September 13, 2019
- I'm an MIT educated retired financial professional with over 25 years experience in the markets. I've been a floor trading member of the PHLX, AMEX, COMEX, CBT, and CBOE. I've managed a hedge fund for over 15 years and personally held ALL the registrations required to open and operate a broker-dealer supervised by the old NASD. I'd like to comment on the proposed rules.
My first objections is simply technical. I'm in favor of plain language in regulations. I'd like to see the word "spinning" changed to gifting, "greasing", or simply bribing- so that all may easily understand the actions permitted. My personal feeling is that significant gifts to individuals managing nonprofit funds are completely inappropriate. FINRA's assertion that the potential for investment banking conflicts of interest is small is mistaken. The fees generated ( and perhaps poorly negotiated ) by a large account easily create conflict of interests- with no investment banking. That said, occasional projects like the issuance of 100 year bonds by a nonprofit can easily justify 10 years of gifting before and after without even considering the economic win by the lucky buyers. Traditionally, managers of accounts that buy "everything" also get special rewards. I'd like to see such conduct prohibited.
The definition of restricted persons should be expanded rather than contracted. Family offices especially need fiduciary protection- particularly after the first generation when most members become financially illiterate. Ideally, managers of nonprofits and family offices should be restricted to personal accounts that are invested along with the managed funds in a pro rata fashion. However, they obviously may be exempted from fees.
Thank you for your attention.