FINRA calls itself the Financial Industry Regulatory Authority, but it is not part of the U.S. Government; it is a non-profit company, funded by its dues-paying “members”, so whose side do you think FINRA will take in a dispute between broker and customer?
FINRA makes rules, but it doesn’t uniformly enforce them. And even if it wanted to, it does not have the authority to tell a broker to do something like close illegal trades opened in a customer account. And no matter how incompetent or corrupt FINRA may be, it has immunity (i.e. it cannot be sued).
"How could any of our lawmakers have possibly thought that this was a good idea?" asked one of our readers.
In Ron Taylor’s case, FINRA confirmed that Thinkorswim had violated FINRA Rules, but instead of sanctioning the brokerage, or ordering them to return the funds they stole out of Taylor’s accounts to finance an employee’s trading losses, FINRA issued a “cautionary action” which is equivalent to saying “bad dog!”
But Mr. Westcomb, you’re supposed to be ENFORCING your firm’s Rules, not breaking them!
Did you not read your firm’s Regulatory Notice 09-17 which states that a Cautionary Action is only appropriate ‘If the violation is of a minor nature and there is an absence of customer harm.‘ Obviously this violation was not “of a minor nature”, because Thinkorswim deliberately wiped out a customer’s life’s savings and retirement funds.
Taylor spent the next four years trying to convince FINRA that Mr. Westcomb’s response was inappropriate. But he said that the higher he went up the corporate ladder, the less these folks seemed to know about the very rules they have been commissioned to enforce.
Below is the response Taylor received to a letter he wrote to the executives at FINRA.
While the letter appears to respond to Taylor’s complaints, it actually reveals how little Mr. Vice President and Deputy District Director actually understands about the reason his firm even exists..
“It seems to me that FINRA’s enforcement actions are inversely proportional to the size of the brokerage”, Taylor added, “And why not? TD AMERITRADE is one of FINRA’s largest dues-paying members. And since FINRA is a non-profit organization, it has to funnel all of that money into the pockets of its executives.
“I’ve seen cases where FINRA barred (i.e. shut down) an entire brokerage for unauthorized trading. Yet, Thinkorswim wipes out my life’s savings, my retirement funds, my family’s future, and even my checking account, and FINRA doesn’t even record the incident in its BrokerCheck™ database, rendering it unreliable and totally useless.”
IF YOU ARE A CLIENT OF THINKORSWIM OR TD AMERITRADE
Taylor warns existing customers not to assume that their funds are safe in the custody and control of this brokerage. He said, “We now know of at least one confirmed violation of FINRA Rules that does not show up in ‘BrokenCheck’, which means we have no way of knowing how many other people’s lives have been similarly destroyed as a result of unregulated corporate greed and dishonesty.”