Schapiro shouldn’t be SEC chairman

No matter how you interpret the facts, the financial crisis happened while Securities and Exchange Commission Chairman Mary Schapiro was supposed to be regulating the broker-dealers as chief executive of the Financial Industry Regulatory Authority Inc.

In my opinion, she and former SEC Chairman Christopher Cox created the crisis by deliberately failing to enforce securities law. Furthermore, I believe that for several decades, the SEC and Finra of New York and Washington have used their authority more to protect the profits of the big broker-dealers than to protect the public.

The oldest of the 77 million baby boomers have started to retire, and they have an average net worth of about $250,000. They have to roll over their 401(k) money.

The correct way to fund their retirement needs is a combination of guarantees, insurance products and securities investments. The only thing standing between the big boys and your client’s money is you.

They are trying to force you to put all your insurance and investment advisory business through the broker-dealers so that they can skim your profits into their own pockets.

It appears that Ms. Schapiro was bought and paid for with millions in presidential campaign contributions from the big broker-dealers.

Remember the posturing for federal regulation of insurance companies and everyone else? That was orchestrated by the big broker-dealers.

Why do you think they changed the name of NASD to Finra? Former Treasury Secretary Henry Paulson, who led the parade, was a former executive at The Goldman Sachs Group Inc. of New York.

Minimum-production requirements and the “no-parking rule” are illegal, according to the Securities Exchange Act of 1934, but they exist so that the big boys can eliminate you as a competitor for your client’s retirement business. The broker- dealers are trying to leverage their enforcement authority to steal your insurance commissions and advisory fees.

Why do you think that the SEC created Rule 151 about index annuities, even after the courts twice said that the commission had no authority to regulate that insurance product?

If you thought that Ms. Schapiro’s reign of terror at Finra was bad, wait until she “fixes” the problems at the SEC by regulating you out of the business in order to cover up her willful failures at Finra.

We all know that Federal Reserve Regulation T prohibits more than 50% leverage for the purchase of securities. So why were Merrill Lynch & Co. Inc. of New York and the others allowed to use 3,000% leverage (30-to-1) to buy the subprime-mortgage securities for their own accounts?

Ms. Schapiro claimed that she had no authority to investigate Bernard Madoff, even though all his client accounts were held at his broker-dealer, over which Finra has absolute authority.

She left a job that paid her more than $2 million a year for the most powerful job in the financial industry, which pays only $160,000.

I believe that Ms. Schapiro is expecting to make up the difference with a big payoff. What do you think she will have to do in order to get that payoff?

If you call yourself a professional, then you have to stand up for the integrity of our business and demand that Ms. Shapiro be re-moved as head of the SEC. Contact your members of Congress and tell them how you feel.

Tell all the other professionals you know to do the same. Tell your customers to do likewise, because Ms. Shapiro is the reason that they have to pay billions for the bailouts.

There are about 660,000 registered representatives, more than 1 million insurance agents, 240,000 investment advisers and millions of pissed-off taxpayers who happen to be your customers. If we all speak up, our voices will be heard.

Lee Feldman
President
Association of Counselors for Equity Securities
Pittsburgh

Finra members must speak out

I read with interest that brokers are finally saying out loud that the Financial Industry Regulatory Authority Inc. of New York and Washington is spending too much effort on small firms and small problems, while allowing the Bernard Madoff scandal to go undetected (“Regulators should sweat the big stuff,” Jan. 12).

Bravo for finally waking up. What bothers me is that many of those who are complaining aren’t willing to go on record.

That speaks volumes about the climate of intimidation created by Securities and Exchange Commission Chairman Mary Schapiro and her friends at Finra. It turns out that that is just peachy to Congress, which doesn’t really care.

Did anyone make any effort to derail her nomination to be the SEC chief? I did.

I sent a 17-page brief to every member of the Senate Banking Committee and Senate Majority Leader Harry Reid, D-Nev., and I wrote to President Obama’s transition team before the election, urging him to withdraw the nomination.

Finra members have to take the regulators on.

After all, Finra is a membership organization. If you don’t start to act, you will continue to be crushed under the heel of Finra’s auditors and enforcement lawyers.

By the way, if you are wondering where that money went that Finra collects in fines, Ms. Schapiro’s salary was reportedly $2 million annually.

I am sure her executives aren’t far behind. All those salaries and all those audits of small firms, and still the Madoff scandal occurred.

If that doesn’t show that Ms. Schapiro is a failure as a chief executive, I don’t know what does.

Hans Beerbaum
President
Beerbaum & Beerbaum Financial and Insurance Services Inc.
Petaluma, Calif.

Pro-bono counseling is widely available

Thank you for the article in the Jan. 19 issue, “FPA gives free counseling to worried New Yorkers.”

The major city chapters of the Denver-based Financial Planning Association have a pro-bono officer who has been trained to educate local chapter members on how to do community outreach and/or work with those who find themselves in either an underserved population or a crisis situation, or those who serve in the military as they come home from overseas.

For the past several years, the Foundation for Financial Planning has been pleased to be able to fund an annual training program for these chapter leaders. In addition, the foundation, through its endowment, has been able to fund requests from more than 50 different charitable organizations.

Scalable and replicable programs have been developed and shared with 501(c)(3)s, and other such organizations around the country.

We are well aware that the number of our citizens who need financial help is staggering. We are working diligently to raise the necessary funds to increase the endowment and are working with other financial industry organizations to spread the word of the availability of help for those who need it by simply contacting the foundation or a local FPA chapter.

Barry Freedman
Chairman
Foundation for Financial Planning
Tucker, Ga.

Uptick rule needs to be addressed

I strongly agree with Carl H. Tiedemann, chairman of New York-based Tiedemann Investment Group, in his letter that appeared in the Jan. 19 issue, “Finra had authority to examine Madoff’s firm.”

The uptick rule is the only defense against “piling-on” activities by short-sellers.

There is no defense against these bear raids, and the elimination of the uptick rule made it open season on otherwise healthy companies in the face of an already difficult market.

Securities and Exchange Commission Chairman Mary Schapiro should address the uptick rule immediately.

John Joseph Sexton
President
John J. Sexton Financial Inc.
Tustin, Calif.

Athlete clients require coordinated effort

I found both the stories in the Jan. 12 issue about financial advisers who work with athletes to be dead-on.

Virtually all investors make mistakes at some point, but athletes have the extra burden of their mistakes’ being made public fodder.

Having worked with athletes in my practice for 18 years, one of the things that I have found that gets these guys in trouble is that the very characteristics that help them succeed in their sport — namely, aggressiveness, high confidence and a little invincibility — are all destructive characteristics when applied to financial planning and investing. Couple that with the fact that many unqualified people come out of the woodwork to “help” them, and you have a recipe for disaster.

Both stories bear out my personal experience. Everything works best when there is a coordinated management and planning effort by the adviser, agent, accountant, attorney and the player or someone from his or her family.

Keep up the great work.

Pete Bush
Partner
Horizon Wealth Management LLC
Baton Rouge, La.

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