Tell this journalist if she her FINRA story is big news or if she's wasting her time
February 11, 2010 1:54 PM Subscribe
How serious is it if a self-described investment bank that is involved in mergers and acquisitions is NOT registered with FINRA? And if it's a big deal, please help me understand why and how I can look into this in greater detail?
(Anon because I'm a journalist and don't want to give away too many of my secrets to potential competitors.)
I got a tip that a company in my area that describes itself as an investment bank and that is involved in M&A work on major deals is not registered with FINRA. Headed over to FINRA's Broker Check site, clicked "Brokerage Firm," and sure enough -- the business is not found. I checked its business license, and the name that I'm searching under is definitely the legal business name.
This is a company that publicly says it is involved in hundreds of millions of dollars worth of transactions, a handful of private placements, and a dozen or so mergers & acquisitions each year.
I've called FINRA, but their media office isn't getting back to me. I've also talked to a few lawyers, who will cite securities code that sure makes it sounds like this company should be registered with FINRA. But none of the attorneys I've reached will talk to me on the record in any way that could be seen as suggesting that this business is doing something wrong.
At this point, I'm at a crossroads. This seems like a big deal, but I can't get my head around how serious it is, why it's serious, and what the consequences are for firms that do not register with FINRA. If the business is going to be slapped with a $200 fine and that's it, I don't want to spend another 10 hours trying to track down enough information to write it up. If this is a major crime or a situation that puts lots of investor money at risk, obviously I'll do whatever it takes to expose it. If it's somewhere in between, I need to know, so I can decide which course of action to take.
This is outside of my expertise and comfort zone. Please, please - can anybody here help me understand the issues surrounding this situation? And which people or institutions might be able to help me as I continue, if I continue?
(Anon because I'm a journalist and don't want to give away too many of my secrets to potential competitors.)
I got a tip that a company in my area that describes itself as an investment bank and that is involved in M&A work on major deals is not registered with FINRA. Headed over to FINRA's Broker Check site, clicked "Brokerage Firm," and sure enough -- the business is not found. I checked its business license, and the name that I'm searching under is definitely the legal business name.
This is a company that publicly says it is involved in hundreds of millions of dollars worth of transactions, a handful of private placements, and a dozen or so mergers & acquisitions each year.
I've called FINRA, but their media office isn't getting back to me. I've also talked to a few lawyers, who will cite securities code that sure makes it sounds like this company should be registered with FINRA. But none of the attorneys I've reached will talk to me on the record in any way that could be seen as suggesting that this business is doing something wrong.
At this point, I'm at a crossroads. This seems like a big deal, but I can't get my head around how serious it is, why it's serious, and what the consequences are for firms that do not register with FINRA. If the business is going to be slapped with a $200 fine and that's it, I don't want to spend another 10 hours trying to track down enough information to write it up. If this is a major crime or a situation that puts lots of investor money at risk, obviously I'll do whatever it takes to expose it. If it's somewhere in between, I need to know, so I can decide which course of action to take.
This is outside of my expertise and comfort zone. Please, please - can anybody here help me understand the issues surrounding this situation? And which people or institutions might be able to help me as I continue, if I continue?
Not a journalist or expert on US finacial law but FINRA is described as "largest independent regulator for all securities firms", suggesting no legal obligation to register. I many well be wrong?
posted by laukf at 2:46 PM on February 11, 2010
posted by laukf at 2:46 PM on February 11, 2010
Try searching for them at the SEC Investment Adviser Public Disclosure site.
posted by IanMorr at 3:05 PM on February 11, 2010
posted by IanMorr at 3:05 PM on February 11, 2010
IanMorr: Investment advisers are different than investment banks. Investment advisers help people or institutions manage their investments. Investment banks buy and sell companies, or assist in the purchase and acquisition of companies.
posted by croutonsupafreak at 3:06 PM on February 11, 2010
posted by croutonsupafreak at 3:06 PM on February 11, 2010
I'm not sure if this contradicts or builds on what laukf has written. According to wikipedia, FINRA -- previously known as NASD:
regulates trading in equities, corporate bonds, securities futures, and options, with authority over the activities of more than 5,100 brokerage firms, approximately 173,000 branch offices, and more than 676,000 registered securities representatives. All firms dealing in securities that are not regulated by another SRO, such as by the Municipal Securities Rulemaking Board ("MSRB"), are required to be member firms of the [FINRA].posted by croutonsupafreak at 3:16 PM on February 11, 2010
[FINRA] licenses individuals and admits firms to the industry, writes rules to govern their behavior, examines them for regulatory compliance, and is sanctioned by the U.S. Securities and Exchange Commission ("SEC") to discipline registered representatives and member firms that fail to comply with federal securities laws and [FINRA]'s rules and regulations. It provides education and qualification examinations to industry professionals. It also sells outsourced regulatory products and services to a number of stock markets and exchanges (e.g. American Stock Exchange ("AMEX") and the International Securities Exchange ("ISE").
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So: Is this company not being a member of FINRA a bad thing? Not necessarially.
posted by NotMyselfRightNow at 2:43 PM on February 11, 2010