Allison Chin-Leong, a UBS spokeswoman in New York, said the "significant majority" of its sales were conducted properly and losses resulted from Lehman's "unprecedented and unexpected" failure.
High compensation packages for top executives at Finra may hinder forceful action that protects investors, according to Turner, the former chief accountant for the SEC.
"The economic incentives are so strong and these executives don't want to make waves and upset the industry," Turner said.
$8.99 Million
SEC Chairman Mary Schapiro, who was head of Finra and had worked at its predecessor NASD since 1996, received $8.99 million as a "final distribution," including $7.6 million in vested retirement benefits, when she left for the SEC, according to a Finra report. She makes $163,500 at the SEC. Schapiro recused herself from voting on the report about regulation of investment advisers.
Finra paid its top 10 executives a combined $11.6 million in 2009, based on data in an annual report. Ketchum received $2.24 million in salary, incentive pay and retirement benefits in 2009, the annual report said.
Compensation doesn't affect Finra's independence and helps prevent turnover, said Ketchum. "It hopefully impacts the willingness of people to make a career out of regulation. I'm not sure that it is a great strategy if you're looking for effective oversight to underpay regulators," he said.
"I can promise you that nobody in the industry thinks that Finra is their friend or Finra is on their side," said Mark Astarita, who has been representing brokers and firms in Finra investigations since 1984. "It's almost comical that that's the perception because that is completely untrue."
Missing Madoff
The regulator, along with the SEC, missed schemes operated by Bernard L. Madoff and R. Allen Stanford, whose brokerage firms were registered with Finra. Madoff's brother Peter, deceased son Mark and niece Shana served on NASD or Finra committees. Madoff didn't receive lenient treatment because of these ties, Finra said in a 2009 report.
Stanford hired the former head of Finra's Dallas office as managing director of compliance in 2006. The group's probe of Stanford resulted in a $10,000 fine for advertising violations in November 2007, about a year before the SEC shut down the alleged $7 billion fraud.