Ten years have passed since I helped found the NASD Dissident Movement, when we took our first steps with the historic 1998 contested election for the NASD’s Board of Governors.  After fielding four candidates and given little chance of success, our slate won two seats and our fledgling coalition seemed destined to flourish.  Unfortunately, as with many things in life, the loftier the goals, the greater the crash to earth.  Personal disputes and professional differences soon found their way into the movement and things collapsed into a balkanized bevy of self interests. 

It is with great sadness that I look back over a decade’s effort to reform Wall Street and see an industry much worse for the wear.  With the blessings of a co-opted regulatory system, the major players built momentum as a juggernaut, which steamrolled all in its path--leaving us amidst  the wreckage of subprime and gridlocked credit markets.  The regulators have spent the decade consolidating their power as a bureaucracy rather than implementing preventative measures and forging a working coalition with the regulated.  Smaller firms, which should have been the bedrock of our financial markets, have succumbed to ill-advised policies and laws.  Our landscape is now bereft of a vibrant independent/regional brokerage community.  Worse, it appears that the major firms and the industry’s regulators now stand over the bodies of the indie community and smile at each other – perhaps congratulating themselves on a job well done?

Today the NASD is no more.  We now speak of the Financial Industry Regulatory Authority (FINRA).  And I now speak of the FINRA Dissident Movement.  Alas, too many name changes of little significance.  The deep-seeded problems remain.  The old alliances are frayed.  The new antagonisms begin to entrench.  Worse, where a decade ago I had developed a cordial relationship with Frank Zarb (notwithstanding our professional disagreement on virtually all regulatory matters), his successors seem less inclined to meaningful dialog and more disposed to politics.  The end result of the dissolved industry coalition and gamesmanship of our regulators is that the vitality has been sapped out of reform efforts.  All of which seemed to reflect the immortal words of Shakespeare:

And thus the native hue of resolution

Is sicklied o'er with the pale cast of thought,

And enterprises of great pith and moment

With this regard their currents turn awry,

And lose the name of action

Investors are urged to contact the Division of Securities to make sure anyone offering investments is licensed, by calling (801) 530.6600, toll free at 1.800.721.7233 or logging on to www.securities.utah.gov . Information can also be obtained at FINRA’s website www.finra.org and using the FINRA BrokerCheck function.

During the past several years I have become aware of offshore operatives who create websites that mimic those of either existing FINRA firms or of broker-dealers that recently ceased conducting a business.  Based upon conversations that I have had with federal criminal authorities, it appears that such efforts are emanating in Eastern Europe and Asia.  One case I handled involved the creation of a website that was apparently operating from New Zealand and displayed photos of the firm and its principals that had been lifted from a then defunct website of the victimized firm (which had ceased doing a securities business a few years earlier).  In addition to soliciting investors for stock offerings (which I assume were bogus), the fake site provided a "contact us" page on which visitors were asked to provide name, address, email, and phone data--one can only imagine how such information was used.

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