June 15, 2022
Now You See It, Now You Don't
by "Regulated or Aggrieved"
Thomas Jefferson so aptly wrote to Richard Price, the great Welsh philosopher and political
reformer, "Whenever the people are well informed, they can be trusted with their own
government; that whenever things get so far wrong as to attract their notice, they may be relied
on to set them to rights."
The fundamentals of democracy begin with the right to vote and the right of constituents to
express their wants by voting for representation in government. The voting process in Congress
is public and a record of the votes made are archived, and easily available on www.govtrack.us
or other sources. The U.S. Senate votes are available on www.senate.gov . The SEC's voting
record is available on www.sec.gov .
We live in an age where the governmental and business outcry has been for "transparency" and
information sharing at all costs. There is a need for every type of business to know everything
about us; from the medical field to the insurance field to the banking industry and the
securities industry. There is no word such as "incognito" that substantially functions anymore.
We no longer have the ability to be anonymous. The information superhighway has assured us
that every road leads to our personal information, like it or not. Unfortunately, the rules that
apply to "transparency" are not applied equally, especially when it applies to certain regulators.
It becomes worrisome when some regulators "exempt" themselves from the same
transparency that they require of the persons they govern. With the express purpose of calling
the regulator out, we hereby point the finger at FINRA. How is it possible, that in the process of
governance of the securities Industry, the regulator requires transparency of its members,
requests comments from its members on issues to be voted on, and yet, is not required to
disclose the way in which its Board of Governors voted? Do as we say, not as we do, perhaps?
It is unfair of an organization made up of paying members, to extricate themselves of the
responsibility of making their opinions and votes clear, which in turn affects the firms
comprising its membership. If there is government transparency when it comes to voting,
including that of its Securities and Exchange Commission, why is it then that FINRA's Board of
Governors are not subject to the same reporting responsibility? Just as state and federal laws
affect every citizen in this country, FINRA rules affect every member subject to its purview. Does
FINRA not believe that it should be judged as to the effectiveness and quality of its voting
members? Are the Governors afraid to reveal their votes in fear that the disclosure would result
in using either the dissenting vote or the consenting vote by members as a defense in
disciplinary proceedings? I think that we are entitled to "transparency" in voting results by
In addition, we note that when Commissioners of the regulators such as the Securities and
Exchange Commission or the Commodity Futures Trading Commission have particular opinions
on relevant subject matter, they often publicize them. This produces useful dialogue among
Recently, FINRA announced that it will consider petitions for some of the Governors that will be
elected in its upcoming election that will take place on or about August 19, 2022. There are
various candidates who have already canvassed the membership to seek nominating petitions.
These candidates sing praises about what they will accomplish if elected but without knowing
what they might have accomplished in the past, we have no way of evaluating their relative
performance. Indeed, some of the candidates seeking nominating petitions have served in the
past on FINRA's Board of Governors or on FINRA's committees but we have no idea how they
may have voted in the past or whether they were successful in defeating some misguided
initiatives, as if they ever existed.
In past elections, FINRA has not publicized voting results other than to declare the winners.
Those results are relevant to all of those members affected by the voting.
In 1938, Congress passed the Maloney Act which established that there be national securities
associations, of which then and currently there is only one, That's what FINRA is; it is meant to
be an association whose constituents are its members. In 2007, as a result of regulatory
consolidation, NASD Regulation and the New York Stock Exchange combined and morphed into
FINRA. Rather than continue including in its full official name the word "Association", instead it
called itself an "Authority", as if it is somewhat quasi-governmental and is thus eligible for
certain special privileges. As a practical matter, assuming that transparent democracy is
currently nonexistent, FINRA members are effectively not members of the Authority, nor are
they members of a national securities association. In some respects, the members are being
relegated to the dustbin of history.
As Thomas Jefferson indicated, when things go so far wrong to attract notice, the people may
be relied upon to set them to rights.
We've noticed. Now FINRA, set them right.
The author of this Guest Blog has requested anonymity under the pen name "Regulated or Aggrieved."
NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of BrokeAndBroker.com Blog.