Down Markets a Blessing For Some

According to Reuters - Hedge funds see big gains in distressed investing. Quoting managers of some of the larger hedge funds, they are buying, and there is not enough capital to take all of the opportunities that they have found.

Giants Go To The SuperBowl

Always the underdog, the Giants win again, in overtime.

NFL Game Center: Post Game - New York Giants at Green Bay Packers - 2007 Conference Championships

Supreme Court Rejects Scheme Liability in Stoneridge

The long awaited decision in Stoneridge Investment Partners, LLC vs. Scientific-Atlanta, Inc. was issued today. The Supreme Court, in a 5-3 decision, rejected the concept that secondary actors, such as bankers, auditors, vendors and attorneys, who do not themselves make misleading statements, are liable to assisting the company that does make misleading statements.

The case is significant, as the defendants in the case did in fact make misleading statements, in that they assisted the issuer's fraud. It is therefore an expansion of Central Bank, which holds that there is no aiding and abetting liability under 10b-5.

The decision is here.

Giants Go To The Championship Game!

What a great game. Big Blue wins, Owens does NOTHING in the second half, and the defense shows, with a decimated secondary, just how good they are.

Bring on the Cheeseheads!

BigLaw Lay Offs

So, you break your back, and your wallet. You graduate from law school, pass the bar exam, get a job at BigLaw, for big hours and big bucks. Sure, you are doing the crap work, getting paid less per hour than your construction worker buddies, but hey, you got a career in law and in another 7...err.....8.....uh...9 or 10 years you might be a non-equity partner.

Then your fantasy bubble bursts.

You are being layed off.............

Yup, Cadwalader is laying off 35 associates, nearly 10% of its lawyers are gone, with three month's severance. Nice deal, great show of support for those new associates you recruited.

According to the article, more layoffs are coming - at least some of BigLaw, including one of my favorite BigLaws did buyouts and took care of their associates. Apparently not all are going to do so.

FINRA Fines 19 Firms a Total of $2.8 Million for Inaccurate Advertised Trade Volume Information

FINRA fined the firms after it compared the firms' advertised trade volume with the firms' executed trade volume found substantial overstatements for each firm in one or more of the securities reviewed.

The firms' overstated trade volumes were made available to market participants by the service providers. The service providers also used the firms' inaccurate advertised trade volumes to compile rankings and reports, including reports that rank the most active broker-dealers by security.

So, these firms misrepresented the volume of their business in their advertisements. In other words, they lied to the investing public. Pretty serious stuff, I wonder why the individuals responsible for these misresentations were not barred from the industry.

Oh wait, the explanation is later on in the press release. Some of the firms involved were CIBC, Lehman, Merrill Lynch, Robert W. Baird & Co., Inc., Thomas Weisel Partners, LLC, UBS, Bear, Stearns, BMO Capital, Cowen, Deutsche Bank, and RBC Capital Markets Corp.). The big boys committing the big violations, and everyone walking away with a small fine.

Oh yeah, FINRA also found that, prior to September 2006, all of the firms lacked an adequate supervisory system and procedures for communicating trade volume to such services. Do they EVER not find inadequate procedures when they fine a firm? Not that I am complaining, since all that does is generate some work for my firm in reviewing and re-writing procedures, but if you were to read FINRA press releases, you would believe that no one has a decent set of supervisory procedures!

Or maybe it is just a way to jack up the fines by adding "another" violation. Hmmmm.

Idling for 10 seconds uses more gas than restarting the car

Ok, this has absolutely nothing to do with the law, but I was so amazed, that I figured most other folks don't know this either.

In the winter, many people idle their car engine after starting it up because they think it needs time to warm up. Not true! Today's fuel-injected engines don't need a warm-up period, and idling for long periods can lead to excessive engine wear.

Worse, cars idling for more than 10 seconds use more gas and create more global warming pollution than simply restarting the engine. Surprised? It's true - the 10-second rule has been proven empirically.

http://green.yahoo.com/blog/climate411/71/when-to-turn-off-your-engine.html

FINRA Board Approves Rule that Codifies Expungement Procedures for Arbitrators

In an apparent effort to make sure that everyone really, really, really understands that FINRA does not trust its own arbitrators, FINRA's Board of Governors approved a rule proposal that would impose expungement procedures requiring arbitrators to take specific steps, including issuing a written explanation, before recommending expungement of information related to arbitration cases from a registered person's Central Registration Depository (CRD) record.

According to FINRA, this proposal is designed to assure that expungement occurs only when one of the narrow grounds specified in the FINRA rules—factual impossibility, no involvement by the registered person or falsity—is determined and documented by the arbitrators.

FINRA Fines J. P. Morgan Securities $500,000

FINRA fined J.P. Morgan Securities, Inc. $500,000 for failing to disclose to the MSRB that it had used consultants to obtain numerous municipal securities offerings and had made payments to consultants connected to particular offerings. According to the FINRA press release, the firm did not simply fail to dislose, it affirmatively stated that it did not use consultants, and that it made no payments to consultants.

That is not a failure to dislose, that is an affirmative mistatement. And JP Morgan gets a $500,000 fine?

A small firm would have been put out of business, with its principals barred.

FINRA - Investor Advocate?

Has anyone noticed the new FINRA advertising campaign - "FINRA - a not for profit resource with nothing for sale" is the tagline. They are doing television ads, radio spots, even sponsored pay per click links on web pages.

The links go to the Investor information section of FINRA's web site, and the opening paragraph claims that FINRA's job "is to protect investors every day by keeping the country’s capital markets fair. As a not-for-profit financial resource, FINRA offers unbiased information on a full range of issues that affect your money and investments."

If one of my clients made that type of misrepresentation, FINRA would be all over them. Sure, FINRA is a not-for-profit organization, but what does that mean? It means nothing to investors, the public, the markets, or to anyone other than the IRS, so touting that is a bit misleading.

FINRA'S "job" is not to protect investors. That may be a benefit of its "job" but its "job" is to regulate the securities industry. FINRA is not an investor advocate, it is an SRO, a -self-regulatory organization.

There are other questions that arise, like why is FINRA spending its members' money on advertising campaigns, but the real problem here is the identity crisis at FINRA. FINRA is a membership organization turned regulator, and it needs to keep its mission in sight, and its role in mind. Fabricating a new role, as an investor advocate, can cause nothing but problems for it, its members, the markets and ultimately consumers.

We have already witnessed the animosity towards the industry in the past several years in the arbitration area, as rule change after rule change tips the scales more and more in favor of the investor.

And we have seen it in public comments by FINRA management. At a recent conference I attended a FINRA executive actually said that when she joined FINRA she was surprised at how many criminals were in the membership. Her word; criminals.

A significant portion of FINRA Staff does in fact treat firms and individuals as if they are criminals, and such treatment can only get worse if management thinks the industry is full of criminals, and if FINRA thinks it is an investor advocate.

What next, guest speaking at PIABA meetings? Oh wait, FINRA already does that.