Broker-dealers want action on Finra proxy proposals

Broker-dealers who last week overwhelmingly approved a set of proxy proposals designed to make Finra more transparent now want to see the regulator take action.

Broker-dealers who last week overwhelmingly approved a set of proxy proposals designed to make Finra more transparent now want to see the regulator take action.
Because the seven proposals are non-binding, the Financial Industry Regulatory Authority Inc. doesn’t have to implement any of them, but because 67% of the firms that voted endorsed them, supporters expect the regulatory agency to give them a serious look.
“When you get an overwhelming number of votes, the powers that be will have to look at them,” said Ken Norensberg, managing director at Luxor Financial Group Inc.
Mr. Norensberg was one of three independent small-firm candidates who were elected to the board last week, beating out candidates supported by Finra’s nominating committee.
“I won’t speak for the board, but clearly, the members have spoken,” he added.
The proposals asked Finra to give members a “say on pay” for top Finra officials, disclose compensation for top executives, make board meetings public, disclose Finra’s investment activities and release an Internal Revenue Service opinion letter concerning NASD’s $35,000 payment to members following its 2007 merger with the regulatory arm of the New York Stock Exchange.
The proposals, submitted by Amerivet Securities Inc., also asked for an inquiry into Finra officers’ involvement with the Bernard Madoff firms, and the creation of an independent inspector general for Finra.
Member firms approved all of the proposals with 67% or more support.
The say-on-pay proposal and additional transparency for Finra’s investment process will be the most likely items to be addressed by the board, said Lisa Roth, chief executive of Keystone Capital Corp. and chairwoman of Finra’s small-firm advisory board.
Ms. Roth, who said she does not have direct knowledge of what Finra is working on, said the advisory board will be discussing the proxy proposals.
A small-firm candidate appointed by Finra’s nominating committee, Ms. Roth lost her election bid to independent Jed Bandes, president of Mutual Trust Company of America Securities Inc.
Ms. Roth supported four of the seven proposals.
During the proxy contest, the Finra board recommended a “no” vote for all of the proposals but after the election issued a statement saying that it will review each of the proxy proposals at its next meeting in September.
Observers noted that the 22-member Finra board has 14 appointed board members who may be unlikely to go against the party line.
“I certainly hope they listen to the proposals and take action,” said Michael Campbell, chief executive of Dominick & Dominick LLC. “There is a flame to be fanned there.”
“I am very happy, although I realize that this is just one battle, and not the war,” Elton Johnson, Amerivet’s president, wrote in an email. Mr. Johnson, a lieutenant colonel in the U.S. Army Reserve, is currently deployed in Qatar.