October 9, 2013
The SEC needs to remove the rule that when there is an investigation by the SEC (or FINRA) the broker must send/respond through the firms compliance department instead of to the SEC directly. This contaminates the process and premise of protecting the investing public which is the core of asset management issues.
This is where the ball is dropped and where ALL firms "get off the hook"
Every broker at every firm knows All the dirt/violations that occur at their firm. The problem is if the broker tells the truth the firm threatens to mark their license if they don't lie in the firm's favor.
The problem is even when the broker does lie for the firm he still gets the proverbial AXE
Moreover, once the broker is gone and blackballed from other firms the (guilty)principles who covered it up can care less because there are other neophite brokers who believe that a firm's principles will NEVER do wrong. Thus new sheep to slaughter (if necesarry)
THE SOLUTION: Change the rule that when there is an investigation that the brokers can correspond/snitch directly to the SEC without fear of retaliation.
I am blown away because the study I did over the last 5 years showed that of all the brokers who left the business between 2008 and 2010 27% LEFT THE BUSINESS BECAUSE THEY WITNESSED MANAGERS BREAKING THE RULES TO MAKE A LIVING and were either forced to participate, lie on regulatory inquiries, or leave the business altogether via mandatory resignation.
27% is HORRIFIC
Once you permit brokers to contact you (the SEC) directly. I gaurantee that the smallest producer will snitch out of pure envy when/if they discover success is the result of Regularory violations.
Thank You.
John Doe
cc: Willie E. Gary, ESQ.