Time for a FINRA Tea Party

May 12, 2010

Time for a FINRA Tea Party?


In response to my recent article announcing the FINRA Board elections, I have been inundated with queries from potential candidates.  It seems clear to me that there will be a robust challenge to FINRA's officially nominated candidates - most of whom are all-too familiar names and faces. 


As I have long stated, I believe that FINRA's election rules were largely implemented to isolate and divide the FINRA Dissident/Reform Movement by Gerrymandering the FINRA community into "small" "medium" and "large" firms, with a smattering of special interest set-asides.  While proponents of this balkanization cynically pretend that it is a means to preserve fair representation for the component constituencies, I think the rationale is far too transparent.  In response to growing electoral strength among the Dissident/Reform Movement, the present election rules were designed to prevent the overwhelming majority of FINRA firms from implementing meaningful change at the Board level and in the regulator's policies. 


Consequently, those who accept the nomination of FINRA's Nominating Committees lend their name and imprimatur to a process that destroyed the historic one-firm-one-vote standard.  Supporting the present FINRA nomination and election process perpetuates a failed and failing regulator. All candidates for FINRA elective office should be required to satisfy the same requirement to obtain a minimum number of nominating petitions.  Moreover, all FINRA member firms should demand that any nominee support the return to the one-firm-one-vote rule.  For me, that is a non-negotiable plank in any platform.


I hope that a credible slate of Dissident/Reform candidates will emerge and that those men and women will offer a united front against FINRA's hand-picked candidates.  My fear is that too many Dissident/Reform candidates may enter the field and split the vote and guarantee election to FINRA's handpicked candidates.   As such, it is incumbent upon you in the member firm community to carefully consider the qualifications of all candidates -- be they nominated by FINRA's Nominating Committee or by petition.  Just as I have seen far too many cronies foisted upon us by FINRA's official slate, I have also seen far too many nominees hand-picked by other industry factions and those individuals were equally lacking in credentials and temperament.  Don't just check off "yes" on any ballot.  Ask the tough questions of everyone.


Dissident/Reform candidates must aspire to the same ethical standards that we would impose upon all candidates.  Just as we in the Dissident/Reform Movement abhor the opacity of FINRA's nominating process, we must offer only nominees who can demonstrate that they were competitively chosen in an open and free process replete with nominating petitions, ballots, and fully disclosed results.  Hand-picked candidates, be they by FINRA or others, are unacceptable.


For my part, if nominated, I will not run; if elected, I will not serve.


I will tirelessly work to further credible proponents of intelligent, pragmatic FINRA reform.  I will not support those who foolishly espouse the abolition of all regulation - that is moronic.  I will not support those who run for elective office simply to promote their own businesses or to gain an advantage over their industry competitors -- we have had enough of such folks.  Now is the time to inject new blood and new ideas into FINRA. 


All FINRA Dissidents and Reformers must join together to take back control of FINRA.  That is the process.  The goal is to institute comprehensive, meaningful regulatory reform that will benefit the investing public and all industry participants.




Bill Singer


The annual meeting of FINRA firms will take place on or about Monday, August 2, 2010, to elect individuals to fill the seven Elected Governor seats on the FINRA Board of Governors (FINRA Board). http://www.finra.org/Industry/Regulation/Notices/2010/P121377 .

There are

  • three (3) Small Firm Governor seats,
  • one (1) Mid-Size Firm Governor seat, and
  • three (3) Large Firm Governor seats up for election.

Alas, I've seen the lists of the official nominees.  I despair. http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p121378.pdf 

Like some frightening Boys from Brazil, the FINRA nominating committees have gone back to the same gene pool that produces the same lookalike, soundalike offspring from the same trade groups and member firms.  In times that demand a shift into forward or reverse, we will be stuck in neutral with an idling engine.

If now is not the time for substantive, meaningful change on Wall Street, then when is? 

Incompetent regulation and inept regulators must be replaced by progressive, pragmatic policies and executives who will prevent a recurrence of the recent industry debacle.  Now is the time for your voice to be heard at FINRA. 

Organize!  Mobilize!! Nominate Your Own Independent Candidates!!!

Here are the steps you need to take:

FINRA Petition Process for Additional Candidates

Pursuant to Article VII, Section 10 of FINRA's By-Laws, a person who has not been nominated for election to the FINRA Board may be included on the ballot for the election of governors if:

(a) within 45 days after the date of this Election Notice, such person presents to the Secretary of FINRA petitions in support of such nomination, duly executed by at least three 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's voting member firms entitled to vote for such nominee's election;


(b) the 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 based on the information provided by the person as is reasonably necessary for the Secretary to make the certification.

As of the close of business on Monday, May 3, 2010, the number of FINRA Small Firms, was 4,324; the number of Mid-Sized Firms was 214; and the number of Large Firms was 176.

Firms may only endorse a petitioner for the same firm size seat as their own and, in the case of petitions, solely in support of a single nominee. No firm may endorse more than one such nominee. Likewise, a firm that signs a petition in support of more than one nominee may not submit a petition in support of an individual nominee. In this election, there are three separate Small Firm and three separate Large Firm seats.

The petition must identify the seat for which the petitioner is seeking to be nominated. The petitioner must submit sufficient information to determine the person's status with respect to the category for which he or she is petitioning to be nominated. The petitioner must also provide information sufficient for the Corporate Secretary to determine that the petitions are duly executed by the executive representatives of the requisite number of applicable size firm members.

Petitions must be submitted no later than Friday, June 18, 2010.

The names of persons obtaining the requisite number of valid petitions will be included on the appropriate proxy mailed to eligible firms in advance of the annual meeting.

Voting Eligibility

A proxy will be mailed, along with the notice of the annual meeting, to each eligible FINRA firm prior to the annual meeting.

Firms are eligible to vote for the nominees who are running for seats that are in the same size category as their own firm. Therefore, Small Firms and Large Firms may vote only for the candidates running for the seats reserved for their firm size, and Mid-Size Firms will likewise vote only for the Mid-Size Firm seat.

FINRA will verify the size of each firm on the day the proxies are mailed. Each firm eligible to vote will receive a proxy containing the nominees for their voting class.