Financial Industry Regulatory Authority (Finra) is a non-profit company which, through Congressional permission, supervises the actions of broker-dealers and 634,000-member brokers who are associated with the securities markets. When among its members breaks its guidelines or securities laws, they sanction the company or individual by enforcing fines, disciplinary actions and, if outright enough, refer cases to the Securities and Exchange Commission or police (state and federal). The company also just recently came under examination by Congress for its absence of openness on how its fines are used and how its executives are compensated.
In a 2013 action versus stock brokers and Finra members Talman Harris and William Scholander, Finra made a claim that the males had gotten a $350,000 payment (kickback) from Deer Consumer Products (formerly noted on NASDAQ) to control the stock rate. In August of the list below year, a Finra arbitration panel found that the guys had breached the company’s guidelines and disallowed them from subscription. The Finra arbitration, whose fairness it has been brought into question, was as far as that case went. Deer Consumer was never ever charged in any action by the Securities and Exchange Commission nor was public law enforcement took part in the case. While the case including Deer Consumer never ever exceeded Finra, Harris, and Scholander were called in a different case including stock control in the Northern District of Ohio. There, Scholander pleaded guilty (sentenced to 2 years in jail) and Harris was condemned at trial (sentenced to over 5 years in jail). Harris is appealing his conviction.
When Finra pursued Harris and Scholander in the Deer Consumer case, they also called 2 non-Finra members in its different grievances. The 2, Robert Newman (a lawyer with previous experience at Sullivan Cromwell) and Benjamin Wey (a Wall Street investor who ran New York Global Group (NYGG)), were called as “stock promoters” together with Harris and Scholander. We had been a consultant through NYGG helping Deer Consumer in its initial trading on NASDAQ. The Finra choice, which was authored by Finra’s National Adjudicatory Council (NAC) member Chris Brummer, indicated that both Newman and Wey were associated with Harris/Scholander’s supposed misbehavior.
Neither Wey nor Newman were offered a chance for a hearing to get their side of the story. They were never ever even gotten in touch with by Finra. Wey’s name was pointed out over thirty times in Finra’s choice and Newman’s thirteen. FINRA legal representatives Robert Colby and Alan Lawhead took a position that Finra had not implicated Newman or Wey of securities scams but consistently released their uncomplimentary findings on the case. Wey would wind up being arraigned on securities scams charges in September 2015 in a different set of scenarios. Ever since all charges versus Wey were come by the Southern District of New York this previous summer season. Robert Newman was taken legal action against by the SEC of a civil problem in 2015 on charges noting him as Wey’s “co-conspirator,” a charge also developed on Brummer’s Finra choice. The SEC case was also dropped versus both Wey and Newman.
Newman’s lawyer, Joanna Hendon, asked Finra to drop her customer’s name from its files pointing out that “… Newman has no pet in this battle,” describing Finra’s claims versus Tilman/Scholander. Finra fired back that it would not be modifying its problems to edit the name of Newman. As Hendon pointed out in one letter to Finra that, “Mr. Newman does not court promotion,” and the only referrals to Newman in publications involved his association with Gilman/Scholander. In Wey’s case, he was under the weapon to protect himself on other fronts and thought that Finra’s calling him even more polluted his capability to do business on Wall Street.
Due to Wey’s current vindication in the SDNY, he has pledged to look for justice. In a news release, Wey stated: “Government companies were misinformed by the vindictive NASDAQ, Finra– which we are not even their damn members within their jurisdiction.” On October 2, 2017, Wey counter-sued Christopher Brummer declaring disparagement, deceptive police authorities, and damages to Wey’s companies.” Through his lawyers, Wey stated he thinks Finra’s calling him in its procedures versus Tilman/Scholander resulted in his federal indictment. The matter in between Wey and Brummer is pending in New York state court.
There is no lack of critics of Finra within its own subscription. Does FINRA have the capability or authority to call non-members in problems it has versus its own members? This case is unsightly, but it might show to specify, limitation, Finra’s capability to impact the lives of its non-members, which there are over 330 million in the United States
For now, Finra appears to be digging its heels, but so are Wey and Newman. This must be a fascinating case for everybody to follow, whether you are a Finra member or not.