Inspector Javert the ex-State Examiner

I'M FROM THE GOVERNMENT AND HERE TO HELP
observations of a former state  securities examiner 
By Inspector Javert

Inspector Javert is a former state examiner/commissioner, who spent many years in securities regulation and conducted untold numbers of field examinations of broker-dealers and their salespersons. He's been on the frontlines and in the trenches.  When he started his regulatory career, the Dow was in the 900's; when he retired, it was over 10,000 - - - a fact he attributes to his diligent efforts.

I have corresponded with Inspector Javert for years.  No, we didn't always agree when he was a regulator (obviously, he was always wrong) and to this day we frequently disagree (he's still stubborn).  Nonetheless, he remains an ardent advocate for public investors and his regulatory background gives him a meaningful voice on the issues he weighs in on. I hope you will enjoy his unique perspective on Wall Street.

Bill Singer, Publisher of RRBDLAW.com

Yeah, that's me. Inspector Javert.  No, that's not really my name.  It's my pen name --- I think the French call it a nom de plume.  Fancy title.  And I guess it goes to show you that I'm a little bit of a coward because I don't want my former bosses and colleagues to know who I am.  No, I'm not going to break any rules or laws.  I'm not going to spill the beans on any cases I worked on.  However, rest assured that I'm going to call things as I see it.  No punches pulled.

On second thought,  there's also something called a nom de guerre name --- that's another fancy word for a pseudonym, but it literally means a war name.  Frankly, some of my former bosses and colleagues may decide that this latter description will prove more accurate of my literary efforts.  We'll see.   In any event, let me start my literary career as a columnist for Securities Industry Commentator.  If you want to reach me, send your queries to bsinger@rrbdlaw.com and Bill Singer will forward them on to me.

So, who was Inspector Javert when I worked for a certain state securities division?  Well, I'm the guy who comes into your shop unannounced and upsets the hell out of the branch manager. He usually makes me cool my heels while he tries to get some instructions from compliance. And he probably calls the people who really run the firm. Finally, he sets me up in the office of some sick guy or maybe the conference room and he worries I'll be a little piss-ant.

Meanwhile, I guess he's sending an e-mail to everyone in the office that a *&*&%^ examiner from the state is in, directing everyone not to talk to me; not to give me any records or anything and to not make me feel too comfortable. And, oh, watch what you say on the phone until I leave.

I usually tell the manager that I've been doing this a while and am not looking for little piss-ant stuff and that I know that the complaint file is usually a bunch of correspondence from all the neurotic investors. I ask for one month's statements from all the reps; a roster of reps, rep numbers, shared numbers, state registrations, the complaint ad and correspondence files and then I go through the stuff during the rest of the day. Rarely will I spend more than a day. My assignments were five a week not counting travel time; sometimes all the way across the state giving me, really, three days for five exams.

I'm looking for two things. I'm looking for really bad brokers doing really bad things: selling away; selling unregistered securities. And I mean unregistered in the sense of companies which never filed for registration, couldn't have gotten it if they tried. The other thing I'm looking for are petty violations to prove that I went through the stuff. But that's really all I want it for. Things like a guy selling in a state he's not registered in and then "correcting" it in the "cancel and correct" file by giving the trade to a properly registered broker.

In my career I've found major producers selling without any registration whatsoever. When they transferred from another firm they didn't get the registration right. Big deal? I think so. Another time I was at an NYSE firm and noted in passing that one of their notes to their financial statements said that they had an out of state margin customer whose margin debt was so large that should he default, it could affect the firm's existence. This bugged me a lot but I couldn't figure out why. For the next day or two it bugged me, but I just lived with the annoyance. I woke up that night and remembered the firm wasn't registered in that state. Big deal? Heck, I don't know. I think so. I think it's stupid to risk so much when a couple of hundred dollars could remove the danger.

Anyway, there's lots more I saw, a lot of probably ill informed decisions I made, but on balance I thought I did what I could.  If you're interested, there's more I could tell you, but I am in private industry now and time's money. Gotta go.

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