Finra Fixing To Levy More Fines Against BrokerDealers

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BrokerDealer.com blog post courtesy of extracts from the Wall St. Journal

The Financial Industry Regulatory Authority aka Finra, the Wall Street watchdog charged with policing the brokerdealer community and overseen by the Securities and Exchange Commission (SEC), is considering tougher penalties for misconduct after criticism from an SEC official that its sanctions are too lenient.

finra penalties wsjIn the five years since the financial crisis, Finra, which is funded by the industry, didn’t discipline any Wall Street executives. It imposed fines of $1 million or more 55 times through 2013, compared with 259 times for the SEC, according to a Wall Street Journal analysis. The SEC oversees a wider number of firms and range of conduct.

Susan Axelrod, Finra’s executive vice president of regulatory operations, said in an interview the watchdog would review its guidelines to make sure penalties are “meaningful and will have an impact.”

She rejected any suggestion its punishments have been insufficient, adding that Finra, as “the cop on the beat from Wall Street to Main Street,” should not be judged just on its biggest fines. “We’re going to bring the action against the individual broker in Des Moines, Iowa, that other regulators are not going to bring. That’s a key part of our mission.”

Private Equity Deals: Don’t Forget About The Fees; BrokerDealer.com Snapshot

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Extract courtesy of May 25  Sunday New York Times/Gretchen Morgenson

Private equity has become $3.5 trillion piece of the $64 trillion asset management industry.

There was joy on Park Avenue as the news arrived from Warsaw, a small Indiana city.

Two companies, twin pillars of Warsaw’s economy, had decided to merge. It was the biggest business story to hit the town in decades; an area newspaper, The Elkhart Truth, called the deal nothing short of an “earthquake.”

Back in New York, in the Midtown headquarters of the Blackstone Group, the tie-up meant a handsome payday for Blackstone and a handful of other private equity specialists. Together, they had bought one of the Warsaw companies, Biomet, in 2007. Now they had agreed to sell it for $13.4 billion, or $2 billion more than they paid.

 Such is the way of private equity, a signature Wall Street business of the past two decades. The sale — Biomet was bought by Zimmer Holdings, creating a leading orthopedics company — meant a nice return for everyone, including public pension funds that had invested their money in the private equity partnerships that owned Biomet.

But for Blackstone and the other private-equity partnerships in the deal — overseen by Goldman Sachs, Kohlberg Kravis Roberts and TPG Capital — this deal will be a gift that keeps giving. That’s because, beyond the profits they share with their clients, they will be paid millions more in fees — for work that they are never going to do.

For the complete story from the NY Times, please click here