FINRA Board Said to Debate Releasing Study of Madoff, Stanford

FINRA Board Said to Debate Releasing Study of Madoff, Stanford - 9/21/2009

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FINRA Board Said to Debate Releasing Study of Madoff, Stanford
Jesse Westbrook

Bloomberg. September 21, 2009
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EXCERPT: Board members of the U.S. brokerage regulator are debating whether to release an internal report of its examinations of firms run by Bernard Madoff and R. Allen Stanford, according to people familiar with the matter. The Financial Industry Regulatory Authority board may decide on the report’s fate this week, according to the people, who declined to be identified because talks are private. A panel of the 21-member board conducted the review after Madoff confessed to operating a $65 billion Ponzi scheme and Stanford was accused of running a $7 billion fraud through a Caribbean bank. The Securities and Exchange Commission was embarrassed this month when the inspector general released a detailed report on missed opportunities to catch Madoff, saying the agency assigned inexperienced lawyers to cases and didn’t follow leads. Finra is debating its report as the regulator lobbies Congress to expand its power beyond brokerages to investment advisers. “If it places this report in the closet and there is just a muffled reaction to the Madoff and Stanford matters, then I think Finra suffers in the eyes of Congress and the SEC,” said James Cox, a professor at Duke University School of Law in Durham, North Carolina, and former adviser to Finra’s predecessor. “Finra being open and saying that it is re-tooling demonstrates its ability to take on more responsibility.” The special panel includes Charles Bowsher, U.S. comptroller general from 1981 to 1996; Harvey Goldschmid, a former SEC commissioner; Joel Seligman, president of the University of Rochester; and Ellyn Brown, Maryland’s securities commissioner from 1987 to 1992, according to the people. […] Finra spokeswoman Nancy Condon said the board formed the committee to review the examination program “in light of the Madoff and Stanford cases.” A draft was shared with the board, which will decide whether to release it, she said.

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