 am

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  The Maloney Act can be repealed by Congress just as it was passed.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.

Sep 7, 2006 10:09 am

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.

Sep 7, 2006 11:28 am
rrbdlawyer:

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.

Sep 8, 2006 9:51 am

]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

Sep 8, 2006 9:58 am
DBCC:

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?

Sep 8, 2006 10:10 am


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.

Sep 8, 2006 10:18 am
DBCC:

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.

Sep 8, 2006 10:30 am

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.

Sep 8, 2006 10:42 am

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???


Sep 8, 2006 10:45 am
Philo Kvetch:

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



Sep 8, 2006 10:52 am
DBCC:

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???


Sep 8, 2006 10:58 am
DBCC:

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.

Sep 8, 2006 11:05 am

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

Sep 8, 2006 11:22 am
no idea:

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."

Sep 8, 2006 11:43 am
NASD Newbie:
DBCC:

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.

Sep 8, 2006 11:59 am

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.


Sep 8, 2006 12:05 pm
no idea:

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?

Sep 8, 2006 12:47 pm
no idea:

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.

Sep 8, 2006 12:49 pm

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?...