2019 FINRA Board of Governors Election

June 17, 2019

A personal note from Bill Singer, BrokeAndBroker.com Blog: 

The 2019 FINRA Board of Governors election is upon us. As one of the founders of the NASD Dissident/Reform Movement (now the FINRA Dissident/Reform Movement), and as a member of the 1998 slate of the first four petition candidates to successfully challenge the self-regulatory-organization's process of anointing its industry Board members, I am a fervent proponent of robust, contested elections as a means of democratizing FINRA's Board, which I view as a gerrymandered body designed to entrench the power of the regulator's Large Member Firms and industry special interests. That rigged construct rebuffs meaningful Wall Street reform, artificially constrains the Small Firm Members' influence, and denies proportionate representation for the industry's associated persons and public customers. 

Linde Murphy is a Petition candidate for the 2019 FINRA Small Firm Governor seat. Linde is a sincere advocate for industry reform and a refreshing voice on behalf of the beleaguered small firms. I look forward to working with Linde on matters of common interest and will eagerly support her future efforts to win election to the FINRA Board. 

Robert A. Muh is a candidate for the 2019 FINRA Small Firm Governor seat. I have tremendous respect and admiration for Bob's intelligence and independence, which prompted my support for his successful 2016 election. Bob is committed to advancing the legitimate needs of smaller firms and has always stood up to speak out for industry reform.  Without reservation, I support Bob's re-election as the 2019 FINRA Small Firm Governor and urge all BrokeAndBroker.com Blog readers to press their FINRA Small Firm's Executive Representative to vote for Bob in this year's election.

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The Financial Industry Regulatory Authority's ("FINRA's") Board of Governors consists of 24 members: 
  • Chief Executive Officer of FINRA; 
  • 13 Public Governors; 
  • 1 Floor Member Governor; 
  • 1 Independent Dealer/Insurance Affiliate Governor; 
  • 1 Investment Company Affiliate Governor; 
  • 3 Small Firm Governors (1 to 150 registered representatives); 
  • 1 Mid-Size Firm Governor (151 to  registered representatives); and 
  • 3 Large Firm Governors (500 or more registered representatives) 
Governors elected at FINRA's 2019 annual meeting will typically serve a three-year term concluding at FINRA's 2022 annual meeting. The 13 Public Governors, Floor Member Governor, Independent Dealer/Insurance Affiliate Governor and Investment Company Affiliate Governor are appointed by the Board from a list of Nominating Committee candidates. The 7 Firm Governors are elected and candidates are nominated based upon Small, Mid-Size, and Large categories with FINRA member firms limited to endorsing one candidate for the same firm-size seat as their own.  

Petition Candidates

On July 8, 2019, any person who has not been nominated by the FINRA Nominating Committee for election to the FINRA Board may be included on the ballot for election of governors if:

a. such person presents to FINRA's Corporate Secretary petitions in support of his or her nomination, duly executed by at least 3 percent of FINRA member firms entitled to vote for such nominee's election. If, however, a candidate's name appears on  a petition in support of more than one nominee, the petition must be endorsed by 10 percent of FINRA member firms entitled to vote for such nominees' election; and 

b. the Corporate Secretary certifies that such petitions have been duly executed by the executive representatives of the requisite number of FINRA member firms entitled to vote for such person's election, and the person being nominated satisfies the classification of the governorship to be filled.

Nominating Committee Candidates

In "Upcoming FINRA Board of Governors Election" (FINRA Election Notice / May 24, 2019)
https://www.finra.org/sites/default/files/notice_doc_file_ref/Election-Notice-052419.pdf, the FINRA Nominating Committee announced its nomination of:

Large Firm Governor Candidate: Andrew S. Duff, Board of Directors, Piper Jaffray & Co.
Small Firm Governor Candidate: Robert A. Muh, CEO, Sutter Securities

As of the close of business on Thursday, May 23, 2019, there were 174 Large Firms, and 3,261 Small Firms. Included in the FINRA 2019 Election Notice were the following profiles of the individuals nominated by the FINRA Nominating Committee for the one Large Firm  and one Small Firm seats subject to election this year:

Profile of Large Firm Governor Nominee
Board of Directors, Piper Jaffray & Co.

Andrew S. Duff is the former chairman and chief executive officer of Piper Jaffray Companies, having served as chief executive officer from 2000 through 2017. He currently serves on the Board of Directors of Piper Jaffray & Co., the primary broker-dealer subsidiary for Piper Jaffray Companies. Mr. Duff joined Piper Jaffray in 1980 in the institutional fixed income sales group. He was later promoted to manager of institutional sales and trading in 1994, and then served as president of the individual investor services and capital markets areas until 1996. During the time period that Piper Jaffray was owned by U.S. Bancorp (1996 through 2003), Mr. Duff served as president of Piper Jaffray and vice chair of U.S. Bancorp for the wealth management group. 

Mr. Duff holds a bachelor's degree in economics from Tufts University in Medford, Mass., and attended the Advanced Executive Program at the Kellogg School of Management at Northwestern University. 

In 2017, Mr. Duff was named among the Most Admired CEOs by the Minneapolis-St. Paul Business Journal. He was inducted into the Minnesota Business Hall of Fame in 2018. 

Mr. Duff currently serves on the Board of Governors of the Financial Industry Regulatory Authority (FINRA), the University of St. Thomas board of trustees and the University of St. Thomas Opus College of Business strategic board of governors. He is a longstanding member of the Walker Art Center board of trustees, and an advisor to the board of directors of Great Clips, Inc.

Profile of Small Firm Governor Nominee 
CEO, Sutter Securities 

Mr. Muh has over four decades of experience in the financial services industry. He is presently Chief Executive Officer of Sutter Securities, a 12-person broker-dealer he cofounded in San Francisco in 1992. Sutter Securities is a full-service broker-dealer. Mr. Muh was also the firm's Chief Compliance Officer until 2015, when increased regulatory burdens required Sutter to hire a full-time compliance officer. After serving as an officer in the U.S. Army, Mr. Muh began his business career at the consulting firm of McKinsey & Company. He left McKinsey to become a major owner and President of Newburger, Loeb & Co., a NYSE member firm. Prior to founding Sutter Securities, he was a partner at Bear Stearns in both Los Angeles and San Francisco. 

Mr. Muh has also been actively involved in security industry affairs throughout his career. He has served as Chair of FINRA's Small Firm Advisory Committee and Chair of the District 1 Committee. He was a member of the National Arbitration and Mediation Committee and on FINRA's Membership Application Task Force. In 2016, he was elected to a three-year term on the FINRA Board of Governors. Mr. Muh has been a frequent speaker at FINRA's Small Firm Conferences and FINRA's Annual Conference. He has written numerous comment letters to both FINRA and the SEC regarding new rule proposals. 

In addition, he has served on more than 20 corporate and non-profit boards. He was a Trustee of the Massachusetts Institute of Technology for more than 20 years and he is currently a Life Trustee Emeritus. He is also a Trustee and Vice Chair of the Culinary Institute of America. Mr. Muh is a graduate of MIT and he holds both an MBA and a M. Phil. from Columbia University where he was an Adjunct Assistant Professor at the Business School. Mr. Muh is currently an Adjunct Professor at the University of San Francisco Law School and an advisor to the Law School's Investor Justice Project.

Small Firm Petition Candidate Linde Murphy

Linde Murphy has submitted the following message in furtherance of her Petition to obtain nomination as a Small Firm Board Governor: 

Dear Small Firm Colleague,   

How many of us are at the end of our rope?  We are frustrated with the outrageous burdens being placed on small firms.  Every year, another dozen rules roll out that may be targeted for large firms but small firms are the ones who suffer because we can't keep up!  Rules do not affect all firms the same.  And many rules should not apply to all firms in the same manner.  

We've all talked about it.  The rules are out of control!  The licensing is 3 times what it is on the IA side.  The restrictions are 10 times the IA side.  They don't have net capital requirements. They don't have annual PCAOB audits. Our margins are shrinking.  It's hard to attract qualified staff.  And we have to keep up with rules from at least 3 regulators.  We keep telling FINRA all of this, but we're not heard.  Many firms surmise FINRA is trying to get rid of small firms and they may just be right. 

So what can we do about it?  I'm reminded of a quote by Marjory Stoneman Douglas, who fought to preserve the Florida Everglades, "Be a nuisance when it counts. Do your part to inform and stimulate the public to join your action. Be depressed, discouraged, & disappointed at failure & the disheartening effects of ignorance, greed, corruption & bad politics - but never give up." 

Never give up.  We have got to keep trying to get FINRA's attention - get them to care.  We have to keep explaining to FINRA the ripple effects these rules have.  They need to hear from those of us who understand our business, who know how to write a ticket, to work an order, to write procedures, to deal with clearing firms, to talk to a rep who's just received his first customer compliant after 30 years in the business.  I understand the plight of the small firm because I am a small firm!  I can and will fight for small firms, our challenges and our rights! I won't stop until they listen!    

Here's an example of just one of the fights I have won working on your behalf on the Small Firm Advisory Committee (SFAC): In 2017, a FINRA rule was set to go into effect that would have removed an exemption to the FINOP requirement for certain small firms, something that had been in place for nearly 20 years.  As a member of the SFAC, I saw the proposal and led the charge in changing this.  And I was successful.  The exemption is allowed to this day.  

I continue to fight against the "use it or lose it" rule where we lose our licenses after two years of not being registered with a BD, for whatever reason.  How many reps have you seen come back to our industry only to start back at the base level?  Why can't we keep our licenses active through continuing education just like attorneys and CPAs do?  People temporarily leave our industry for a variety of reasons: taking care of aging parents, new position at another division, child care, etc.  The problem is they don't come back once they've lost their license because of this rule, so I am fighting to change the use-it-or-lose-it rule.   

My kids are convinced the children's book is "Are you my regulator?" not "Are you my mother"?  I've dealt with FINRA, State Regulators, SEC for Municipal Advisory work, and SEC on the BD side.  I personally have used CRD, IARD, and EDGAR.  I understand that different business lines may require different oversight, but the least they could do is streamline the registrations into one system.  And for crying out loud, why can't they coordinate audits better?  I will work on your behalf to on these issues! 

Why can't we have different rules for small firms?  Why does every rule have to apply to every firm? Even Chairman Clayton of the SEC testified on the Hill that "one size does not fit all". I think the idea of having a small firm rulebook makes sense and the time has come to take this fight up so we have a chance of staying in business! 

Many will tell you we need to fight for more.  I'm here to tell you we need to fight for less.  LESS rules.  LESS fees.  LESS bureaucracy that ends up hurting our customers because we're too busy checking boxes for a regulator.  We will all achieve more when FINRA starts requiring us to do LESS.  

Please join me in the fight for small firms by signing my petition today.  

Please feel free to call or email me directly with any questions or problems, I'm here to help! 

2019 FINRA Board of Governors Election (BrokeAndBroker.com Blog)

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