9 Critical Points Where FINRA Was Out of Bounds

1. *FINRA Head Supervisor Phil Harris delays CMG admittance to the NASD (FINRA). The clearance takes 18 months when it should be 6 months costing Baldwin and additional $720,000.00. The licenses of Baldwin, all employees and the broker-dealer are spotless. Phil Harris claims he hasn’t received all documents.

 

2.*FINRA Head Supervisor Phil Harris wrongfully stops CMG on 3 separate occasions causing a loss of revenue of over $350,000.00 from clients and the loss of the clearing agent Mesirow. Phil Hariis questions the net capital but will not give or perform a net capital calculation. Phil Harris constantly questions CMG’s net capital levels but will never perform the calculations–he will only “estimate”–during these periods CMG needs $6k but has over $400,000.00 in net capital and makes hundreds of thousands of dollars a month.

 

3.*FINRA Head Supervisor states that CMG/Baldwin is under net capital but will not perform a calculation for 5 years through 3 proceedings. CMG needs 6k and has a minimum of $250,000.00 but an average of $440,000.00. During the period in question CMG makes $900,000.00 in revenue in less than 90 days. Phil Harris still refuses to perform a calculation and only estimates.

 

4.*FINRA Head Supervisor takes CMG/Baldwin to proceedings on the basis of stating not receiving documents. The initial case is 48 points and then whittled down to 3 after baldwin forwards information to counter claims on the points. In the proceedings, Phil Harris and 2 top officials from District 8 lie under oath and are forced to recant their testimony for 2 of the 3 points, leaving the third an 8210 violation where Harris once again claims he didn’t receive a document from Baldwin. FINRA bars and expels Baldwin based on their testimony. The National Adjucatory Counsel (NAC) reinstates CMG/Baldwin after finding “troubling” and “inconsistent” testimony by staff–namely the inability to name any specific document that they didn’t receive to substantiate an 8210 violation. FINRA then gives Baldwin a 2 year suspension ansd $25,000.00 fine for not providing a deposit ticket for a wire sent by a third party and not having a bank statement for a third party who placed the money in an unregulated company that Baldwin controls. All the documents were sent to FINRA on December 21, 2005 via ouside counsel, ex SEC attorney Joseph Mannon of Vedder Price who send them also to the Deputy Assistant Regional Director of the U.S. Securities Exchange, James A. Davidson, Esq. as well due to the consistent denial of document reception by District 8.

 

5.*FINRA launches 2 more proceedings against Baldwin/CMG although Baldwin hasn’t performed any securities transaction since December of 2005 and has stated as well as put in writing that he will be pursuing a masters degree at Oxford and working in Europe and the Middle East outside of FINRA’s jurisdiction and scope. No one from FINRA will perform a net capital computation during any of the proceedings to justify net capital deficiency–they just consistently allege potential low capital with “estimations”. Although there is no theft, malfeasance or fraud–FINRA officials say that CMG/Baldwin are a threat to the public due to low levels of capital and state that they must protect the public. CMG doesn’t have any individual or retail clients, only sophisticated institutions like Goldman Sachs, UBS and Northern Trust and participates in capital market transactions where the top investment banks are the lead managers.

 

6.*FINRA Head Examiner Phil Harris faxes an article to the Qatar Finance Centre (QFC) from Crains Business that was written by the author who wanted to explore the “capital deficiency” and proceedings. The QFC is not a regulatory agency and is an organization with whom Baldwin is working on a conference with Lord Jacob Rothschild through an unregulated CMG company. The Chief Executive notifies Baldwin of the actions of Harris. CMG is being paid $250,000.00 by the QFC to host the conference.

 

Baldwin appends a 4000 document binder with all of his communications to FINRA and the SEC to be appended to the record and has his counsel send a sealed document to FINRA, gives one to the head adjudicator for the NAC and forwards one to the SEC. Baldwin allows all of his licenses to lapse in August of 2006. FINRA then has a 2 year period to continue asking questions. Baldwin stops all financial reporting (FOCUS reports) and withdraws all capital and terminates the clearing agreement. The Corporate Secretary send Baldwin a letter stating that if no reporting is sent CMG will be expelled pursuant to rule 9552. Baldwin allows this broker-dealer to expel. Baldwin is cut off from all electronic information to FINRA for broker-dealers.

 

7.*FINRA reinstates CMG as a broker dealer after years of complaining that Baldwin/CMG is a threat and has low capital levels that will endanger the investing public, FINRA reinstates CMG without notifying Baldwin although:
* There has been zero reporting
*There is zero capital
* The broker-dealer has no clearing agreement

FINRA’s job is to protect the public, if they believe that Baldwin and they have extolled that consistent net capital deficiency, why would they be derelict of their duties and reinstate the broker-dealer in direct violation of net capital deficiency rules? This would put the public in danger since they vehemently stated that CMG was a threat. I submit that this was done so that they could continue to take Baldwin through illegal proceedings beyond the 2 year scope. During these proceedings, no official would perform a net capital calculation because it will negate the reason for ever beginning the intensive examinations and subsequent investigations.

 

8. FINRA takes Baldwin through proceedings in 2009 and presents documents as CMG’s currently submitted Anti Money Laundering, Business Continuity Plan. Baldwin states that these documents are not the ones he submitted and are less robust–Baldwin also informs the NAC in writing and verbally that he appended all documents to a previous case with FINRA and that the panel will find the glaring difference–this is recorded and he takes great care to outline the deficiencies and a date that is out of order on a document needed from June of 2005 that is dated June of 2004. Baldwin also reminds the panel that Enforcement initially tried a 48 point case which was reduced to 3 points under which 3 of the top officials in District 8 lied under oath and were forced to recant and intimates that the same is occurring now. The NAC ignores this and expels Baldwin again although neither Baldwin nor the firm have participated in any securities transactions since December of 2005 and none of the charges involve malfeasance, fraud or theft.

 

9. in May of 2010, FINRA raises several points against Baldwin for MSRB with an entity that isn’t regulated by FINRA when neither Baldwin or CMG Institutional Trading LLC have received any commissions or securities in the transactions. During this period Baldwin hasn’t participated in any municipal transactions. 4 of the 14 points of the case are inapplicable because they are MSRB issues and neither Baldwin or CMG Institutional Trading LLC have participated in any municipal transactions, received any payments or received any municipal securities during the periods FINRA alleges.

 

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