Our readers likely are familiar with the Financial Industry Regulatory Authority. FINRA is the self-funded body that oversees securities brokers. Its own website states that its mission is to provide investors basic protections by enforcing rules against fraud or other wrongdoing.
But some critics question whether FINRA has been too lax, especially in dealing with cases in which there are signals that a broker has been consistently following questionable practices. Several cases that seem to be attracting particular attention include that of former California-based broker Bambi Holzer, Debbie Saleh and Hugh Hunsinger Jr. of New Jersey.
Holzer recently had her license suspended. According to The Wall Street Journal, this is at least the second time it's happened. The allegation by FINRA is that Holzer lied on regulatory forms and sold high-risk securities to clients who couldn't stand to lose their money.
Her attorney denies all the allegations. However, FINRA documents indicate Holzer had 64 customer complaints filed against her and that about 60 of them came just since 2001. The papers also note that between 2001 and the present, Holzer got fired, but quickly rehired, and worked at five different brokerages.
Saleh lost her license in 2009. According to FINRA, she provided misleading information to insurance companies which allowed her to do such things as buy and sell variable annuities 17 times in two years for a single client. Her work record revealed that between 2001 and 2004, she worked for three different brokerages. She neither admitted nor denied the accusations as part of settling the matter.
Reuters suggests that Hunsinger's colors may have been showing in 2001, too, after he was fined $5,000. FINRA alleged he tried to pass himself off as a certified financial planner when he was not. Last year, he pleaded guilty to stealing more than $1 million from accounts under his control. They belonged to his parents. He was recently sentenced to prison, according to the New Jersey Attorney General's Office. His brokers' license has been suspended for five years.
FINRA says it has been doing its job well. Still, a spokeswoman says a program was launched this year to move more speedily against what she calls higher-risk brokers.
For investors who have already lost funds, the move is likely too little, too late.
Source: Reuters.com, "COMPLY-When brokerages look away from advisers' shady pasts," Suzanne Barlyn, Nov. 7, 2013