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Financial watchdog acted more like a lapdog


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Dear Mr. Berko:

I lost about 70 percent of my retirement funds to Bernard Madoff’s Ponzi scheme, and I blame an organization called Financial Industry Regulatory Authority, or FINRA. Two years ago, I invested with Madoff because I believed his claims and corporate books had been given a clean bill of health by FINRA, the regulatory police at the Nasdaq Stock Market and the New York Stock Exchange. Now I’m thinking about suing FINRA for malfeasance and misfeasance because they dropped the ball on Madoff. I was hoping you would have access to names of other Madoff victims who would be willing to share the cost of this venture. If you will provide their names to me, or give them my name, I’d appreciate it.

D.S., Boca Raton, Fla.

Dear D.S.:

Clarence “Clarabelle” Sanders Jr. is the senior counsel at the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA), a non-governmental regulator for all securities firms doing business in the United States. It seems that Sanders and his circle of clowns blithely allowed Bernard Madoff to suborn $50 billion from investors over the last decade. I’m not surprised!

Clarabelle sent me a personal letter last year commanding me to appear at his inquisition in New York, believing I was engaged in an outside business activity without his written consent. I was instructed by registered letter to bring counsel and appear at his 14 Wall St. office for interrogation. I think Junior may be smoking too many left-handed Luckies – if you get my drift.

The outside activity is this column, which the New York Stock Exchange has tried to silence since 1992 because a bunch of Merrill Lynch big shots were offended by the column’s comments. This column has been published from coast to coast for 30 years. It is a sad, sad, sad era for the brokerage industry when FINRA’s bootlickers start chasing me rather than Madoff.

Certainly if these toadies had been doing their jobs, Merrill Lynch, Lehman Bros., Citigroup, Bear Stearns, Bank of America and other brokerages would be good as gold and solvent today. Every broker, dealer and member of the New York Stock Exchange must open his or her books to FINRA. It is FINRA’s imprimatur that assures the investing public that their accounts at Lehman Bros., Merrill Lynch, Bear Stearns and Madoff are solidly capitalized and that there’s no hanky-panky bookkeeping.

When FINRA audited Bernie’s books each year, it’s hard to imagine how their blithering circus of examiners could miss the glaring evidence. Some folks suggest that the problem relates to FINRA’s employment qualifications, which are equal to those at Burger King.

Other observers suggest that the FINRA harlequins had to be on the take. And can you believe that Mary Shapiro, the CEO of FINRA, might be appointed to head the Securities and Exchange Commission, which is a governmental agency? What a bummer that’s gotta be for the investor. Some think Shapiro might bring along Clarabelle, whom some say is palsy-walsy with Wall Street big shots.

I do know a couple of couples that were very badly dinged by Madoff, but I won’t get involved with introductions. However, I laud your intention to sue FINRA and so do thousands of brokers whose names have been sullied. These brokers would elevate you to icon status if you sued FINRA – and some would probably help with the costs.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service

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