Posted on 08/19/2009 3:55:15 PM PDT by CutePuppy
The industry self-regulatory organization that was supposed to police the brokers at the Stanford Financial Group acknowledges that a Stanford employee alleged in 2003 that the company was running a Ponzi scheme, but the organization did not follow up on the claim based of its own policy, which has since been changed.
The disclosure comes in testimony from Daniel Sibears, Executive Vice President of the Financial Industry Regulatory Authority, FINRA, prepared for a Senate Banking Committee hearing on Monday.
In 2003, Stanford advisor Leyla Wydler alleged in an arbitration case that the company was "engaged in a Ponzi scheme to defraud its clients."
Wydler lost the arbitration case, and FINRA is now acknowledging that her allegations of fraud were never passed on to investigators by the FINRA arbitration panel. Sibears' testimony said that prior to this year, FINRA procedure was to review fraud claims in arbitrations involving customers, but not those that involved employment disputes like Leyla Wydler's.
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(Excerpt) Read more at cnbc.com ...
After she lost the arbitration in 2004, Wydler brought her concerns to the Securities and Exchange Commission, which launched a formal investigation the following year. But the SEC did not sue Stanford until this year. The agency says it, too, was thwarted by Antiguan regulators, and added the nation's chief financial regulator to its complaint in June.
FINRA is crap. Relying on FINRA is like opening a bank and securing it with a poodle and a flashlight- no vault, security system, cameras, etc. and shocked when the bank gets robbed everyday.
The same people who do such a bangup job regulating the Financial sector want to take over Health care.
And Mary Schapiro, CEO of FINRA at the time, was rewarded by Obama to a post of Chair of SEC (an overseer of FINRA) for doing such a great job.
Crony Capitalism.
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