A Tale of Regulations Run Amok

You’re a small business on the rise. You need to hire more employees to help you grow. Think hard before you add to your payroll. That’s what Peter Schiff should have done; it would have saved him a half a million dollars in legal fees and fines.

Schiff owns a small brokerage firm in Connecticut called Euro Pacific Capital Inc. In 2008, he wrote a book about the coming problems in the stock market that proved to be popular.

The book was so popular in fact that he garnered more and more clients and needed to hire additional brokers to service them. He hired about 50 or 60 brokers and his business continued to grow.

Then he faced the wrath of the federal government. The Financial Industry Regulatory Authority (FINRA) said he didn’t have its permission to hire. (FINRA is a self-regulatory agency funded by the brokerage industry; membership in FINRA is mandated for brokerage firms by the SEC.)

In 2011, he was fined $15,000. FYI: the originally-hired brokers have been terminated.

Earlier this month Schiff talked about testifying in Congress (a clip worth viewing). He discussed his hiring experience and the onerous impact of regulations on running a business.  Bottom line:  He’s now outsourcing offshore rather than hiring domestically because it’s the only way he can afford to get things done!

Do you have a regulatory story to share?  I’d love to hear it - send to Info [at] BarbaraWeltman [dot]com.

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