Terra Extraneus

Texas Tech University football head coach Mike Leach “suspended indefinitely” an offensive lineman “for violating team rules.” In the copyrighted AP story published by the Daily Oklahoman, the unattributed AP story seemed to imply that the lineman was suspended because he posted to his Twitter account a complaint that he was at a Sunday meeting and the head coach was late. This allegedly occurred the day after the team lost 29-28 to the Houston Cougars. (I am a graduate of the University of Houston college of law but I never saw a Cougars game while there and have never seen one since. I have never seen a Texas Tech football game either. In both disclosures, I include TV as well as live attendance.)

It once again amazes me that a college football player, a college kid, not an NFL player, can be treated this way. It also amazes me that it is news flashed across the planet rather than merely a line item in a campus newspaper.

I wonder if the football coach, an employee of a state institution, realizes he is a state actor and may have violated the civil rights to free speech of a citizen commenting on the way in which this government employee, the football coach, attended to his duties? While a high school football coach might be able to squash the free speech rights of a minor in a public high school under the rubric of preserving the peace at the school, that should not be available to a college football coach employed by a taxpayer funded state institution.

Nobody can reign in a sitting head football coach at a division 1 NCAA school in the Big Twelve with no worse than a 50% record and so much television revenue yet to collect for the year, so this is all academic.

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The September 24 ,2009 warning by FINRA about leveraged and inverse ETFs was a bit annoying. If FINRA has to warn about it, should not there be new suitability rulemaking to go with it aimed at these products?

Even the explanation by FINRA of what these products are lacks clarity for the people FINRA is trying to warn. Of even more concern, however, is that these products, FINRA believes, are especially apt to act erratically in volatile markets.

FINRA’s explanation of these products contains nicknames like “short funds” and “ultra short funds,” as if the investor reading the alert that did not understand the more formal name might get something out of the less formal. Of course, FINRA has to start somewhere, and the name is the most logical place to start. But, what else is the investor likely to get beyond the names? Will the investor really understand the nature of these products and their real risks?

These products should probably be classified by FINRA for suitability purposes as “speculative,” if FINRA’s warning is to have any real meaning. That would go a long way toward diverting them from the unsophisticated. FINRA could also declare them unsuitable for retirement accounts. FINRA could also preclude margin account purchases of these products, or limit margin account purchases to margin accounts with an actual marked to market value exceeding one million dollars.

Unless FINRA begins these types of protective rule implementations, FINRA will always be regulating after the losses instead of preventing them.

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Associated persons (a/k/a “financial advisors,” stockbrokers, etc.) should be wary of FINRA’s new Rule 13806 which provides for a single arbitrator in promissory note cases. While the single arbitrator may be fine for default cases, where the associated persons plans to make no defense and files no answer, rarely are single arbitrators desirable in contentious employment cases of any kind. Invariably, single arbitrators rarely have the courage on their own to do more than do a Solomon - like “split the baby” Award. Worse, too often, the single arbitrator is so aligned with the industry that even public policies designed to protect ALL employees are simply disregarded. FINRA tried to avoid the latter by restricting single arbitrator choices to panelists qualified to hear discrimination cases. However, anyone caught in this system should be wary until the system statiscally verifies its lack of imbalance in favor of the industry.

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