Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

FINRA Owes America Answers on These Proposals

Posted by Larry Doyle on June 22, 2010 1:28 PM |

FINRA can talk about transparency and integrity all it wants. We all know talk is cheap. FINRA’s board and executives need to show America how they truly define and embrace transparency and integrity. How so?

FINRA is scheduled to hold its first Annual Meeting in almost three years on August 2nd. In anticipation of that meeting, FINRA member firm Amerivet Securities has submitted seven proposals to be included in the FINRA proxy materials. The FINRA board and executives owe their member firms, and ultimately America, the opportunity to address and then receive complete answers on each of these proposals.

As a reminder, Amerivet Securities principal Lt. Col. Elton Johnson has filed a complaint against FINRA. The complaint is embodied in my commentary from last August, “BREAKING NEWS: Amerivet Complaint Against FINRA Alleges Madoff Investment.”

As a point of interest, Lt. Col. Johnson will not be in attendance at the upcoming FINRA Annual Meeting. Why not? Well, it just so happens that Johnson will be deployed for service to the United States Army Reserve in Afghanistan at that time!

What is Amerivet requesting? What do the FINRA board and executives need to address? The following proposals are highlighted in a document submitted on behalf of Amerivet (link to full document provided at the end of this commentary):

Proxy Proposal 1 – Disclosure of Compensation of FINRA’s Top Ten Most Highly Compensated Employees
Beginning in its 2011 Annual Report and annually thereafter, FINRA shall disclose the compensation, both direct and indirect, of its top ten most highly compensated officers. FINRA shall also disclose any and all compensation, direct or indirect, to any compensation consultants employed by FINRA and/or the Board.

Proxy Proposal 2 – Independent Study of Current and/or Former FINRA Officer and/or Director Involvement with the Madoff Family
FINRA shall commission an independent study of the dealings between present and/or former FINRA officers and directors, on the one hand, and Bernard L. Madoff, members of his family and/or their respective affiliates on the other.

Proxy Proposal 3— – Transparency of FINRA Investment Policies, Practices and Transactions
FINRA shall publicly disclose the identities of all persons it consults or does business through in connection with the investment of its assets, including all financial institutions or advisors involved in the purchase or sale of any FINRA assets of any kind including those held in any FINRA retirement plans.

Proxy Proposal 4—- FINRA Board of Governors Meetings to Be Made Public Except When Absolutely Necessary
Beginning on September 1, 2010, transcripts of all meetings of the FINRA Board of Governors and/or Committee of the Board shall be made public on FINRA’s website within 30 days following each such meeting. The Board by affirmative vote can close those portions of the meetings when non-public regulatory matters are on the agenda or to be discussed and confidentiality is warranted.

Proxy Proposal 5 – “Say on Pay” for Top Five Most Highly Compensated FINRA Employees
Beginning in 2011, at least once in each year, FINRA members shall have a non-binding vote on the compensation levels of the top five most highly compensated FINRA employees.

Proxy Proposal 6 – Creation and Employment of an Independent Private Sector Inspector General
Beginning on September 1, 2010, FINRA shall employ an independent private sector inspector general (“Inspector”) on a standing basis to investigate claims of misconduct by FINRA executives and employees or others acting on its behalf. The reports of the Inspector shall be filed with the FINRA Board of Governors, the Securities Exchange Commission, the Senate Committee on Banking and the House Committee on Financial Services.

Proxy Proposal 7 – Disclosure of IRS Correspondence Concerning $35,000 NASD Member Payment
FINRA shall immediately make available correspondence between NASD (including its lawyers, agents and employees) on the one hand, and the IRS on the other hand, concerning the regulatory consolidation of NASD and the regulatory arm of NYSE, provided that FINRA members first sign a confidentiality agreement in substantially the form posted on the website.

There you go. In light of everything our country has experienced, who in America could possibly have a problem with the transparency and integrity encompassed in these proposals? America deserves answers to these proposals. FINRA must remove the incestuous blanket it has wrapped itself in over the years. No longer can FINRA be allowed to operate as an entity described by Harry Markopolos as ‘in bed with the industry.’ These proposals will go a long way in pulling that cover back.

I call on President Obama, Treasury Secretary Geithner, Fed Chair Bernanke, SEC Chair Schapiro, Congressmen Issa, Frank, Kanjorski, Senators Dodd, Schumer, et al to compel FINRA to embrace these proposals. America deserves nothing less than total transparency, and will learn a lot in this process.

I strongly encourage those who care about our markets, our economy, and our country to review the explanatory notes supporting these proposals in the linked 9-page document (click on image below). I almost laugh when thinking that Lt. Col. Johnson’s proposals and explanatory notes run a full three pages longer than the FINRA Chairman and CEO ‘2009 Year in Review‘ highlighted here at Sense on Cents earlier this morning.


I think you may want to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook!! Thanks!!

Recent Posts