Bloomberg has a good scoop on FINRA’s, the financial industry’s self-regulator, suspiciously well-timed exit from the auction-rated securities market.

FINRA had jumped head first into that market, loading up with $862 million in auction-rated securities before it got out in early 2007, just six months before the whole market went belly-up.

While this is great reporting, it’s another case of a bad Bloomberg edit. I felt like I was slogging through this thing, trying to piece it together.

For instance, the really good stuff is buried at the bottom. FINRA was headed up by Mary Schapiro, which readers aren’t told until halfway through the piece. That should have been much higher. Schapiro now heads Obama’s SEC, and she had some very interesting things to say about market-timers in auction-rated securities:

Individuals bought auction-rate securities in 2007 even as “institutional investors and companies were dumping their shares,” Schapiro said in an October speech at Dominican University in Forest River, Illinois.

“Many institutions understood the risk in terms of their own investments, but the question is: Was that information freely shared with individual investors?” Schapiro said in the ethics and leadership lecture on regulation. “There was both a legal and ethical obligation to do so.”

FINRA is an institutional investor that dumped its shares in 2007—and it’s supposed to protect investors from this kind of stuff.

Further:

Bankers knew the market was going to fail, said Richard Ketchum, Schapiro’s successor, at a Finra seminar on March 23. “The impending scarcity of new buyers at auction was, at some point, no real secret.”

So what did FINRA know and when did it know it? That’s the real story here, and it’s buried.

There are hints of this up top, but they don’t quite work:

“If they had these securities, they had to know the market was in trouble,” said Ed Dowling, 54, the owner of a clothing manufacturer in New York City, referring to Finra. Dowling said he has $2.25 million of auction-rate securities he can’t sell.

That should have come after the Schapiro quotes. This guy isn’t exactly the most authoritative source, especially when you have pretty damning words from the horse’s mouth.

Bloomberg pegs the story on the fact that FINRA is arbitrating billions of dollars in auction-rate securities claims by investors despite getting out of the market. Its headline:

Finra Oversees Auction-Rate Arbitrations After Exit

That’s a fine story. But it’s really good when you know the Schapiro quotes, which unfortunately most readers will never see since they’re buried toward the end of the piece.

The best you can say for FINRA was that it was ignorant, which is what its flack does:

Finra didn’t know the auctions were poised to weaken, Perone said. The regulator issued its first guidance for investors caught in the debt on March 31, 2008, more than a month after the failure rate rose to about 80 percent.

That sounds a lot like what we know about FINRA’s regulation under Schapiro.

Another problem with the story: A real basic question that goes unanswered here is why FINRA exited the market when it did. I don’t see any reason suggested by FINRA here.

This is good work by Bloomberg to uncover this story, but it could have been better.

Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.