ipl 2023 highest score team list NYSE Market Regulation which pro duced FINRA in 2007 As a result of the merger her annual compen sation rose 57 from 1 999 731 to 3 140 826 This was a sore point for the brokerage firms that had been NASD members They felt Schapiro had enriched herself at their expense As an inducement to get member firms to approve the merger deal that created FINRA Schapiro told the NASD members that they would receive checks based on the projected future savings that the merger was expected to generate In proxy material sent to the members in December 2006 NASD claimed that the IRS was pre cluding it from paying them more than 35 000 each A lawsuit filed against FINRA by a California brokerage firm objecting to the small payout alleged that Schapiro and her staff had lied in the proxy material about the IRS ruling It claimed to have seen a letter from the IRS that placed no such cap on the distribution which came from 2 billion in members equity that had been amassed as a result of the listing of NASD s NASDAQ market between 2001CHAPTER 9 THE TROUBLE WITH MARY AND GARY 103 and 2006 The suit claimed that the member firms had been entitled to 70 000 to 112 000 each The suit was dismissed in March 2010 when U S District Judge Jed Rakoff for the Southern District of New York ruled that self reg ulatory organizations like FINRA and their officers are immune from private damages suits challenging official conduct performed within the scope of their regulatory functions But he did not rule on the merits of the case Simply put the way the law was written even if FINRA had lied on the proxy and had short changed its members it was bullet proof Protesting members had no recourse in a court of law Schapiro s reputation suffered as a consequence of the suit Her 7 million package upon leaving FINRA didn t help matters espe cially because critics had accused her of being a lax regulator Her priority at the SEC had been rebuilding the agency s morale which was at a low after the Madoff scandal revealed severe short comings in its enforcement branch and dealing with the aftermath of the 2007 credit debacle The Dodd Frank financial reform bill required the SEC to implement 90 new rules in 18 months The rule making process required that the agency post its proposed rules accept comments from the public and then redraft the rules to reflect sensible suggestions She also had embarked on a review of market structure the process that Senator Kaufman wanted speeded up because of the distortions caused by the high frequency traders Now the Flash Crash had been added to that full plate But just as it was for Gensler it was Schapiro s golden opportunity to provide a better ending for the story historians would write about her This page intentionally left blank The Road to Ruin The history of U S investors and their experiences in the equities market has all the earmarks of an abusive relationship and it would require an eminent psychiatrist several hundred pages to explain why battered investors return to the market time after time following their previous drubbing knowing in their hearts that they eventually will be brutalized again Congress and the regulators realizing the important role that small investors play in providing capital for American businesses keep trying to save the marriage by imposing new rules on Wall Street The rules work for awhile But Wall Street always finds new ways in which to smack his spouse around right under the regula tors noses Many of the complaints heard in 2010 about certain classes of traders having an unfair advantage had been voiced countless times in the past Small investors always seemed to be getting fleeced by some Wall Street sharpie The old Fred Schwed saw Where Are the Cus tomer s Yachts resonated as loudly with investors in 2010 as it did when he first published his classic Wall Street book of the same title in 1940 1 The particular thrashing that engendered the sweeping market reforms of 2005 took place in 1969 and 1970 when a stock market bubble burst and the consequent bear market slashed into Wall Street s brokerage profits exposing the undercapitalized positions of more than 100 brokerage firms 2 This massive collapse of so called 10 105 106 CRAPSHOOT INVESTING white shoe firms marked the first significant catastrophe for Wall Street since the Great Depression and it was a wakeup call for Con gress that the New York Stock Exchange NYSE and its regulator the Securities and Exchange Commission SEC were not on the ball 3 The capital crisis was part of a one two punch The first punch was an embarrassing paperwork fiasco in 1968 Brokerage houses were overwhelmed by an unexpected influx of new customers at the zenith of a stock market bubble The newcomers expecting to get rich quickly invested heavily in smaller highly speculative stocks The enthusiastic crowd drove trading volume to record highs and the back rooms of the brokerage houses where trades were settled man ually simply could not keep up with the flood of paperwork Failed trades instances in which a transaction was voided because the seller s broker wasn t able to deliver an actual stock cer tificate to a buyer s broker topped 3 47 billion by May of that year The paperwork fiasco was so bad that many firms could not account for all the investor assets that were supposed to be in their safe keep ing Audits later would discover that some of the assets had been mis allocated to collateralize the bank borrowings of several brokerage firms In other instances the securities simply had vanished most likely into the pockets of dishonest employees Frightened and dis gusted the public abandoned the market as quickly as it had embraced it