Finra’s Board of Governors lacks transparency, critics say

Despite having made some changes, calls for more open meetings persist

After each of its board meetings, Finra posts a video with board members and executives providing a brief overview of what was discussed and giving a synopsis of the regulatory proposals advanced.

“We get a report that says the board talked about this and talked about that,” said David Burton, a senior fellow in economic policy at the Heritage Foundation. “They should open the board meetings to the public unless they vote to go into executive session.”

In response to criticism that the meetings of its 24-member board occur behind closed doors, the Financial Industry Regulatory Authority Inc. over the last few months has posted more information about the board online.

In an interview, Finra chief executive Robert W. Cook said that as part of Finra 360, the regulator is attempting to “look at different types of ways that we can be as transparent as is appropriate for our organization.”

(More: Finra touts improvements during first year of Finra 360 operational review)

Finra has also established a portal through which it will take nominations for board positions and seats on its other committees. The board consists of 10 industry governors, 13 public governors and Mr. Cook.

The current chairman, William H. Heyman, a public governor, is vice chairman and chief investment officer at The Travelers Companies Inc. Ben Edwards, an associate professor of law at the University of Nevada, Las Vegas, contends that the public governors often have industry backgrounds. He hopes that as Finra takes more applications for board posts, the body will become more investor-oriented.

“If opening up this new method for nominations and indications of interest gets more people in the pipeline, it may eventually lead to a more public-minded board with fewer conflicts,” he said.

The next test will be how Finra handles the departure of Randal Quarles, a public governor who last fall became vice chairman of the Federal Reserve.

“As Finra moves to replace him … we’ll get a sense of what Finra thinks is important background for a public governor to have,” Mr. Edwards said.