Elephants in the Room: The Continuing Failure of Self-Regulation

In case people were wondering how all those bad brokers are making a living nowadays, wonder no more. According to the Wall Street Journal, “[f]ormer brokers who were [b]arred from working at brokerage house now have begun new careers as investment advisors.”[1]

How could such a thing happen? Well, it’s easy when an industry regulates itself. These former brokers are being legally moved into this position because Financial Industry Regulatory Authority (FINRA) found it politically feasible to give these crooks another shot at our wallets.[2]

This is a classic example of a “captive” regulatory body. In this case, one can assume that what FINRA is really regulating is who among the bad actors is being released into the wild again.

This is part of the brew, a part of the mix, that will cause our next financial meltdown. First, we fail to prosecute criminal acts by fiduciaries. Second, we only fine them for the most egregious abuses, if we get around to it. Third, we allow the bad actors to get their hands back into the client cookie jar.

This was a mistake. Cons like Keating can’t stop cheating. [3]

I am challenged to figure out how I can represent myself to the public as someone who is NOT certified by FINRA.

[1] See generally Michael Wursthorn. Wealth Advisor Daily Briefing: Barred Brokers, Wall Street’s Election Slog. The Wall Street Journal. Nov. 4, 2016. http://blogs.wsj.com/moneybeat/2016/11/04/wealth-adviser-daily-briefing-barred-brokers-wall-streets-election-slog/ Accessed Nov. 4, 2016.
[2] Id.
[3] Referring to Charles Keating, the serial financial criminal. His manipulation of Lincoln Savings and Loan provided a model for hundreds of other crooks, leading to the collapse of the Savings and Loan industry in the 1980s. See generally The Lincoln Savings and Loan investigation: Who is Involved?. The New York Times. Nov. 22, 1989. http://www.nytimes.com/1989/11/22/business/the-lincoln-savings-and-loan-investigation-who-is-involved.html. Accessed 11-6-2016

Deborah Lagutaris writes. Her nom de plume is Olivia X. LaRosa. Ms. LaRosa holds a B.A. cum laude from UC Santa Barbara in an interdisciplinary major, Law and Society. She went on to earn her law degree from UC Hastings in 2004. She was the oldest person in her class. In November 2016 she submitted her thesis and completed all of her coursework in an advanced law master’s program (LL.M.) with an “International Taxation and Wealth Management” concentration.

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