Yeah, now they're nitpicking, which is what regulators will tend to do if you stand up to them. It's not really Schwab or even optionsXpress they're going after here. They're going after Stern.
I don't know how familiar you are with broker/dealer compliance, but here's the real take-away with these new, tacked on charges:
1.) Stern was sloppy. No getting around this. If you make the decision to de-register an entity, then you don't just slime your way through it. You diligently complete the necessary paper work and you move on. And you never, ever start backdating material to fix a compliance mistake. "OX Trading LLC" is a separate entity from "optionsXpress". It will be interesting to see how Stern handles this. His trading as a "customer" of optionsXpress does not violate the registration requirements of CBOE... unless they're going to try to nail him for the RFQ's. The RFQ issue is the kicker. Stern has messed up, and he's probably going to have to eat it as punishment for trying to stand up to the SEC on the Reg SHO complaint.
2.) I can step into almost any OSJ for any broker/dealer in this country and find half a dozen violations. It doesn't mean that all the broker/dealers in this country are crooked nor does it mean that they're not bothering with the rules. Given the plethora of regulations, vague and occasionally contradictory as they can be, "Broker/Dealer Compliance" is as much an art-form as anything else in this day and age. If you're a compliance officer, you do the best you can with the resources at your disposal to keep your shop as clean as possible. But you're always aware that if some twerp from FINRA or the SEC is looking to put a feather in his or her cap at your expense, they can find something.
"The penny stock investor may be the most dangerous creature in the investment world, at least to himself.[...]His hypocrisy becomes most apparent when he then blames his losses on the greed of others." Robert C. Dugan, Director - JRM Capital
