FINRA doctored documents given to SEC; punished with a wristslap.

Posted by on Oct 27, 2011 in Marc's Blog | Comments(0)

It’s all over the news, at least that section of the web that I frequent, that FINRA employees changed documents before handing them over to the SEC.  The Reuters story by Suzanne Barlyn and Sara Lynch can be found here.

My firm and I have done document productions to FINRA in the past.  They frequently require “certified” copies of documents from my clients.  Sometimes they require “certified” copies of documents that we obtain from another branch of FINRA.  Apparently, my clients and my firm can’t be trusted to not alter documents.

But FINRA production to the SEC?  Apparently that’s exempt from notions of honesty and fair play.  But even more ironic is the penalty.  FINRA has to hire a consultant and take steps to improve its practices.  If one of my clients altered documents before sending them to FINRA, the discovery would likely result in my client’s permanent suspension from the securities industry.  I have seen draconian responses to much less.

Is it any wonder that the public does not trust our current regulatory system.  Bernie Madoff made the SEC look bad.  FINRA is altering documents that should have been innocuous.  And nothing significant happened other than more lawyers gained employment.

On the other hand, I had a client who changed some customers’ phone numbers in the firm’s database.  That client was suspended from the industry and will have a permanent CRD mark.  Does that seem fair?

 

 

 

 

 

 

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