From Bill Singer, Esq.
Publisher of the
"Securities Industry Commentator" and
Members of the FINRA Small Firm community will be receiving a PROXY seeking your vote for a candidate for the 2023 FINRA SMALL FIRM Governor seat. DO NOT RETURN ANY PROXIES to FINRA.
According to FINRA's most recently published statistics, the number of FINRA Small Firms (1 - 150 registered persons) is about 3,039. The FINRA Small Firm community has sent a message to FINRA by boycotting the petition phase of the 2023 Board elections. As a result of that boycott, only one FINRA Small Firm candidate received enough petitions to move forward. Not much of an election with only one candidate for the one vacant Small Firm Governor seat. The goal of the boycott is to persuade 1,520 FINRA Small Firm Executive Representatives to not return their firm's proxy. There is no conflict inherent in not casting a worthless vote. It is a quiet, elegant form of protest. If we prevail, less than half of all eligible voting FINRA Small Firms will return a proxy. That's a simple metric by which to send FINRA an overdue message. Please, join 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. As presently constituted, the FINRA Board is a lackluster, gerrymandered body that:
As the FINRA election moves forward, it is critical that you maintain the boycott and send a strong message to FINRA. Perhaps FINRA and its Board will finally pursue a reform-oriented agenda that better addresses the needs of both public investors and all industry participants.
DO NOT RETURN ANY PROXIES TO FINRA
Boycott the 2023 FINRA Elections
If you have given a revocable proxy pursuant to a proxy card distributed by FINRA, you may revoke your proxy before the Annual Meeting on Wednesday, September 6, 2023, at 10:00 a.m. Eastern Time by delivering to FINRA’s Corporate Secretary:
Bill Singer Calls For Boycott Of 2023 FINRA Elections
(BrokeAndBroker.com Blog / June 16, 2023)
FINRA's Board of Governors is a lackluster amalgamation that is tone deaf to the legitimate needs of its smaller members and resistant to implementing the necessary reforms to protect the investing public and the industry's financial professionals. FINRA's Small Firm members represent some 90% of the membership but are gerrymandered down to about 13% of the Board Governors. Since the Small Firm Members are of no apparent consequence, I urge the Small Firm community to boycott all 2023 FINRA elections. Further, until such time as FINRA demonstrates a sincere commitment to reform, I urge all FINRA member firms to instruct their Executive Representative to not cast a vote for any candidate in any 2023 FINRA election by way of a boycott.
In January 2021, the FINRA Board of Governors appointed Goldman Sachs' General Counsel to fill the Floor Member Governor's seat. There was no election. The Governor was hand picked, and her appointment was approved by the full Board. By way of context, on September 10, 2010, plaintiffs had filed a Complaint asserting claims for gender discrimination in pay, performance evaluation, and promotion under Title VII of the Civil Rights Act of 1964, and the New York City Human Rights Law. On March 30, 2018, the case was certified as a class action; and trial was set to begin on June 7, 2023.The Governors who voted to approve the nomination of Goldman Sachs' General Counsel knew or should have known about the troubling allegations set out in the pending 2010 Class Action against Goldman Sachs.
In 2021, no FINRA Governor reportedly challenged the appointment of Goldman Sachs' General Counsel to the Board of Governors of Wall Street's leading self-regulatory-organization. In 2022, as the shocking allegations mounted, no FINRA Governor reportedly requested the resignation of Goldman Sachs' General Counsel. Even in 2023, amid a flood of allegations and evidence, FINRA's Board of Governors said nothing. Goldman Sachs settled the Class Action gender discrimination charges by 2,800 female associates and vice presidents at a cost of $215 million. “Goldman Sachs to pay $215 mln to settle gender discrimination lawsuit” (Reuters / May 9, 2023)
The appointment of Goldman Sachs' General Counsel by FINRA's Board placed the self-regulatory-organization in an unflattering light of hypocrisy given its efforts to depict itself as a bastion of inclusion and diversity: "FINRA Creates Industry Diversity Advisory Committee / New Committee Highlights FINRA’s Commitment to Improving DEI in the Securities Industry" (FINRA Release / November 9, 2022)
https://www.finra.org/media-center/newsreleases/2022/finra-creates-industry-diversity-advisory-committee. Notwithstanding FINRA's belated efforts to acknowledge discrimination and harassment in the industry, those were not issues that had been hidden from Wall Street's regulators. As I noted many years ago in "Why Is The NYSE And NASD Soft On Racism And Sexism?" (BrokeAndBroker.com Blog / March 9, 2006) http://www.brokeandbroker.com/10/nyse-nasd-sexism/
Please, show me the cases those regulators brought in the past 50 years in which member firms were charged with permitting racial or sexual discrimination/harassment. And what's the message? The regulators unwittingly encourage intolerant behavior by not deeming these practices to be conduct that offends basic notions of "high principles" and "honor." Do the SROs see such conduct as nothing more than an indiscretion?
. . .
I hear these heart-rending stories virtually every day when I am contacted by potential clients. If this cancer is tolerated by Wall Street's regulators, how will we ever destroy it? If the NYSE and NASD see fit to bar folks from the brokerage industry because they have had felony convictions for drunk driving, then it's high time we roll out the same artillery to combat illegal discrimination.
Placing FINRA in the unflattering light of hypocrisy and raising questions as to the regulator's complicity, are the very words of FINRA's bedrock regulatory rule:
FINRA Rule 2010: STANDARDS OF COMMERCIAL HONOR AND PRINCIPLES OF TRADE
A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.
Despite decades of discrimination and harassment at many of its member firms, FINRA failed to file charges . . . failed to take action. If sexism and racism are not among the most classic examples of commercial dishonor, what is? If sexism and racism are not the hallmarks of injustice and inequity, what is? Presented with this squalor on Wall Street, no one on FINRA's Board ever spoke up; and even today, no one is speaking out. Instead of action we get press releases, outside consultants, white papers, and blue-ribbon panels.
Gender/racial discrimination is not a dirty, little secret on Wall Street. It's long been out there in the open. The message from those in power is to look the other way, keep quiet, and don't rock the boat. Now, in 2023, when we are confronted with the reality of Goldman Sachs' $215 million settlement, it is absurd to pretend that nothing was ever amiss. And yet, despite all of that, those who know better, those who should speak up and speak out, still shrink from their ethical and moral obligations. FINRA's Board is silent. Wall Street's regulators are silent. Wall Street's trade groups are silent. It is all deafening.
There is no commercial honor, no justice, no equity when it comes to the regulation of Wall Street. The industry is a cesspool that many smell but few admit to seeing. There are none so blind as those who will not see. The most deluded people are those who choose to ignore what they already know.
SEC Charges Ault Alliance, Inc. and former CEO Milton Charles (“Todd”) Ault III with Making Misleading Disclosures and Other Violations, and Charges Current CEO for Record-keeping and Internal Control Violations (SEC Release)