Why Is Finra Coming Down Hard On An Old Stockbroker, But Ignoring The Big Fish?
by admin on June 8, 2012
Bill Singer harshly criticizes Finra in his latest column at Forbes. His comment concerns the case of Thomas Robert Vodicka, a registered Investment Company/Variable Contracts Products Representative since 2004. Vodicka maintained four separate checking accounts and wrote checks to himself for funds he didn’t have in order to pay bills and other expenses. As a result, he violated Finra Rule 2010. Vodicka was hit with a $5,000 fine and a six-month suspension.
The major question here is, why is Finra “playing the tough guy” with this broker who didn’t even harm his customers, but failing to adequately penalize the big fish like MF Global that treated customer funds with reproachable irresponsibility?
Singer says,
Is Finra ignoring the big fish?
When I think about Lehman Brothers or Bear Stearns or MF Global, I have to scratch my head as I read about poor Vodicka. When I ponder the trading losses at JP Morgan or the equivocations from Goldman Sachs, Citigroup, and others, I have trouble reconciling the regulator’s zeal here. Finally, as the Facebook mess unfolds and I see the finger pointing by Morgan Stanley and the belabored definitions of what’s a “customer” from NASDAQ, I’m not quite sure who’s setting the regulatory priorities on Wall Street and what considerations are involved.
What do you think? Is FINRA just trying to make an example of Vodicka? Is it trying to compensate for its other notable failures?
Want a daily digest of articles like this one, plus the latest compliance jobs at top-tier organizations? Join 40,000 other compliance, risk governance, and regulatory professionals and subscribe to our free afternoon newsletter.
3 comments
If he was using customer funds then he should be fined.
by John on June 8, 2012 at 5:53 pm. #
I worked for NASD/FINRA for 15 years and conducted investigations that went after reps like this. It’s just so much easier to nail a little fish with an easily documented violation than it is to build a big case against a big fish. A bureaucracy like FINRA tracks performance by cases and results. They can look so much more effective by taking serious disciplinary actions in many small cases against people who have few resources to fight back than against the big players who have powerful lawyers and limitless resources. The playing field is different that when I worked there as well. At the NASD, it was one firm, one vote. Then, under Shapiro, FINRA’s structure was changed and the large firms have far more influence over the structure and operation of the regulator. Big cases could always be referred to the SEC but I learned early on how futile that was. The state regulators were so much more effective. Now, Shapiro runs the SEC, the SEC is unionized, they care more about the appearance of regulating–pontificating and rule passing–than enforcing. It’s a sad state of affairs and getting worse all the time.
by Jean McLenigan on June 8, 2012 at 6:49 pm. #
I’m an ex-FINRA examiner from a while back. Here’s the thing I don’t get. How did FINRA determine he was kiting checks among his CHECKING accounts (which I’ll ASSUME were personal accounts at different financial institutions, i.e. banks)?? AFAIK, FINRA doesn’t have the authority to ask for personal bank accounts. If they were personal brokerage house accounts with check writing privileges, why is a FINRA examiner looking at this activity??
As a compliance officer at a B/D, I’ once had a former jagoff co-worker do an exam of an inactive, affiliated clearing firm that cleared institutional business. Guy wanted to examine the brokerage accounts of the officers “looking for suspicious activity” I replied, “what suspicious securities clearing for institutional customers are you going to find in my or my bosses personal accounts”??
I put up a fight but agreed to turn over the statements. Guy just wanted to know how much money I had.
That kind of overreach pisses me off.
by SULLY on June 12, 2012 at 9:22 am. #