I am in DC, to attend the annual FINRA conference that starts tomorrow morning. I have been to many of these over the years, formerly as the Director of NASD’s Atlanta District Office, but, over the last ten years, as a lawyer who defends brokers and broker-dealers against, among other things, FINRA allegations of misconduct. Sadly, these things are pretty predictable. Senior management will tell the attendees how reasonable FINRA is, how they don’t go out of their way to bring Enforcement cases, how they are not looking for “foot faults,” and how they are always willing to entertain contrary views from members as to how to achieve reasonable compliances. The problem is, this message seemingly never makes it to the examiners who are actually conducting the exams, or to the Enforcement attorneys who are presented with recommendations from Member Reg to proceed with formal action. Contrary to senior management’s message, examiners regularly demonstrate not just a willingness but a desire to write firms up for the slightest violation, no matter how benign. And Enforcement lawyers routinely proceed with formal disciplinary action when, historically, a Letter of Caution would have sufficed.
I will try not to pre-judge and to keep an open mind as I sit through the sessions over the next three days. I will dutifully report the messages that FINRA delivers, and try to avoid too much editorializing. But, I have to be honest, just as we all know that Lucy will always pull that football away before Charlie Brown can actually kick it, no matter what she tells Charlie Brown to the contrary, regardless of how thoughtful and reasonable FINRA management will undoubtedly claim they are, when all is said and done, I don’t imagine that anything will change. Exams will remain burdensome. Minor violations will still appear in Exam Reports and Exam Disposition letters. Settlements will continue to be expensive. But, a guy can hope, right?