Greg Smith: On Wall Street and Goldman Sachs

Greg Smith is a former executive director and vice president of investing banking firm Goldman Sachs.

In March 2012, he resigned from the firm in an op-ed in The New York Times decrying the firm’s change in culture and loss of client focus.

He has since written “Why I Left Goldman Sachs: A Wall Street Story.” 

Smith spoke to The Stanford Daily about his time at the firm, Stanford students on Wall Street and the difference between Wall Street and Silicon Valley.

Q. We read in your op-ed that you decided to leave Goldman Sachs after an experience while doing student orientation. Was there a specific instance that you encountered while working at Goldman Sachs that made your decision final?

Integrity and doing the right thing is something that Goldman as a firm always espoused to do. Certainly I think that’s one of the reasons that it survived for 140 years … I think that the problems came up in the early 2000′s when I joined the firm.

There was a whole host of regulations that were overturned by Congress, which allowed it to be a lot easier to make money by using your client’s information to place your own bets, as opposed to helping your clients.

This didn’t happen overnight, but from what I saw through my career from when I left Stanford [in 2001] to when I left Goldman [in 2012]…was an erosion of that duty to the client, and a maximization of the firm’s own interest over the client. 
I think what got to me was the hypocrisy of publicly saying, “Yes, our clients’ interests come first,
”… whereas privately doing something completely different and often using your client’s information to bet against them, which is something that jived against my ethical beliefs.



Q. You worked at Goldman Sachs for over 12 years. What was it that attracted you there right out of college?

It was the idea of Goldman Sachs being the absolute best in the world, having the highest standards. It was really the reputation.

If you flash back to 1999 to 2000, when I was interviewing for Goldman, it had an absolutely golden reputation.

I saw a real erosion of that reputation as people tried to make profits more and more quickly – you had to have the right attitude towards clients.

I saw that mindset change at Goldman, and I hoped that it would change back to the way it was.

Q. Do you think that some of the things that you heard or said or experienced at Stanford affected your decision to leave Goldman Sachs eventually?

That’s an interesting question. I think that Stanford is an interesting place because it teaches students to cut through the noise and see the truth. 

Certainly I credit Stanford for giving me my education, but I also credit it for giving me my value set and my perception of the world.

I’m very proud of Stanford; one of the reasons I loved recruiting was visiting Stanford. I always found the East Coast kids, the Harvards [sic], the Whartons [sic], of the world, as being really cutthroat. Stanford students have a reputation on Wall Street of being collaborative, easygoing but still very acutely commercial. We want to be entrepreneurial and create a product which will contribute to society. That’s what I think the biggest difference is in the way business is done in Silicon Valley and on Wall Street.

Q. Did you make an attempt to change some of the [practices you criticize] while at Goldman?

I did. I used to do a lot of recruiting, and I was one of the captains of Stanford recruiting… Within the firm, I certainly was a big proponent of the culture.

Once I saw things go as they did during the financial crisis, Goldman Sachs had a big SEC [U.S. Securities and Exchange Commission] lawsuit and the firm ultimately settled a $500 million suit with the government…

I actually saw some wrongdoing, and the firm did a yearlong study… I found the survey to be lip service…

After speaking to my colleagues and nine different Goldman partners, everyone agreed that there were these lapses … we had no competition.

Q. What advice would you have to give to the 15 percent of Stanford undergraduates who ultimately will work in finance?

I’m not certainly going to be the person to tell students to go or not to go into finance.

There are certainly a lot of positive aspects to finance.

Unfortunately, actual finance on Wall Street is only 20 percent of the pie. So, what I would say to people is that if you are going into finance, go into it for the right reasons. Don’t go into it because you think that it’s the easiest career or because you think that it’s the path you should take.

Q. One of the up-and-coming fields that Stanford students are interested in is venture capital. What would you say about that, being someone who did investment banking on Wall Street?

I think that it’s a great profession. I think that the level of innovation going on in Silicon Valley is a level not seen anywhere else in the world.

When I was at Stanford, Google was being invented, and I remember going to Chicago in the 1990′s and telling them to use Google. When I graduated, I felt that that era had come to a close.

What we see clearly with the … whole host of innovations is that we’re still pretty early in the cycle. What I would say to Stanford students is that we’re incredibly lucky to be going here.

Embrace the spirit of innovation while you’re here.

Q. If a Stanford student came up to you today with a job offer from Goldman Sachs or another reputable financial institution on Wall Street, what advice would you give them?

Examine the reasons why this attractive to you.

By that what I mean is, “What are you really interested in?” 

The longer I’ve been in business and the longer I’ve been away from Stanford is that it’s more important to follow your interests and your heart than what you think you should be going.

I would encourage them to not lose track of their own ethical framework and to stay true to themselves no matter how long they stay in business.

I would not encourage someone to go into something because it looks flashy, or that they’re supposed to do it, or that society thinks it’s the right thing to do.

Q. Do you think that the culture on Wall Street will be changing anytime soon?
I don’t see it changing anytime soon… I think that the overriding message I’m trying to get across is to highlight to, especially non-financial people, that politicians are still being funded by the banks they’re trying to regulate. 

I would take away this misaligned incentive – that Wall Street is incentivized to swing for the fences… If things go really bad, the worst that will happen is that taxpayers will have to hold the bag and bail out the bank. 

I feel that you need to make an even playing field.

People need to be tied to their performance over, say, five years.

There needs to be a changed fiduciary standard where conflicts of interest disappear – you need to change some of the laws.

 











By Nitish Kulkarni

Source:
Stanford Daily | Greg Smith: On Wall Street, Goldman Sachs and students entering finance

http://www.stanforddaily.com/2013/01/21/1074203/

Just Start: Take Action, Embrace Uncertainty, Create the Future by Leonard A. Schlesinger

Book Description
Publication Date: Mar 20 2012


How to succeed at work and life—in an increasingly unpredictable world


In a world where you can no longer plan or predict your way to success, how can you achieve your most important goals?

It’s a daunting question. But in today’s environment, where change is the only constant, it’s a question everyone must answer.

This is true whether you are an innovator or an entrepreneur, a manager or a newly minted graduate.

The first step, say the authors of this book, is this: "Just start.” In other words, take action now and learn as you go.

Written by a trio of seasoned business leaders, Just Start combines fascinating research with proven practices to deliver a reliable method for helping you advance toward your goals—despite the uncertainty that is all too common today. 

Babson College President Leonard Schlesinger, organizational learning expert Charles Kiefer, and veteran journalist Paul B. Brown share their own deep and varied experiences and draw from a source where striving amid constant uncertainty actually works:

the world of serial entrepreneurship. 

In this world, people don’t just think differently—they act differently, as well.


Using this novel approach, Just Start will help you:

1) Determine the best strategy and tactics when the future is uncertain

2) Minimize financial risk in every decision you make

3) Attract like-minded people to what you want to do (and learn why this is important)

Understand why. Act. Learn. Build (so you can) Act again” is the best course of action when facing the unknown
So throw out your forecasting tools and shrug off that nagging frustration that comes with constant uncertainty. 

Just Start distills for you the very essence of what makes people successful in today’s volatile environment. 

This book is your guide to achieving your goals—whether your project is professional or personal, or somewhere in between.








Source:
Just Start: Take Action, Embrace Uncertainty, Create the Future by Leonard A. Schlesinger - Reviews, Discussion, Bookclubs, Lists

http://www.goodreads.com/book/show/13235913-just-start

Secret Ingredients for Success

Excuse making is not the answer to moving your business forward and making a success of your efforts  -  working harder is not the answer; you need to change a losing game. 

Work differently like the successful people in this article did:
they subjected themselves to fairly merciless self-examination that prompted reinvention of their goals and the methods by which they endeavored to achieve them.

They looked inward and subjected themselves to brutal self-assessment. 

In interviews with high achievers for a book, the authors expected to hear that talent, persistence, dedication and luck played crucial roles in their success. 

Surprisingly, however, self-awareness played an equally strong role.


The authors learned that challenging our assumptions, objectives, at times even our goals, may sometimes push us further than we thought possible. 


This is  the cognitive approach that Professor Argyris called double-loop learning wherein we are advised  to  question every aspect of our approach, including our methodology, biases and deeply held assumptions. 

..........



Secret Ingredient for Success
By CAMILLE SWEENEY and JOSH GOSFIELD


WHAT does self-awareness have to do with a restaurant empire? A tennis championship? Or a rock star’s dream?

David Chang’s experience is instructive.

Mr. Chang is an internationally renowned, award-winning Korean-American chef, restaurateur and owner of the Momofuku restaurant group with eight restaurants from Toronto to Sydney, and other thriving enterprises, including bakeries and bars, a PBS TV show, guest spots on HBO’s “Treme” and a foodie magazine, Lucky Peach.  

He says he worked himself to the bone to realize his dream — to own a humble noodle bar.

He spent years cooking in some of New York City’s best restaurants, apprenticed in different noodle shops in Japan and then, finally, worked 18-hour days in his tiny restaurant, Momofuku Noodle Bar.

Mr. Chang could barely pay himself a salary. He had trouble keeping staff. And he was miserably stressed.

He recalls a low moment when he went with his staff on a night off to eat burgers at a restaurant that was everything his wasn’t — packed, critically acclaimed and financially successful.

He could cook better than they did, he thought, so why was his restaurant failing? “I couldn’t figure out what the hell we were doing wrong,” he told us.

Mr. Chang could have blamed someone else for his troubles, or worked harder (though available evidence suggests that might not have been possible) or he could have made minor tweaks to the menu. 

Instead he looked inward and subjected himself to brutal self-assessment.

Was the humble noodle bar of his dreams economically viable? 

Sure, a traditional noodle dish had its charm but wouldn’t work as the mainstay of a restaurant if he hoped to pay his bills.

Mr. Chang changed course. 

Rather than worry about what a noodle bar should serve, he and his cooks stalked the produce at the greenmarket for inspiration. 

Then they went back to the kitchen and cooked as if it was their last meal, crowding the menu with wild combinations of dishes they’d want to eat — tripe and sweetbreads, headcheese and flavor-packed culinary mashups like a Korean-style burrito. 

What happened next Mr. Chang still considers “kind of ridiculous” — the crowds came, rave reviews piled up, awards followed and unimaginable opportunities presented themselves.

During the 1970s, Chris Argyris, a business theorist at Harvard Business School (and now, at 89, a professor emeritus) began to research what happens to organizations and people, like Mr. Chang, when they find obstacles in their paths.

Professor Argyris called the most common response single loop learning — an insular mental process in which we consider possible external or technical reasons for obstacles.

LESS common but vastly more effective is the cognitive approach that Professor Argyris called double-loop learning. 

In this mode we — like Mr. Chang — question every aspect of our approach, including our methodology, biases and deeply held assumptions. 

This more psychologically nuanced self-examination requires that we honestly challenge our beliefs and summon the courage to act on that information, which may lead to fresh ways of thinking about our lives and our goals.

In interviews we did with high achievers for a book, we expected to hear that talent, persistence, dedication and luck played crucial roles in their success. 

Surprisingly, however, self-awareness played an equally strong role.

The successful people we spoke with — in business, entertainment, sports and the arts — all had similar responses when faced with obstacles: they subjected themselves to fairly merciless self-examination that prompted reinvention of their goals and the methods by which they endeavored to achieve them.
The tennis champion Martina Navratilova, for example, told us that after a galling loss to Chris Evert in 1981, she questioned her assumption that she could get by on talent and instinct alone. 

She began a long exploration of every aspect of her game. 

She adopted a rigorous cross-training practice (common today but essentially unheard of at the time), revamped her diet and her mental and tactical game and ultimately transformed herself into the most successful women’s tennis player of her era.

The indie rock band OK Go described how it once operated under the business model of the 20th-century rock band. 

But when industry record sales collapsed and the band members found themselves creatively hamstrung by their recording company, they questioned their tactics. 

Rather than depend on their label, they made wildly unconventional music videos, which went viral, and collaborative art projects with companies like Google, State Farm and Range Rover, which financed future creative endeavors. The band now releases albums on its own label.
No one’s idea of a good time is to take a brutal assessment of their animating assumptions and to acknowledge that those may have contributed to their failure. 

It’s easy to find pat ways to explain why the world has not adequately rewarded our efforts. 


But what we learned from conversation with high achievers is that:

 challenging our assumptions, objectives, at times even our goals, may sometimes push us further than we thought possible. 












Camille Sweeney and Josh Gosfield are the authors of the forthcoming book “The Art of Doing:  How Superachievers Do What They Do and How They Do It So Well.”


Source:
Secret Ingredient for Success - NYTimes.com



http://www.nytimes.com/2013/01/20/opinion/sunday/secret-ingredient-for-success.html?_r=0

Vanguard's $130 Billion Year

Investing

Vanguard's $130 Billion Year

By Roben Farzad on December 11, 2012



The $5 footlong. The $340 laptop. Free two-day shipping. All hallmarks of our economic times.

Vanguard, the 38-year-old low-cost investing pioneer, brings you the Great Deflation.

The fund company is not just having its best year ever. (It shattered that record in September.) The $130.4 billion in deposits in mutual funds and exchange-traded funds that Vanguard has taken in through November is the most ever for the industry, according to data from Strategic Insight. That beats the $129.6 billion that JPMorgan (JPM) clocked, mostly for money market funds, in 2008. This year’s not over.

You’ve no doubt heard of the “Wal-Mart (WMT)effect.” Now the market is watching—with equal parts gratitude and trepidation—the rapid escalation of the “Vanguard effect.” It’s asymmetric warfare, as Vanguard’s sole ownership and constituency is its fundholders, the savings it wrings from its buying power are passed on to them, not to shareholders or partners. BlackRock (BLK), Charles Schwab (SCHW), Fidelity, and State Street cannot say the same.

“No one should be shocked,” says Josh Brown, the Manhattan investment adviser who blogs as the Reformed Broker. He says that Vanguard is selling the lowest-cost bond funds in an environment in which every basis point counts, as well as “the plainest-vanilla indexes” in an era whose most expensive stock-pickers, he says, have been “rendered impotent.”

The average equity mutual fund investor pays $1.24 for every $100 invested, compared with just under 36¢ for equity ETFs, according to Lipper. Vanguard ups (lowers?) that ante by offering a firm-wide average expense of 20¢ per $100 invested. Since the market bottomed in March 2009, equity mutual funds have experienced a cumulative net outflow of $242 billion, compared with a net inflow of $270 billion to equity ETFs, according to Birinyi Associates. ETFs seem to be in a chronic state of boom (PDF). “Don’t fall out of your chair if this continues for a while longer,” says Brown.

Go back to that $130.4 billion that Vanguard has taken in so far this year. Bridgewater Associates, the planet’s largest hedge fund, is $130 billion large. In 2008, the country’s largest stock mutual fund was American Funds’ $117 billion Growth Fund of America; going into August of this year, it sustained $63 billion in net withdrawals.

The world of fund management is in generational upheaval. In 2000, when the Cult of Equity was still going strong, brokers, banks, and insurers dominated global asset-management, representing six of the top 10 spots based on assets, according to Pensions & Investments. Today they hold four of those slots. The four banks and insurance houses on the list sport a total of $5.5 trillion in assets, compared with more than $11 trillion for the rest, including Vanguard and BlackRock.

And those insurgents are knifing one another over fees. In October, Vanguard took drastic action to keep cutting costs on 22 offerings. It announced that starting in January, it will ditch MSCI (MSCI) as its benchmark provider, shifting to a lower-cost framework under FTSE. “Licensing costs for indexes have consumed a greater portion of our costs,” says Vanguard spokesman John Woerth. “So we’ve taken a stand and used our position in the market.”

That’s been short-term costly while money managers who are jittery about the impending switch bail out. Last month, Vanguard’s $57 billion MSCI Emerging Markets ETF lost $887 million to redemptions while its nemesis, BlackRock’s $41 billion IShares MSCI Emerging Markets Index ETF, took in $2.34 billion, according to data compiled by BlackRock. This despite the Vanguard ETF having less than a third of its competitor’s expense ratio. Since the start of 2009, it has outdrawn its BlackRock counterpart in deposits by more than seven-to-one.

“We believe the vast majority of our investors have embraced the change,” says Woerth, “and understand that we’re trying to pass the savings on to them.”

While Vanguard is the world’s largest mutual fund company, it is only the No. 3 ETF player, after BlackRock and State Street. With so many fund dollars now up for grabs—and tons of it sluicing to Vanguard—that’s probably not for long. Farzad is a Bloomberg Businessweek contributor.





Source:
Vanguard's $130 Billion Year - Businessweek

 http://www.businessweek.com/articles/2012-12-11/the-year-of-the-vanguard-effect

10 Rules for Dealing with the Sharks on Wall Street

 

Back in 2001, a very curious deal was struck between the government of Greece and Goldman Sachs. It was an exotic dollar/yen swap for euros. What possessed Greece to do such an unusual — and expensive — financial transaction? It needed help to hide its large and rapidly growing debt in order to maintain its status as a euro-zone member in good standing.

Both parties had something to gain. 

1. Greece created the false appearance of being in compliance with the Maastricht Treaty. This mandates that European Union member states with high debt levels must reduce their debt-to-gross-domestic-product ratio. 

2. And Goldman Sachs scooped up a ridiculously large 600 million euro fee. According to Bloomberg News, this accounted for “about 12 percent of the $6.35 billion in revenue Goldman Sachs reported for trading and principal investments in 2001.”

Once again, a new group of rubes got rolled by The Street.


Before you begin tsk-tsking the Greeks, allow me to point you to the latest group of suckers to get taken in by The Street’s three-card monte: the Poway Unified School District in San Diego.  It took a page from the Greek school of bad finance, agreeing to an exotic and costly bit of Wall Street shenanigans. Despite the district’s strong tax base and good credit rating, its officials bought a complex Wall Street-originated exotic loan offering.

Reminiscent of the bubble days of exotic mortgages, this debt deal makes no payments for 20 years. 

Over the course of the 40-year financing, it pays a very rich tax-exempt interest of 6.8 percent. Had the district done a straight-up school bond offering, it would have paid 4.1 percent. Over the course of 40 years, this interest rate differential is enormous. Poway borrowed $105 million. Instead of paying $300 million for a normal bond offering, the townspeople are going to pony up nearly $1 billion.

I learned of this festering financial debacle courtesy of the investigative reporting of Will Carless at the Voice of San Diego.

It appears there are no good actors here. What motivated this absurdity appears to be an attempt to avoid increasing real estate taxes on the school district residents. Rather than live within their budget, the district is trying its level best to become the next Detroit. 

The worst part of all is that by the time the bill comes due, everyone associated with this awful deal will be long gone.


 It’s a classic case of “I’ll be gone, you’ll be gone” financing.

It is astonishing to think that anyone involved in this mess thought that the big investment firms would help them come up with “creative financing” to resolve their budget issues. 

If only they’d had a helpful guideline, a set of rules for dealing with the sharks on Wall Street.


So presented here:

“The Inviolable Rules for Dealing with Wall Street”:

1. Reward is always relative to risk: If any product or investment sounds as if it has lots of upside, it also has lots of risk. If you can disprove this, there is a Nobel Prize waiting for you. On the buy side, chasing yield can expose  you to shaky credits, like junk bonds that have inherent high risk for bankruptcy.  If you are selling bonds to raise long-term  capital, and your underwriter suggests

2. Asymmetrical information: In all negotiated sales, one party has far more information, knowledge and experience about the product being bought and sold. One party knows its undisclosed warts and risks better than the other. Which party are you?  There is always one sucker at the Poker Table...

3. Good advice is priceless: I know, easier said than done. The Street buys the best legal talent, mathematicians and strategists that money can buy. Make sure you have expert advisers and lawyers working for you as well.

Or get a second opinion from the competition, as in, pit Goldman against Solomon.

4. Motivation:Always ask, what is the motivation of the outfit selling me this product? Is it the long-term stability and financial health of my organization — or their own fees and commissions?  What's in it for us?

5.  Legal documents are created to protect the preparer (and its firm), not you or yours: In the history of modern finance, no large legal document has worked against its drafters.

Private placement memorandums, sales agreement,arbitration clauses — firms use these to protect themselves, not you.  Listen to your own lawyer!

6. Performance: How significantly do the fees, interest rates commissions, etc., have an impact on the performance of this investment vehicle over time?

Determining for yourself:

what is the actual cost of money to avoid more heartache in the future.

7. Shareholder obligation: All publicly traded firms (including investment banks and bond underwriters) have a fiduciary obligation to their shareholders to maximize profits. This is far greater than any duty owed of care to you, the client. Always ask yourself whether this new product benefits the shareholders or your organization. (This is acutely important for untested products.)  Who is the winner in this deal?  Us or them?

8. Reputational risk: Who suffers if this investment goes down the drain? Who gets fired or voted out of office if this blows up? Who suffers reputational risk? Where does the buck stop?

9. Keep it simple, stupid (KISS): It’s easy to make things complicated, but it’s very challenging to make them simple. The more complexity brought to a problem, the greater the potential for things to go awry — not just astray, but very, very wrong.

10. There is no free lunch: Repeat after me: There is no free money, no riskless trade, no way to turn lead into gold. If you remember no other rule, this is the one that will save your hide time and again.

If you wondered why the biggest financial firms are fighting tooth and nail 
to avoid having to maintain a “fiduciary standard,”
 just look at the fees and expenses in deals like this. 

There is always big money in the ongoing attempts to turn lead into gold.


The never ending parade of stock scandals continues unabated. As history has shown us — from Mexico to Orange County to analyst banking crisis to derivatives — when the Street comes a-knockin’, best you hide your wallets.


 ------
Ritholtz is chief executive of FusionIQ, a quantitative research firm. He is the author of “Bailout Nation” and runs a finance blog, The Big Picture. On Twitter: @Ritholtz.
PERMALINK







Source:
10 Rules for Dealing with the Sharks on Wall Street | The Big Picture

 Link:  http://www.ritholtz.com/blog/2012/09/10-inviolable-rules/


Original article:

http://www.nytimes.com/2012/08/17/business/schools-pass-debt-to-the-next-generation.html?_r=0

For the Love of Money

If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen." 
-- Samuel Adams

Authors@Google: Burton Malkiel - YouTube

Uploaded on Jun 1, 2010

 

Dr. Burton G. Malkiel, the Chemical Bank Chairman's Professor of Economics at Princeton University, is the author of the widely read investment book, A Random Walk Down Wall Street. He has also authored several other books, including the recently published The Elements of Investing.

Dr. Malkiel has long held professorships in economics at Princeton, where he was also chairman of the Economics Department. He also served as the dean of the Yale School of Management and William S. Beinecke Professor of Management Studies. Dr. Malkiel is a past president of the American Finance Association and the International Atlantic Economic Association, and a past appointee to the President's Council of Economic Advisors. He continues to serve on several corporate and investment management boards.

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  Education

• License

  Standard YouTube License

Source:
Authors@Google: Burton Malkiel - YouTube

http://www.youtube.com/watch?v=wnCxlIQjT-s

State Street Global Advisors (SSgA) --- About

Fiduciary Heritage of State Street Corporation

State Street Global Advisors (SSgA) is the asset management business of State Street Corporation, one of the world's leading providers of financial services to institutional investors¹, with a heritage dating back over two centuries. Backed by the strength and stability of the State Street organization, SSgA makes continual investments in our asset management and client service platform, resulting in a client-focused, solutions-driven orientation. Our investment culture is built on experience and skill that each of our more than 450 investment professionals and over 2400 employees² around the world bring to every client relationship.
¹Pensions & Investments, 27 June 2011 ² State Street Global Advisors, as of 31 March 2012

State Street Global Advisors (SSgA) --- About

 http://www.ssga.com/webapp/glp/about.jsp?tab=1

SIPC - Securities Investor Protection Corporation

Why Was SIPC Created?

SIPC is an important part of the overall system of investor protection in the United States. 

While a number of federal, self-regulatory and state securities agencies deal with cases of investment fraud, 
SIPC's focus is both different and narrow:  
Restoring funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. 

The Securities Investor Protection Corporation was not chartered by Congress to combat fraud.

The SIPC Mission

When a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers' cash, stock and other securities, and other customer property. 

Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court.

Although not every investor is protected by SIPC, no fewer than 99 percent of persons who are eligible get their investments back from SIPC.

From its creation by Congress in 1970 through December 2011, SIPC advanced $1.8 billion in order to make possible the recovery of $117.5 billion in assets for an estimated 767,000 investors.


 Learn More:

 http://www.sipc.org/Portals/0/PDF/HSPY_2012_English.pdf



 Source:
SIPC - Securities Investor Protection Corporation > Who > SIPC Mission

http://www.sipc.org/Home.aspx

FINRA - Financial Industry Regulatory Authority

About the Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA's mission is to protect America's investors by making sure the securities industry operates fairly and honestly. All told, FINRA oversees about 4,290 brokerage firms, about 161,265 branch offices and approximately 630,390 registered securities representatives.

FINRA has approximately 3,440 employees and operates from Washington, DC, and New York, NY, with 20 regional offices around the country.

Learn more about who we serve and what we do.

Mission Statement

FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. 

Chairman's Message

For more than 70 years, FINRA has played a critical role in America's financial system, working to protect investors. Today, nearly 53 million American investing households count on us to make sure the securities markets operate fairly and honestly.

... an organization that plays a role in regulating nearly every aspect of the securities business.

 FINRA,  protect investors by registering and educating all brokers, examining securities firms, writing the rules they must follow and enforcing those rules and federal securities laws.  

... monitor trading in the U.S. stock markets and administer the largest securities-related dispute resolution forum in the world. 
Given the pace of change in the marketplace, it's more important than ever that regulators be prepared to act quickly.

 ... ability to identify high-risk firms, brokers, activities and products 

...regulatory programs in order to focus on the greatest risks to investors.

When the rules are broken, FINRA takes action. 

... strong and vigorous enforcement program brings discipline where investors have been harmed. 

In 2012, FINRA barred 294 individuals and suspended 549 brokers from association with FINRA-regulated firms, levied fines totaling more than $68 million and ordered $34 million in restitution to harmed investors.

.... increased our efforts to fight fraud, and to that end, have established several programs to help us root out bad actors and help consumers protect themselves.

In early 2009,  created the Office of the Whistleblower, and  established the Office of Fraud Detection and Market Intelligence.

Through this office, staff with expertise in fraud detection and investigation can provide a heightened review of potentially serious frauds.

FINRA believes that investor education is a critical component of investor protection.

 Over the last decade, we have worked hard to develop a strong investor education outreach program. 

- produce alerts, interactive tools and educational content to help investors make wise financial decisions.

 -  BrokerCheck tool, for example, provides investors with a quick way to check a broker's disciplinary and professional background. 

Encouraging people to take this simple step before doing business—or continuing to do business—with a broker is part of our greater commitment to protecting investors.

- offer information and tools to help investors stay on top of what's happening in the markets.  

-  Market Data Center, investors can find information and data on equities, options, bonds, mutual funds and more. 

- Trade Reporting and Compliance Engine (TRACE) system helps investors better monitor their bond investments by providing them with timely and accurate pricing information for corporate and agency bonds.
In addition to FINRA's work to educate the general public, the FINRA 

Investor Education Foundation—the largest foundation in the United States dedicated to investor education—also plays a key role in serving the unique financial education needs of certain under-served populations, such as military service members and older investors.

These efforts are just part of what they do each day to support our important mission of protecting investors.



 Get to know FINRA:

 FINRA is the Financial Industry Regulatory Authority.
 
We’re an independent, not-for-profit organization
with a public mission: to protect America’s investors
by making sure the securities industry operates fairly
and honestly. 

We do that by writing and enforcing rules
governing the activities of nearly 4,400 securities firms
with approximately 630,000 brokers. By examining
firms for compliance with those rules. By fostering
market transparency. And by educating investors.
 
Our independent regulation plays a critical role
in America’s financial system—by enforcing high
ethical standards, bringing the necessary resources
and expertise to regulation and enhancing investor
safeguards and market integrity—all at no cost to
taxpayers.

FINRA continues that tradition today with a
commitment to protect investors through strong
enforcement and effective investor education. Because
in an often unpredictable marketplace, investors need
to know someone is looking out for them.
Contents
who we serve 1
what we do 2
why our role matters 4
how we make a difference 6
where you can find us 8

https://www.finra.org/web/groups/corporate/@corp/@about/documents/corporate/p118667.pdf



Source:
FINRA - Home Page

https://www.finra.org/