Proxy proposals stir interest in Finra election

Proxy proposals seeking to shed more light on the Financial Industry Regulatory Authority Inc. have emerged as a hot-button issue in the self-regulator’s election for seven open board seats.
The election, set to conclude Thursday at Finra’s annual meeting, has opposing candidates for three small-firm seats and one midsize-firm seat.
Candidates for three large-firm seats are running unopposed.
The fight over the smaller firm seats has seen some spirited debate over the growing regulatory burden on broker-dealers.
In addition, a set of seven non-binding proxy proposals submitted by Amerivet Securities Inc. has also generated interest in the election.
The proxy proposals urge Finra to disclose the pay of its most highly compensated employees, offer members a “say on pay” vote on Finra’s five most highly compensated employees, investigate any potential connection between Finra officials and Bernard Madoff, disclose more about Finra’s investment activities, make board meetings public, create an independent inspector general position and release an IRS opinion letter concerning the NASD’s $35,000 payment to members following the 2007 merger with the NYSE enforcement unit.
In a letter sent to Finra members late last month, Amerivet urged other broker-dealers to vote for its proposals. The letter also included a ballot and a request for member firms to give Amerivet’s attorneys the power to vote their proxies.
“These proposals represent an honest and straightforward effort to improve Finra,” the letter said. “No objective observer can look at the performance of Finra over the last few years and characterize it as an effective regulator or being operated in its members’ best interests.”
Finra has urged its members to vote no on the proxy proposals.
All the board candidates who circulated petitions to get on the ballot favor the proposals.
With one exception, candidates nominated by a Finra nominating committee haven’t made their views known on the proxy proposals.
Lisa Roth, chief executive of Keystone Capital Corp., a nominating committee small-firm candidate, supports disclosure of Finra’s investment activities, say-on-pay, an inspector general and disclosure of the IRS letter.
“I would very much like the [IRS] letter to be released to validate the truth” that $35,000 was the most that NASD could pay its members, Ms. Roth wrote in an e-mail.
The remaining nominating committee candidates did not respond to e-mails requesting comment, or declined comment. They also didn’t respond to Amerivet’s earlier e-mail asking about their positions.
Those candidates still silent on the proxy proposals are small-firm candidates Mari Buechner, chief executive of Coordinated Capital Securities Inc.; Donald Steel, chief executive of Planned Investment Company Inc.; midsize-firm candidate Dennis Ferguson, director of clearing at Sterne Agee Financial Services Inc.; and large-firm candidates Richard Brueckner, chief executive of Pershing LLC; Seth Waugh, chief executive of Deutsche Bank Securities Inc.; and James Weddle, managing partner with Edward Jones.
Mr. Brueckner, through a spokeswoman, declined comment.
The petition candidates are Timothy Smith, a midsize-firm candidate and president of Comprehensive Asset Management & Servicing Inc.; and small-firm candidates Ken Norensberg, managing director of Luxor Financial Group Inc.; Jed Bandes, president of Mutual Trust Company of America Securities Inc.; Joel Blumenschein, president of Freedom Investors Corp.; and Howard Spindel, owner of Integrated Management Solutions.
“I support transparency with Finra, just like Finra requires everything we do to be transparent,” Mr. Norensberg said.
The nominating committee candidates haven’t spoken up because the proposals “go against the company line,” Mr. Blumenschein said.
In its proxy sent to members last month, Finra opposed each proposal.

Related Topics: Financial Industry Regulatory Authority