The SEC accepted FINRA's settlement offer related to the SRO's submission of altered or misleading documents to SEC investigators.  Besides the corrective actions that FINRA plans to take (although corrective actions taken twice before in the same FINRA District Office failed to prevent the 2008 incident), FINRA now must deal with the embarrassment. SEC Chairman Mary Schapiro may also have a stain on her reputation because she was the head of NASD when the 2 earlier violations occurred - during 2004 and 2005 SEC inspections. That said, the Street will soon be looking for answers on 2 other issues, namely:

1. will any individuals be punished for their role in providing altered or misleading documents to SEC inspectors in 2008?
2. will the SEC extend its inspection to other FINRA District Offices?

Three Strikes and You're Out. It would seem inconceivable that a single FINRA District Office - the one in Kansas City - could submit altered or misleading documents to SEC inspection teams on three different occasions.  FINRA would surely come down hard on any member firm that was caught committed such violations.  And given the public's thirst for blood, it's only fitting that responsible persons are identified and punished.  In this case, we're talking about the Director of the KC District Office who allegedly instructed his staff to make the alterations. Yes, the Director was terminated after FINRA completed its Internal Audit review.  But that probably won't "cut the mustard." Systemic Internal Control Weaknesses. Armed with the knowledge that serious violations took place in a FINRA District Office, it would make sense for the SEC to extend its inspections to other, if not all, FINRA offices.  To not drill down further within the FINRA organization would appear to indicate that the SEC believes that the incidents were isolated to a single arm of the SRO.  Such confidence is, at best, misguided and unfounded.  Extended reviews are necessary. So, good people - there's nothing much we can do now except to wait and see.  It will be interesting to see if the "court of public opinion" rises up and spurs the SEC to take further action.    -Howard Haykin