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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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Tue, 03/13/2012 - 23:29 | 2252936 Stax Edwards
Stax Edwards's picture

I had not heard that Corzine was running, but am truly impressed by his moxie. /s

Tue, 03/13/2012 - 20:31 | 2252468 monmick
monmick's picture

Errors happen. Where is the evidence (or even suggestion) that there is anything incriminating on the recordings, or that FINRA has a motive in having them disappear?

Tue, 03/13/2012 - 20:59 | 2252542 newengland
newengland's picture


Legal proceedings which can deprive a man of his livelihood and property are suppose to operate with stricter principles and procedures than Grandma Sally's daily errands, and errors. 

Tue, 03/13/2012 - 22:00 | 2252715 CoolBeans
CoolBeans's picture

I won't junk you.  Just think about who is involved.


Tue, 03/13/2012 - 20:34 | 2252475 Sleepless Knight
Sleepless Knight's picture

This shit is everywhere there is money involved. How much of a chance would I have if I told the IRS "all my assets just vanished" Since this line has been used, I'm gonna tell them that carnivorous gold eating bunnies ate all my PMs. The little fuckers even ate all my chocolate. Welcome to fantasy land.

Tue, 03/13/2012 - 21:17 | 2252601 newengland
newengland's picture


Thanks for the chuckle. Be grateful you didn't lose all those PMs in a boating accident. Lot of that around here, apparently...

Tue, 03/13/2012 - 20:34 | 2252479 Gromit
Gromit's picture

Probably be able to keep the house for a couple of years..

Tue, 03/13/2012 - 20:38 | 2252485 Watts_D_Matter
Watts_D_Matter's picture

Never expect a "fair" hearing from a rigged court system whether SEC, FINRA etc...Just ask Michael Armstrong...

One thing that bugs me is that all major wire firms are crooks about the pay to play scheme they operate...A person who has been in the investing world for a long time like Mr. Mensack should know that ALL firms have the shell game about hidden fees, who can play in their sandbox and who gets screwed...So that MS raping their clients should not be any earth shattering news for him...I bet that his prior firms did the same thing in the 401k world too...Merrill Lynch just paid a huge fine for raping WalMart....ML made more money from the excess fees than the fine that was levied against ML...The SRO gets their fine from ML, the lawyers get their fees, and the 401k particpants got ZERO! 

Remember there are 3 sides to every story...

I got to peel more potatoes for the inmates....


And lastly...FUCK FINRA and the SEC...




Tue, 03/13/2012 - 20:43 | 2252500 newengland
newengland's picture

And another thing! Is this the same Morgan Stanley whose managing director was arrested recently for a 'hate crime', threatening and stabbing a cab driver after drunkenly refusing to pay the fare?

Mr Mensack, join the Fight Club. Get up off your knees. Notify major news desks that you know Morgan Stanley was cheating its clients, and perhaps that is the kind of dark secret and pathology that creates knife-wielding thugs like the one who assaulted a defenceless cab driver. You must know someone with a PR or journalistic ability in your wide circle of friends. If not, find one. Tell your lawyer that his name and reputation can only benefit as he tries to save yours.

Headline: Do psychopaths rule bank boardrooms?

F* the banksters, hard.  Gloves off. Fight harder or become another anonymous victim. Good luck.

Tue, 03/13/2012 - 21:56 | 2252702 CoolBeans
CoolBeans's picture

Yeah --  and walk on the arbitration fee, Mr. Menasck.  Do it.  So what if they bar you for non-payment?  Screw 'em.  You don't need them -- that door closed and a new, better one opened:  Get out there and hit the news, write articles, etc. - there is more for you out there.  Blow that whistle!!!!

Tue, 03/13/2012 - 20:47 | 2252509 Whoa Dammit
Whoa Dammit's picture

A guy who knew enough to be hired on with close to a million dollar signing bonus would not raise the issue with 401Ks unless the double dipping problem was wide spread & egregious.

Tue, 03/13/2012 - 20:52 | 2252522 Steverino
Steverino's picture


Tue, 03/13/2012 - 20:52 | 2252523 Westcoastliberal
Westcoastliberal's picture

I totally agree with the "post-constitutional America" post.  And it must stop very soon or we will be permanently living in something much worse than a Banana Republic.  A Banana Republic with nukes.

Whistleblowers such as Mr. Mensack are subject to crap such as this instead of being rewarded for their efforts.  Many including Matthew Simmons, pay the ultimate price.  I hope Mr. Mensack continues to fight and wish him success.

Tue, 03/13/2012 - 20:56 | 2252530 Everyman
Everyman's picture

“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.”

OK dumbass (FINRA) WHO was on the fucking panel, and WHY are they not being investigated "Finra regional director Katherine Bayer"???  YOU STUPID FUCKING CUNT!!!  And you "understand" and "apologize"???  FUCK YOU bitch.  Where the hell is the fucking investigation on a panel for DESTROYING evidence in a FEDERAL FUCKING CASE?????  Where in rule or law does it state that destroying evidence in a federal case merits a fucking APOLOGY??

Jezus folks, this is bad, they aren't even trying anymore.

This is all gone.  Time to shoot stupids fucks, because FREEDOM IS GONE!!!


Tue, 03/13/2012 - 23:58 | 2252988 sgorem
sgorem's picture

i'll say it again, " i love you E' man"!  U R totally correct!  it's well past time to get ole Mossy out and go visitin some of these Walled Street Slime Buckets @ home.

Tue, 03/13/2012 - 20:56 | 2252534 Yen Cross
Yen Cross's picture

 The dollar isn't strong. The carry/LTRO trade is in New York. 

Tue, 03/13/2012 - 20:57 | 2252536 Zero Govt
Zero Govt's picture

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

Where'd this Court of 'Justice' occur?

...let me guess, New York?

...could have told you the outcome before you'd arrived

Tue, 03/13/2012 - 20:57 | 2252537 sIewie the pi-rat
sIewie the pi-rat's picture
How Does FINRA Lose 8 Hours of Testimony?


Tue, 03/13/2012 - 20:59 | 2252540 The Fonz...befo...
The Fonz...before shark jump's picture

SROs are the biggest jokes.... First ones to be netted in regulatory capture....

Tue, 03/13/2012 - 21:00 | 2252544 max2205
max2205's picture

Broker porn. Love watching brokers fuck each other

Tue, 03/13/2012 - 21:02 | 2252554 VelvetHog
VelvetHog's picture

Guns are the answer.

Tue, 03/13/2012 - 23:04 | 2252890 palmereldritch
palmereldritch's picture

Considerably, they are always part of the calculation...

Tue, 03/13/2012 - 21:02 | 2252556 Nid
Nid's picture

Ever been in a FINRA proceeding? Makes the Royal Court of Kangaroo look like the fucking Hague.

Tue, 03/13/2012 - 21:04 | 2252557 Caviar Emptor
Caviar Emptor's picture

Let's pardon all financial criminals. They did create jobs for hookers and Mexican drug dealers. They tip well and they keep us entertained. That banker who defecated on the food cart in the first class cabin of a plane did us all proud. So did the banker last month who stabbed a taxi driver after refusing to pay. 

We shouldn't demonize or bully those who are simply more sociopathic than we are. 

Tue, 03/13/2012 - 21:10 | 2252572 847328_3527
847328_3527's picture

Those two safeguards are a big part of why there were no bank runs during the most recent financial crisis. But it also presented a problem to policymakers, who believed having that safety net under banks encouraged them to make risky bets in global markets in the run-up to the financial crisis, leaving taxpayers and responsible banks holding the bag should those bets fail.

"The big banks do have access to the safety net, in the form of the Federal Reserve discount window, and they can rely fairly heavily on insured deposits to fund their activities," says Jim Barth, co-author of "The Guardians of Finance: Making Regulators Work for Us." "One has to be sure that banks, to the extent they have access to that safety net, don't misuse it."



Read more: Fed Faces Intense Criticism Over Bank Rule |

Tue, 03/13/2012 - 21:13 | 2252584 crawldaddy
crawldaddy's picture

arbitration is nothing but theater, the arbitrators are bought off actors. Like a multi billion dollar compnay isnt gonn ahave the game rigged before the game is even played.  How do you think they became so rich.


Tue, 03/13/2012 - 21:17 | 2252600 Optimusprime
Optimusprime's picture

"This smells". 

No, to paraphrase Dr Johnson:  "Madame, I do not 'smell'.  In fact YOU smell!  I stink!"

Tue, 03/13/2012 - 21:17 | 2252602 nmewn
nmewn's picture don't I just leave my rights at the door in the interest of "compromise".

Hard lessons last a lifetime.

Tue, 03/13/2012 - 21:22 | 2252611 I am a Man I am...
I am a Man I am Forty's picture

This man took on BAC and at least got his money back, court and attorney fees paid for, plus interest.  

BAC should have had to pay punitive damages because they proved fraud.

Tue, 03/13/2012 - 21:28 | 2252627 SIOP
SIOP's picture

From the article..."... If I were a Morgan Stanley 401-K customer, I would be on the horn to my representative TODAY..."

This is hilarious because I closed all my accounts at Morgan Stanley -Smith Barney this morning!  (moved it ALL over to Scottrade where I will manage it myself)

Tue, 03/13/2012 - 22:04 | 2252726 Harry Dunn
Harry Dunn's picture

Get Lost

Tue, 03/13/2012 - 21:33 | 2252640 yogibear
yogibear's picture

What does FINRA occupy it's time with? The SEC is busy with porn and going after the small guys to make it look like their a Securities. policing agency. Katherine Bayer, of FINRA,  was probably on the phone with the Morgan Stanley Attorney laughing about how their back-balling Mark Mensack and how he never ever work in the securities industry. 

Any agency responsible now with policing the securities industry is doing just the opposite. Their ensuring fraud/corruption continues.

Tue, 03/13/2012 - 21:50 | 2252687 CoolBeans
CoolBeans's picture


Then, after helping out a firm or two...there is the possibility of a job after FINRA.  Many a firm desires to hire from the regulatory pool. 

Tue, 03/13/2012 - 21:48 | 2252678 CoolBeans
CoolBeans's picture

I have been in the regulatory biz (private) for more than 17 years.  The NASD, now FINRA process has always struck me as entirely rigged.  Duh, I know.  But I can still figure out who ever thought it was a good idea to form a self-regulatory's like the foxes guarding the hen house.  It is a broken system that never truly worked.

Do you ever get the feeling that the U.S. has de-volved back to the Wild West?

Tue, 03/13/2012 - 21:58 | 2252710 SilverFocker
SilverFocker's picture

Not yet, but soon grasshopper, very soon. Blood will run, just make sure it aint yours.

Tue, 03/13/2012 - 21:57 | 2252707 Harry Dunn
Harry Dunn's picture

It's not FINRA incompetance, it's very much intentional and well thought out. These scumbags know exactly what they are doing. Lowly Broker/Adviser VS Large BD & FINRA is a no win, now more than ever. Any deadbeat off the street could go to a BD tomorrow, hand them 100K and slap a lawsuit on them week later.

Tue, 03/13/2012 - 22:01 | 2252716 interbanker
interbanker's picture

FINRA, is a cartel that protects the banking cartel, this guy should sue them in civil court, and it that does not work sue them in a international court, he should also sue FINRA, for negligence in losing the tapes and also the people involved in audio taping the hearing, he should also go the the EEOC, and file a whitleblower claim, against both  FINRA and MS, those bastards are nothing less the criminals, ..FINRA, the biggest criminals of them all, I know them, I had me dealings with them, and yet, the could care less about you or your rights, they think they are god, and above anything...someone should set a precedent in sucking it to them, ...FINRA is the worst agency, commission sucking parasites there is, all they do, is get commissions from the broker, the attorneys and never restitute anything to the affected parties or the investors, ...they keep everything, the adm judge also works in a commission schedule there is no neutrality, I hoped someone set a precedent about This scumbags, Why is it, they have never fined Stand O'Neal from Merril Lynch ? for all million of dollars in losses to investors ? and similar criminals like him, ? But if a person accuses you of being a Martian, a sanatic priest, or whatever  it goes in you U_4 record, for ever, even if you win, it there for eternity, .is absurd.

Tue, 03/13/2012 - 22:07 | 2252731 Northeaster
Northeaster's picture

"but last I checked, this is America."

Yes, where the Rule of Law has been usurped.

In this case, FINRA wins because the United States Supreme Court says it does. We can argue all year long at the injustices burdened upon us, but it doesn't change the results.

The question for fellow Americans, minus the morons that think G-Men are coming to burst their doors down (hint, stay there, they think you're stupid anyways and are not coming), is what are you going to do? What will you sacrifice? If your answer is nothing, then enjoy status quo.

Tue, 03/13/2012 - 22:08 | 2252733 yogibear
yogibear's picture

"he should also go the the EEOC,"

I knew someone that had a case (sent paperwork certified). The woman at the EEOC said they lost the paperwork. The EEOC just didn't want  to deal with it. The corruption runs very deep. From the financial organizations to government agencies in charge of policing. 

Tue, 03/13/2012 - 22:13 | 2252753 KickIce
KickIce's picture

When the government fears the people there is freedom, when the people fear their government there is tyranny.

Once they get your vote these bastards have no regard us.

Tue, 03/13/2012 - 22:21 | 2252781 El Hosel
El Hosel's picture

"Reopen the case".... Yeah, and all those other cases - MF Global Fraud, Madoff cover up Fraud, 911?, Housing Fraud, Mortgage Fraud, CDS Fraud, Sewer System Fraud, Comex Fraud.

 One case after another of "NO justice for all".

Tue, 03/13/2012 - 22:17 | 2252761 Jim in MN
Jim in MN's picture

Yet again the same lesson.

Get anything you value the hell away from NY/DC.  And that includes 'the markets' which are just NY/DC playthings.

'Get low. Stay low.' --Jason Bourne

Tue, 03/13/2012 - 22:19 | 2252768 crawl
crawl's picture

I'm trying to rationalize FINRA being so incompetent to lose 8 hours of testimony and keeping their ruling in place.  Nah, even retards couldn't screw up so badly.  Arbitration is not strictly fair and without bias to both parties.  It's not coincidence the arbitrators hired by banks and regulatory agencies rule in favor of the arbitrator's paying customers.

Maybe some national reporting on the guy's plight may cause the arbitrators to reconsider their verdict.  Short of that, doubtful any court would overturn the arbitrators' judgement unless the missing 8 hours of testimony were found.  And that seems to be a miracle is needed for that to happen.

Lesson learned: banks have friends in the right places.

Tue, 03/13/2012 - 22:30 | 2252807 CoolBeans
CoolBeans's picture

I haven't lost 8 whole hours since I was in college.

Wed, 03/14/2012 - 02:12 | 2252876 non_anon
non_anon's picture

brought to you by Captain Kangaroo and Mr. Greenjeans

edit: for those that didn't live in the 70's hippie era

Tue, 03/13/2012 - 22:59 | 2252877 Dermasolarapate...
Dermasolarapaterraphatrima's picture

"the dog ate my testimony. I swear...."

Tue, 03/13/2012 - 23:16 | 2252912 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Hell Mensack, fight fire with fire. How about a tell all guest post? Ram up their arse, but hard.

Wed, 03/14/2012 - 00:26 | 2253018 dcb
dcb's picture

this si what the new sec whistleblower cases are ab out where he can report and get compensated.

Wed, 03/14/2012 - 01:13 | 2253069 BlackholeDivestment
BlackholeDivestment's picture we need a private Delta Force? Oh, wait, umm what is the current Delta Force doing working for this mess? Lol

Wed, 03/14/2012 - 01:58 | 2253129 Uncle Keith
Uncle Keith's picture

Maybe Katherine Bayer wants to be Mary Shapiro when she grows up. 

Or, maybe - like Mary Shapiro - Ms Bayer understands that she is immune from any real oversight, prosecution, or, consequences and, should do anything and everythhing in her power to Look Out For #1. 

Sociopaths... What is called for is a return to Rule of Law.

Wed, 03/14/2012 - 04:39 | 2253229 El Gordo
El Gordo's picture

Laws are just for the little people.  Everyone should know that by now.

Wed, 03/14/2012 - 06:29 | 2253236 Benjamin Glutton
Benjamin Glutton's picture

The 'Market' is nothing more than a Private Club. Picture any of the following clubs which you may despise if this helps; The Catholic Church, AFL/CIO, Boy Scouts of America, The United Way, The Democratic/Republican Party, etc. etc....The color of law surrounds them yet within the rules of each club, when properly excepted, law is compromised. It is the very purpose of creating a club.

You understand what this means don't you?

Let me clear it up. The 'Market' operates within the law to the extent that its participants properly define the rules in an enforceable legal framework. The Market is not governed by common law, god's law or societal standards.

The 'Market' IS a private self governed club. Join the club and you have chosen to submit to its rules.

Wed, 03/14/2012 - 06:47 | 2253281 overmedicatedun...
overmedicatedundersexed's picture

put the average lawyer in black robes ..stand when they enter the court..let them decide what is law and the nations fate. ( remember we have the highest court in the land with members openly stating our constitution is far worse than other lands)

a nation without moral fiber will never have justice or freedom. as the founders so plainly stated

that is why the mafia (uh big gov new world order elite) must destroy G_D's place in society. alas all the world has been handed over to E Spitzer and DKS types and we give them respect and power.

few good ideas about what one can do. Ignore them seems best until they take what you have worked for.

Wed, 03/14/2012 - 08:42 | 2253507 j0nx
j0nx's picture

None of this shit matters in the grand scheme of things because honestly the people don't know about it and wouldn't care even if they did. I mean you should see my neighborhood for a future of what America will look like. A bunch of fat lazy pieces of shit living off the dole 10 to a house, making a nuisance of themselves in the hood and not following any of the rules. 100 different houses with people from 100 different countries living in them. There is no more cultural unity in this country in populated areas. The people only care about their grape drank, football and who's the father of snooki's mouth breather. Just accept it and move on. Multi-culutralism and political correctness killed us a decade ago and we are just waiting for them to turn off the machines now.

Wed, 03/14/2012 - 15:16 | 2255392 Chippewa Partners
Chippewa Partners's picture

The FINRA arbitrators were probably in a hurry and the tapes were "lost".  Maybe they left them in a bar in deliberation after the hearing, who really knows.  They were "lost".

As a former NASD arb (and NYSE arb) for a decade or so you must realize the ineptitude of many arbs.  The process needs to be revamped to eradicate the stench but as an SRO there won't be any change.   The status quo remains intact.  Just like they like it.


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