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 - 22:21 | 2252777 CoolBeans
CoolBeans's picture

Shitstain, I mean Lickstains -

You seriously need to find another place to haunt.  You got someone's attention to two seconds after causing minor angst and now we've all tired of your commentary.  Move along, please.

Tue, 03/13/2012 - 20:08 | 2252396 Firing Pin
Firing Pin's picture

FINRA is a freaking joke...just like the SEC they miss HUGE fraudsters and make the little guys jump through pointless hoops. They audit firms (member firms nonetheless that pay membership dues), find BS errors ("oh, page 7 of 73 was not initialed by your client..."), and then they shake down their members for big fines. Oh, and forbid you ever go to an arbitration. They molly-coddle clients and there is an immediate presumption that the broker is guilty. This about sums it up:

Tue, 03/13/2012 - 20:09 | 2252397 whoisjohngalt11
whoisjohngalt11's picture

WOW just wow, they are trying to get us all either very mad(not angry) or to give in...all part of their banana republic plan right????

Tue, 03/13/2012 - 20:09 | 2252398 Tsar Pointless
Tsar Pointless's picture

This is my "shocked" face.

Tue, 03/13/2012 - 20:10 | 2252399 Cursive
Cursive's picture

My prayers are with Mr. Mensack and his family.  I was a whistleblower.  What I learned was that no one really cares if they are getting screwed.  Sure, people will express rigtheous indignation if they learn of some fraud (that didn't benefit them), but easily 95% of all people won't lift a finger to protect their rights or their assets.  The new "activisim" of our sad times is taking a moment to sign a class action mailer and letting the lawyers get all the winnings while we wait patienty for a $3 check that never comes.  That's American society circa 2012.  I'm looking forward to the reset....

Tue, 03/13/2012 - 20:14 | 2252408 Yen Cross
Yen Cross's picture

Meant or Knaut? That was a nice post. +1

Tue, 03/13/2012 - 20:22 | 2252443 Cursive
Cursive's picture

@Yen Cross

Thank you and I definitely meant it.  I went through a very sobering 5 year ordeal and I am a better man for it.  I learned that most "friends" are worthless, that my faith and my wife were the best things that ever happened to me and that your health really is more important than your money.  I knew all of these things before, but nothing brings it all home like a "trial by fire."

Tue, 03/13/2012 - 20:25 | 2252450 Yen Cross
Yen Cross's picture

Thank You.  I'm speechless.

Tue, 03/13/2012 - 20:39 | 2252493 Likstane
Likstane's picture

Cursive, you are still a corrupt bastard like the rest of us.

Tue, 03/13/2012 - 21:06 | 2252566 Cursive
Cursive's picture


Lulztroll.  I am totally enjoying your one-trick pony imitation.

Tue, 03/13/2012 - 21:55 | 2252699 UP Forester
UP Forester's picture

Which totally proves you are totally corrupt....

Tue, 03/13/2012 - 22:10 | 2252743 Likstane
Likstane's picture

I think you're getting it.

Tue, 03/13/2012 - 22:51 | 2252859 UP Forester
UP Forester's picture

That Khan's bug has burrowed through your ear to starve to death?

If that's the case, everyone's already got it.

Tue, 03/13/2012 - 23:00 | 2252886 palmereldritch
palmereldritch's picture


Tue, 03/13/2012 - 20:55 | 2252531 Caviar Emptor
Caviar Emptor's picture

@Cursive : hat tip to you

Tue, 03/13/2012 - 22:10 | 2252745 CoolBeans
CoolBeans's picture

May you reap your rewards soon.  If not in this life, the next.  You are better for the experience.  I firmly believe we are all sent here to learn something... then we can move on to the next plane.  I know...may sound off the wall.  So, consider yourself a more evolved soul.

Bless you for sticking to what is right.

Tue, 03/13/2012 - 23:25 | 2252934 Cursive
Cursive's picture


Yes, I have my reward.  I'm not a broken man and my career is back to what it was.  I'd do it all over again, no regrets.  And, who knows, I may have to do it again....



All that is necessary for the triumph of evil is that good men do nothing

- Edmund Burke


Tue, 03/13/2012 - 20:47 | 2252513 Likstane
Likstane's picture

Mensack is a corrupt bastard too.

Tue, 03/13/2012 - 20:16 | 2252416 Thomas
Thomas's picture

Rule of Law or not? They should chose carefully cause eventually we will also chose "no", and then some Morgan Stanley guys may be in trouble.

Tue, 03/13/2012 - 20:50 | 2252519 LawsofPhysics
LawsofPhysics's picture

There it is.  Moral Hazard is a bitch.   The problem is that generations have long passed since a time when consequences meant something.  Russia and America are coming to the same "conclusion", just from different directions.

Tue, 03/13/2012 - 20:53 | 2252526 Yen Cross
Yen Cross's picture

The land speed record, has your thesis printed all over it!

Tue, 03/13/2012 - 21:01 | 2252553 LawsofPhysics
LawsofPhysics's picture

You may or may not be suprised at how hard it is to get people to acknowledge the obvious today.  

Tue, 03/13/2012 - 21:17 | 2252599 Yen Cross
Yen Cross's picture

 You are a very intelligent person. Perhaps it's time to mentor/ just a thought.

Tue, 03/13/2012 - 20:16 | 2252417 SheepDog-One
SheepDog-One's picture

WTF do you do when theres no recourse at all for you, the govt is rogue and passing 'you better shut up or we will kill you' bills....WTF can you do?

Tue, 03/13/2012 - 21:27 | 2252625 TN Jed
TN Jed's picture

Joe Stack asked the same thing.

Tue, 03/13/2012 - 23:01 | 2252861 brettd
brettd's picture

He's fighting in the wrong venue.  The courts?  Arbitration?  Jeeze.

Someone's got to know Gasparino/Stossel/Rivera et al at Fox....

Failing that, someone at NPR, Salon or Breitbart media.

Assuming that M's claim actually has merit...

There are plenty of media outlets who can and would LOVE a story like this.

Tue, 03/13/2012 - 20:17 | 2252419 Buck Johnson
Buck Johnson's picture

I wonder what was on that 8 hours that was so incriminating to them.

Tue, 03/13/2012 - 20:27 | 2252438 SheepDog-One
SheepDog-One's picture

401K's are about to get bent over and kornholed, big time. Do people really think the FED is pumping all these bullshit stocks just for shits and grins? Theyre buying them all up for themselves, and will pull the trapdoor one of these nites. After all, it was the FED central banksters that pumped up the stocks values themselves, so who really owns them then? The bankers do.

And no one will do a damn thing about it...just look at MF Global, same shit.

Tue, 03/13/2012 - 20:30 | 2252463 unununium
unununium's picture


We have a winner!

Tue, 03/13/2012 - 21:05 | 2252562 LawsofPhysics
LawsofPhysics's picture

How is that going to work again if the vast majority of 401K money is in treasuries?  This was covered earlier on ZH.  The big takedown will be in government deb, followed immediately by a "revaluation" of gold, more price and capital controls and an attempt in general to outlaw transactions using anything other than the fiat du jour.

Tue, 03/13/2012 - 21:56 | 2252706 UP Forester
UP Forester's picture

So we won't be able to use Tide for transactions?

Tue, 03/13/2012 - 22:25 | 2252794 Global Hunter
Global Hunter's picture


Wed, 03/14/2012 - 07:52 | 2253373 Ace Ventura
Ace Ventura's picture

Is this not already the case with the so-called 'legal tender' laws? Witness the recent stormtrooper raids of facilities which were 'creating counterfeit currency', such as the liberty dollar, etc. Shockingly, the feds confiscated all the 'counterfeit currency' and stashed it an a 'secure location' somewhere.

They can revalue gold and silver to whatever they like...if you own it, isn't your purchasing power retained? Unless you think physical metals confiscation is in the cards at some point before the revaluation. Not saying they aren't working on a way to do that, just wondering how they will go about justifying such a move in an era when gold and silver are no longer 'officially' considered legal tender, as they were during the last gubment robbery in 1933.

Then again, who says they have to justify anything. Of course if they pull the 'cuz we said so' card at that point, then the jig will mostly be up, and even the most boobified american will realize the party has started.

Or not. Just trying to figure all this crap out.


Wed, 03/14/2012 - 00:39 | 2253034 cranky-old-geezer
cranky-old-geezer's picture



401K's are about to get bent over and kornholed, big time.

Oh yes, and IRAs, pension funds, all of it, gonna be confiscated, just flat out taken.

And I'll have a big belly laugh when it happens. 

I feel like banksters do, I love seeing stupid sheeple get sheared.

I know someone who lost 80% of their retirement money after cashing out their 401k and giving it to "investment advisors" to look after. 

I laughed my ass off at that stupid dumbass sheep. 

I hope they end up living on the street.  They deserve it. 

Tue, 03/13/2012 - 20:28 | 2252456 Amish Hacker
Amish Hacker's picture

If only Rose Mary Woods were around to explain it to us.

Tue, 03/13/2012 - 20:30 | 2252465 SillySalesmanQu...
SillySalesmanQuestion's picture

The same thing that the missing 16 hours of Nixon's tape had during Watergate....nothing to see here, move along.

Tue, 03/13/2012 - 20:58 | 2252539 Caviar Emptor
Caviar Emptor's picture

But in those days Nixon was going to be impeached. Plus without a Ford pardon he was going to be tried after the resignation. Also all of his immediate WH staff did hard time including a former attorney general. 

Tue, 03/13/2012 - 21:25 | 2252615 SillySalesmanQu...
SillySalesmanQuestion's picture

Touche C.E. You are quite correct...those guys did the time for the crime, unlike today.

Wed, 03/14/2012 - 01:24 | 2253086 Clashfan
Clashfan's picture

That's because it specifically had to do with "that Bay of Pigs thing."

Tue, 03/13/2012 - 20:18 | 2252425 newengland
newengland's picture

This is a mis-trial in effect, putting aside legalese,  and it is corrupt for the apparatchik Ms Barely Credible to declare: '...Finra has no authority to reverse the award...”.

The process was ongoing, and the 'court' has corrupted the evidence, regardless of whether that is due to incompetence or something more sinister.

It's a grave injustice when the machine gets so big that it can crush any small cog with impunity, and damage the entire system on which everyone depends.

Tue, 03/13/2012 - 20:19 | 2252427 q99x2
q99x2's picture

Appeal. The filing of the paper work is pretty simple and doesn't cost that much in a regular court. Also put someone to work on digging up dirt on all persons responsible at county recorders. Local newspapers work great but may harm the case. Hire PIs to do research. They are fairly inexpensive and can trace other illegal activities in process by those personally responsible. Journalists may also be used to dig into it. Google ariel photos are sometimes helpful if real estate scams are part of the dirt dug up. Once you get all the shit together on a RICO case probably one of many that you find then begin the process of filing the lawsuit and all associated complaints at all the various government agencies.

If your case gets out in front of enough people someone that can do something might make a call to resolve the issue.

Tue, 03/13/2012 - 20:23 | 2252446 SheepDog-One
SheepDog-One's picture

Yes place an appeal to Ceasar.

Tue, 03/13/2012 - 20:20 | 2252434 shinola
shinola's picture



Mussolini would be proud of his legacy.

Tue, 03/13/2012 - 20:20 | 2252435 navy62802
navy62802's picture

In order to be surprised by this, you have to come into this article with the assumption that the legal system is not corrupt.

Tue, 03/13/2012 - 20:22 | 2252441 Bartanist
Bartanist's picture

The corruption that people are capable of is absolutely amazing. What is so important that people would stoop to such a low moral and ethical level?

It is so prevalent. Maybe there was promise never again to wipe out all living things on earth again ... but there was no promise to never again wipe out a new sodom and gomorrah.

Can people be so ignorant?

Tue, 03/13/2012 - 20:27 | 2252444 SillySalesmanQu...
SillySalesmanQuestion's picture

Mutha Fuckin Global...that is why things disappear, get shredded, burnt, sunk in the Hudson, "I don't know where the money went" and are vaporized.

Tue, 03/13/2012 - 20:30 | 2252466 SheepDog-One
SheepDog-One's picture

One of these mornings the FED spokesman will be saying

'We dont know how it happened, overnite we saw mass electronic runs on the banks, we had to stop it by any means or the whole system would have collapsed, again, so yep your 401K's and pensions and stocks are all now worth 10% of wat they were yesterday so we saved  you, now get back on those damn oars and ROW, damn peasants! And we dont want to hear any bitching! We SAVED your asses!'

Tue, 03/13/2012 - 20:53 | 2252527 fonzannoon
fonzannoon's picture

We get to keep 10%??!!!!!

Tue, 03/13/2012 - 21:05 | 2252563 Bringin It
Bringin It's picture

That's your chains.  No chains .. you might walk free.

Tue, 03/13/2012 - 20:29 | 2252462 Yen Cross
Yen Cross's picture

 It is well known that MF. Global will be solved, after the ( vapor trail) has disolved. A U.S. Senator?

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