Financial Serial Killers by Tom Ajamie

Author:Tom Ajamie
Language: eng
Format: epub
Publisher: Skyhorse Publishing, Inc.
Published: 2011-01-10T16:00:00+00:00

Although they’ve seemingly been sleeping on the job, securities regulators are some of the best-paid bureaucrats in Washington.

Thirteen current and former executives of FINRA made more than $1 million apiece in 2008, a year in which the regulatory organization lost $696.3 million, according to tax forms FINRA filed in November 2009, as well as the company’s annual report.

The compensation, which includes salary, bonuses, and retirement plan awards, pales next to the payouts that some Wall Street executives and bankers made in boom years—but still raised eyebrows given FINRA’s investor protection charter and its hundreds of millions in losses.

Despite the billions of losses to investors due to financial serial killer fraud by the Madoffs and Stitskys of the market, these well-paid securities regulators have stepped into some outstanding new jobs. The highest-paid executive was Michael D. Jones, the group’s former chief administrative officer, who left in the summer of 2008 after more than a decade at FINRA with compensation, severance, and accumulated benefits valued at $4.43 million. Jones subsequently joined the Public Broadcasting Service as its chief operating officer.

Several of FINRA’s 2008 millionaires have gone on to lowerpaying, but extremely powerful, government positions. SEC Chairman Mary Schapiro, who received $3.3 million in 2008 as FINRA’s chief executive officer, is paid $162,900 to run the government agency. In 2009, she received another $7.2 million from FINRA as part of her accumulated retirement-plan benefits.

Elisse Walter, who was appointed a commissioner of the SEC in July 2008, received $3.8 million from FINRA the same year (including $2.4 million of supplemental retirement benefits) for running its regulatory policy and programs. Internal Revenue Service Commissioner Douglas Shulman pocketed $2.7 million in salary, bonus, and retirement benefits for his eight years of service at FINRA, which ended when he joined the IRS in March 2008.

Four current FINRA executives—including enforcement chief Susan Merrill and Grace Vogel, executive vice president for member regulation—made more than $1 million in 2008, and four others made more than $800,000.

Schapiro’s compensation included $20,000 for club memberships in New York and Washington, $20,000 for personal financial and tax counseling, and a car and driver for use in both cities, according to the tax form. FINRA also generally pays a “gross-up” adjustment to cover its executives’ costs.

Who knows how much higher their salaries will be if they move from the public arena of securities regulation to work for Wall Street’s investment banks? It’s an inevitable career path for many regulators, regardless of their success or failure rate in preventing or catching financial serial killers.

The SEC is not the only group of securities regulators that bungled a huge fraud investigation of a financial serial killer.

A report from 2009 detailing FINRA’s inability to detect Allen Stanford’s long-running, alleged $7.2 billion fraud clearly shows that the securities industry’s self-regulator has gaping and significant problems related to its examinations of securities firms.

Despite its roster of millionaires, FINRA as an institution couldn’t see the Stanford fraud with any clarity until it was way too late.

In an attempt to make sense

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