March 24, 2010
Where investors were once promised an independent dispute resolution forum, they instead find one ever more closely controlled by the member firms that have defrauded them. In a forum where customers lose 60% of the time and only recover 30% or their damages when they "win," the current amendments continue to tighten the screws to insure that members win without regard to the facts or the law.
Most notable are sections 4.3 and 4.6 concerning the Board of FINRA-DR. No longer will the allegedly neutral Board be allowed to select its own Chair. Instead, the Chair, under section 4.3, will be appointed by FINRA, Inc. That's the organization that protected Bernie Madoff for so many years before dumping him onto the SEC as an investment advisor instead of a broker-dealer. FINRA, by naming the Chair, will set the agenda to prevent a rogue Board member from suggesting a measure that might bring some element of fairness to the dispute resolution process. Section 4.6 provides that Bernie's buddies can also remove a recalcitrant Board member at any time for conduct unfriendly to firms continuing to defraud the public.
That will not "redound to the benefit of investors." It will further prejudice their chances of ever attaining a level playing field. Self regulation does not work. It never has. It never will. FINRA, through greater control of its home court forum, will continue to protect its members from responsibility for their conduct toward customers.