This is an issue where FINRA may be technically correct, but where the violation makes no sense from a policy perspective. The theory behind the enforcement action is that there are two separate short sales—one from the client to the broker-dealer and a second from the broker-dealer to the street—and therefore, it is necessary to locate pools of borrowable securities, one pool for each short sale.  

In the real world, there is need for only one pool of borrowable securities. The…

One statistic jumps out: the very high percentage of AML filings that were made by just ten institutions. Firms should consider whether they are filing as often as they should. Failing to file SARs may be the subject of disciplinary action.  

The dealer-trader rule is the subject of legal challenge, and the proposed rules on alternative trading systems will likely be challenged if adopted. The rules requiring the central clearing of many US Government securities transactions will not be challenged in court, but there is reason to be doubtful that they will accomplish their intended purposes. The view that "tremors" in the market may be prevented by imposing a central clearing requirement, without regard to the external events…

The SEC's record before the courts in defending its regulatory actions raises reasonable questions as to the agency's respect for the limits of its statutory authority, its compliance with administrative procedures and its equitable treatment of those who are regulated. Even were the SEC to appeal the court's decision and win as to its statutory authority—which would seem an uphill battle given the unanimous decision against it—the SEC would still have to defend the Private Fund Advisers…