Inspector Javert  is the alias --- or nom de guerre, as he prefers --- for  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.  Although now retired, he remains an ardent (and unapologetic) advocate for public investors.  I hope you will enjoy his unique perspective on Wall Street.  If you'd like to pose any questions to him, please send your queries to bsinger@rrbdlaw.com

Bill Singer, Publisher of RRBDLAW.com

Peeing In the Pool

At times, Wall Street's less of a global superhighway and more of a little path --- point being, the securities industry can be an awfully small world. Fact is, stockbrokers and broker-dealers are usually competing for the business of the same investors and the same clients. Moreover, brokers frequently transfer from firm to firm and cross paths at the same health clubs, bars, tennis courts and hypertension doctors. Funny thing, though, but long before we regulators know what's going on, it's those brokers who've seen it and heard it.  They tend to know who the bad guys are, what they're doing, and where they're working long before the regulators do.

I may understand it, but I just don't get it (if you know what I'm trying to say).  Sure, in these here United States we've got this cultural thing about folks whom are known as stoolpigeons or snitches.  Even as kids we called them tattletales.  Still, I've never really figured out why Wall Street hides behind a wall of silence when it comes to scams.  The broker-dealers, the stockbrokers, the issuers, the public investors, and the regulators are all living in the same house --- and when that building catches fire we all need to pitch in and quickly quench the flames.  Do brokers or their firms help the regulators get the bad guys? I can count on two fingers, once a decade, when a broker told me that so and so was really screwing clients in a major way. Meanwhile, I have something on the order of one thousand branches and offices to examine. Hey guys --- I could use a little help.
 
Why should we help, is what I often heard from the industry.  The theory is that no good deed goes unpunished.  To some extent that's the failure of the regulators.  Frankly, it's a fair concern --- how should I put it delicately?  I've known more than my fair share of state regulators who had their eyes on running for higher political office, and maybe, just maybe, securities regulation was a convenient stepping stone on the way up.  So, like I said, I understand why there isn't always a lot of help from the industry, but I still don't get it.   This is the ultimate failure of regulation on Wall Street.  It should be a partnership between the industry and its regulators; but it's not.  Until that culture of distrust is fixed, there's no way that we're going to end this vicious cycle of scandals and criminality.  The bad news about Wall Street changes as fast as the soup du jour.

Wall Street has to get over its hang-up about working with its regulators.  It's in the industry's best interest to get the worst of the bad guys out of the business. As things now stand, notwithstanding all the recent headlines, the regulators are fighting a losing battle.  At best it's just a game of catch-up.  Sure, I realize that sometimes my side of the table was a bit heavy-handed --- maybe even clumsy.  However, at the end of the day, if stockbrokers and their firms know who's breaking the law and keep it hushed up --- well, guys, as I see it, you're simply peeing in the pool where you swim.