Guest Post: How Does FINRA Lose 8 Hours of Testimony? Wall Street’s “Kangaroo Court”

Tyler Durden's picture

Submitted by Larry Doyle of Sense on Cents

How Does FINRA Lose 8 Hours of Testimony? Wall Street’s “Kangaroo Court”

I will admit that having written extensively and aggressively about Wall Street’s self-regulator FINRA over the last three years, I did not think there was anything more I could see that would surprise me.

Today I am surprised, shocked, and saddened.

For those in our nation who have a semblance of decency and a desire to see due process reflected in legal hearings and financial arbitration, I believe you will be similarly dismayed.

The case to which I will refer strikes deep into the core of Wall Street arbitration.  

I hope you are sitting down and do not have any sharp objects nearby as Dow Jones’ Al Lewis provides a scathing expose of a FINRA arbitration entitled Broker Bankrupted in Kangaroo Court,

Mark Mensack joined Morgan Stanley (MS) in 2008, landing an $873,000 signing bonus, but now he’s in personal bankruptcy and just moments away from losing his home in Cherry Hill, N.J.


He’s turning 50. He’s got a wife and three kids. And this is where he’s landed after losing an arbitration with his former employer before his industry’s self-regulating body, the Financial Industry Regulatory Authority.


Mensack claimed he was forced to leave Morgan Stanley after he accused the firm of taking hidden fees from its retirement-account customers. In July, a Finra panel ruled against this would-be whistleblower and ordered him to pay Morgan Stanley $1.2 million, essentially demanding most of his bonus back after quitting, plus interest and legal fees.


It is extraordinarily difficult to successfully appeal a Finra ruling. It is even more difficult when Finra mysteriously loses several hours of recorded testimony.


Mensack told me that when his attorney requested recordings for an appeal, Finra wouldn’t produce them. He said he eventually learned eight of about 18 hours of testimony from his case were missing. He sent me audio files that were inexplicably cut off at the end. He also showed me a Jan. 13 letter that Finra regional director Katherine Bayer wrote to his attorney. It said:


“Finra is required to make a…recording of every hearing. …Unfortunately, portions of testimony returned to us by the panel are missing. …I apologize for this and any perceived miscommunications from the Finra staff about the status of the recordings. …I understand Mr. Mensack’s disappointment with the arbitrator’s decision. However, Finra has no authority to reverse the award.”


A Finra spokeswoman declined to comment on the case.

The plaintiff’s charges of Morgan Stanley effectively double dipping into its 401-K accounts is obviously a very serious allegation. If I were a Morgan Stanley 401-K customer, I would be on the horn to my representative TODAY.

Those charges are NOT the main point here.

If there is supposed to be a whiff of justice and fair dealing in our nation, then each and every plaintiff is entitled to a fair hearing and a full record of testimony.

The fact that FINRA cannot and did not provide the full testimony of his hearing to Mr. Mensack renders the FINRA arbitration process as nothing more than a kangaroo court.

Richard Ketchum and his cronies at FINRA can talk all they want about progress on the financial regulatory front.

If they want to have a scintilla of credibility with the American public then they should go back and rehear Mr. Mensack’s case AND this time make sure that ALL of the testimony is properly recorded and provided for all the parties involved.

Statements such as,

 …Unfortunately, portions of testimony returned to us by the panel are missing. …I apologize for this and any perceived miscommunications from the Finra staff about the status of the recordings…

may work in kangaroo courts of third world nations but last I checked, this is America.

This smells.

Losing 8 of 18 hours of testimony?……America?………Really?

Come on Mr. Ketchum, you have work to do here.

Reopen the case.

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I_ate_the_crow's picture

Fuck the legal system and all the complicit douchebag attorneys who let the charade continue.

vast-dom's picture

Larry: I'm shocked that you of all people are shocked. I wouldn't expenct anything less and would be shocked if anything of significance at this stage were above board....

Zero_Sum's picture

Statements such as,

 …Unfortunately, portions of testimony returned to us by the panel are missing. …I apologize for this and any perceived miscommunications from the Finra staff about the status of the recordings…

may work in kangaroo courts of third world nations but last I checked, this is America.


Check again. This hasn't been America for quite some time.

jcaz's picture

As much as I believe in most conspiracies in this biz,  I believe even more that FINRA is just this incompetent, to actually lose the tape, rather than "lose";   

However, I totally concur with the lack of appeal available when the Great Ones rule-  in this biz, "arbitration" is code for the weird Monarchy that rules not out of wisdom and knowledge, but out of political favor and fear.....

Used to be a broker who had a hickey on their U-4 was an outcast.....  Now it's an inevitable consequence of walking thru the muck long enough.......

Doña K's picture

Arbitration is another invention of TPTB to avoid jury trials. There has never been an arbitration vacated unless fraud was proven. Odds of that 200 to 1.

Whatever you do people, never sign conracts that specify arbitration as the sole dispute resolution. Rely on the jury.

wee-weed up's picture

Agreed, but the number of contracts with fine print offering arbitration as an ONLY option are multiplying faster than rabbits on viagra.

LetThemEatRand's picture

Because it's worth repeating....  Another gift of the conservative members of our Supreme Court.   The U.S. Supreme Court decision upholding the validity of adhesion contracts containing arbitration provisions that no consumer ever reads was a 5-4 decision on party lines.  The Conservatives voted in favor of fucking the consumer.  No juries for you!!!!!!  More activist judge bullshit.

mick_richfield's picture

So you think it's a problem that people can agree to settle their disputes without state involvement?

Oh, but wait -- it's unfair because "no one ever reads" those things?

And you call that "judicial activism" ?


Ace Ventura's picture

I get your point and essentially agree, but c'mon.....have you seen the acres of fine print in almost any financial transaction lately? Not only is it plentiful, but has gotten to the point in some cases where even a magnifying glass doesn't help much, the text is so tiny.

Common sense ordinarily dictates the main reason for doing this probably has little to do with 'saving paper', and much more to do with attempting to insert language in a contract which the originator of the document would prefer you didn't read or understand.


Willzyx's picture

At the time of the American Revolution, the right to negotiate a contract was one of the fundamental rights the colonists fought for.  Try to negotiate the finer points of your cell phone contract.  Sure, the consumer hasa the right to refuse to sign the contract, but they are not on equal footing with the team of corporate lawyers who wrote the contract.

grid-b-gone's picture

Arbitration is inherently unequal, which is exactly its function.

The problem with declining arbitration, especially for credit cards and most online terms and conditions, is that arbitration is less a request than it is a prerequisite. 


PlausibleDenial's picture

Agreed, better yet, though... Own nothing in your name.  There are too many ways to play their game.  For myself, I would rather accept divorce risk than give anyone else the satisfaction of trying to take my assets.  Oh, and I am self employed as well.

"Freedom is having nothing left to lose"  Kristopherson.

Crab Cake's picture


Northcom. Torturing. Indefinite detentions. Cameras and drones spying on us. A compromised political economic structure that equates to disenfranchisement. Endless foreign wars of profit, and an endless War on Drugs that leads to significant portiions of our population being locked in corporate gulags..... It goes on and on and on....


How's Apple doing?

palmereldritch's picture

iPad 3 to be re-named iPadFree!

Harlequin001's picture

Revolution. Fuck me you've only just finished the last one. What's up, wasn't it good enough?

Seems everytime you see something you don't like you want ANOTHER revolution. How is there supposed to ba any basis of law if all you want to do is revolt?


It's not going to change jack shit about who holds the mortgage.

UP Forester's picture

Cuz some 'Merikans don't want to end up like a bunch of disarmed, crooked toofed, fish-n-chips eatin', warm beer-swillin', ruled by beloved inbred Limeys....

Harlequin001's picture

What do you mean by 'end up?'

Do you think you ever weren't?

You were given a central bank by English bankers despite your 'revolution', and your new revolution will last for as long as it takes for them to give you another.

You might as well get used to it, now that you've finally woken up to it, that those 'disarmed, crooked toofed, fish-n-chips eatin', warm beer-swillin', ruled by beloved inbred Limeys' are still the ones that call the shots as far as you're concerned...


palmereldritch's picture

George the Turd was holding his dick in his hand in what's different now?

Harlequin001's picture

yes but he still came back and kicked your arse didn't he. Why do you think the White House is painted white? Because it looks nice?

and all that in sailing ships too...

Rule Britania eh, for the old colonials that know what's good for them...

Now England has American aircraft carriers in its fleet, but paid for and manned by freedom loving dreamers in its old colonies that think they have some say in things through their revolution created Congress which in truth is duly ignored by its English nominated Presidents. You can vote for anyone you like as long as it's us.

Perhaps you're finally 'getting it' now... Looks like someone had his dick in hi hands, but it wasn't Good King George III...

Ace Ventura's picture

Compelling words no doubt, and there is certainly an unavoidable link between the American government and old blue-blooded european money. Where I'm not sure I make the full connection is the 2nd amendment. If the idea was to simply rule the colonies through a puppet government, why 'allow' such a vast swath of 'subjects' to be armed? Doesn't history show that even peasants armed with pitchforks can eventually storm the castle and physically access those same aristocrats who would rule them? Difference now is that instead of pitchforks the peasants have high-powered long reach accessories?

I'm not disputing the overall sentiment, just wondering why they would even permit the 2A to exist at all, when they don't allow it amongst their own populace?

Commander Cody's picture

Our benevolent dictators have been trying to undo the Second Amendment for awhile now.  It is a continuous struggle on all fronts to maintain individual freedoms.  Don't ever relent.

Harlequin001's picture

absolutely Cody, you take care of your 'freedoms', just don't ever take a real close look at the bigger picture. It will only piss you off...

Harlequin001's picture

Because the 2A is irrelevent. This is about the money. You can install any government you like but the real power is in he who holds the money, and that is still England and its banking families.

If you guys want to run around shooting yourselves go ahead, knock yourself out, but the money appoints the sherrif to protect its interests, and he will tell you what gives...

You'ra all running around telling yourselves about this 'miracle' that is your Constitution but reality reared its very ugly head last week when Secretary Paneta made it quite clear to some insignificant Congressman that it was the President who made the decisions, and he didn't need the approval of your Congress to do it. English money will give you your candidates, and Ron Paul will not be among them, and when England tells America to invade iran or Syria it will do exactly as it is told, just like it always has.

All England needs your President to do is take care of the 'marketing'...

If you want to shoot yourselves, go ahead, nobody else gives a shit...

palmereldritch's picture

Good King George III still lives! your insane sentiments...

Harlequin001's picture

suuuure he does...

and your vote counts for what?

palmereldritch's picture

I vote fatalistic-apathetic-helplessness dear us the way!

Meatier Shower's picture

"God forbid we should ever be 20 years without such a rebellion. The people cannot be all, & always, well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty."

- Thomas Jefferson

falun bong's picture

I moved out of the US about 6 years ago. Recently I've been watching COPS on TV from the US. It is absolutely shocking to see what is permitted these days by the police, way more than when I left. In one episode the cop came upon some people sleeping in their car. He woke them up, and asked them to step outside. Then without charges or anything illegal being mentioned, he cuffed the guy. Then he searched the guy; came up with a tiny baggie of pot; and he stated "I now have probable cause to search the vehicle" where he found some more pot. It's also true now that illegal search becomes legal if something illegal is found. And it used to be that is you were innocent and resisted arrest, they couldn't charge you with resisting arrest. Now if you are innocent but you resist a false arrest, they charge you.

Folks you live in a true police state. Our Founding Fathers are weeping.

Ace Ventura's picture

It's way worse than that, dude. Do an internet search for videos regarding 'filing a complaint against the police'. What you will see is the modern reincarnation of SS/Stasi police thuggery and intimidation. And even that is just the tip of the iceberg.

I'm 100,000 times more afraid of my own government (at any level), than I am of any potential 'terist'.

Unprepared's picture

Yet another example of "We have absolutely no idea where the 8 hours are"

Everything is vaporizable nowadays

Whoa Dammit's picture

Mensack should tell Morgan Stanley and FINRA that the $1.2 million they wish to recover from him has vaporized, and they should check with Jon Corzine as to its whereabouts. 

Real Money Wins's picture

The 8 hours of tape are not missing. They know right where they are. along with the MF Global funds, the missing Watergate tapes, The Kennedy assassination files and the UFO recovered from Roswell New Mexico.

Nothing is ever LOST only MISPLACED!

WillyGroper's picture

except the stench on wall street & in dc-------it lingers

Jim_Rockford's picture

I recall this question from the 10 Trillion Dollar Pyramid:

As a citizen you are guaranteed "Due Process", not "Judicial Process"

- Name that Atty. General.

nmewn's picture

Sounds like something Holder would say.

Global Hunter's picture

Was Lavrentiy Beria an Attorney General?


"In God We Trust" was adopted as the official motto of the United States..

Can't trust that motto anymore. Throw it out the window.

Real Money Wins's picture

Your assessment is incorrect the Motto is still valid because God is the only one you can still trust. That's why they are trying so hard to get him out of the schools, the media and public buildings and public view altogether. That way you mistrust everyone, because people who distrust and fear everyone are easier to manipulate and control.

candyman's picture

I was sued because the market went down in "87.  It was my fault the customer claimed. I won. Make sure you fill out the new account form correctly- err to the downside.

candyman's picture


This is why I'm so glad I'm out of the industry:
Chief compliance officers received a number of stern warnings on Thursday during the Investment Adviser Association’s annual compliance conference in Arlington, Va., just outside Washington.
Robert Plaze, deputy director of the Securities and Exchange Commission’s Division of Investment Management, warned CCOs during the conference that the newly created Asset Management Unit that’s housed within the SEC’s Division of Enforcement “is dedicated to suing you.”

Willzyx's picture

Arbitration is hardly the legal system.  Same goes for FINRA.  Your ire ought to be pointed at the internal dispute resolution system of a self regulatory organization.

trampstamp's picture

Wonder of the old man finally couldn't take it anymore.. he was getting weak in the mind and the the good person in him got the better part of him. I'm sure he has plenty of money from his early years screwing folk. Bankster will always be a bankster.

SimpleSimon's picture

This doesn't smell. It stinks.

Get out of the system NOW.  Physical all the way.

Gidas19's picture

Fuck yea, he should have cashed out 600K and bought gold, FuCK you MS!!! Where is your signing bonus money sir? REPLY-I dont fucking have it!!! and walk away with Corzine's swagga...

Doña K's picture

Was'nt he in a boating accident?

palmereldritch's picture

The real 'Corzine boating accident' has the precious surviving and Jon going for an extended swim...

IndicaTive's picture

Are you fucking kidding me? Even I get this one 100 fucking percent.

LongSoupLine's picture

This is beyond sickening. It stinks of rotting, maggot infested corruption.