Following Finra’s $84M loss, board election commences

Three candidates will be squaring off for an open small-firm seat on the board of the Financial Industry Regulatory Authority Inc., the regulator announced last Monday.

The small-firm candidates are Kevin Carreno, part owner and general counsel of International Assets Advisory LLC in Orlando, Fla.; Stephen Kohn, president of Stephen A. Kohn & Associates Ltd. in Lakewood, Colo.; and Dock David Treece, a partner at Toledo, Ohio-based Treece Financial Services Corp.

All three were able to collect signatures from 3% or more of the 4,059 small Finra member firms, which are defined as having no more than 150 registered persons.

All small-firm candidates must qualify for the Finra ballot by the petition process.

The Finra Nominating Committee has chosen two other candidates to represent midsize and large firms. W. Dennis Ferguson, director of clearing at Sterne Agee & Leach Inc., was chosen to run for the open midsize seat, representing firms with 151 to 499 registered persons. Seth Waugh, chief executive at Deutsche Bank Americas, was picked to represent firms with 500 or more registered persons. Both are running unopposed.

Mr. Waugh announced in late February that he would be stepping down as CEO as soon as Deutsche Bank named a replacement.

His candidacy for the Finra board seat was announced May 11, one day after the U.S. Attorney’s Office for the Southern District of New York settled for $202.3 million a civil fraud case alleging reckless mortgage lending practices against Deutsche Bank and three of its subsidiaries between 2002 and 2009.

One of those subsidiaries is Deutsche Bank Securities Inc., of which Mr. Waugh is chairman. Mr. Waugh joined Deutsche Bank in 2000.

U.S. Attorney Preet Bharara stated in a press release that Deutsche Bank and another of its subsidiaries, MortgageIt, “treated [Federal Housing Administration] insurance as free government money to backstop lending practices that did not follow the rules.”

Nancy Condon, a Finra spokeswoman, wrote in an e-mail that “the [Justice Department] action has no impact on Mr. Waugh’s eligibility to serve on Finra’s board.”

Candidates will be soliciting supporters until Finra’s annual meeting Aug. 13, when the votes will be tallied.

The campaign for the small-firm seat could heat up in the wake of Finra’s recently announced $84 million loss, pending member fee hikes and a bevy of new regulatory requirements, including revised suitability rules that began taking effect last week.

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Related Topics: Financial Industry Regulatory Authority