The Blog Of The Securities Industry Professional Association

FINRA ELECTION: A Matter of Trust

Who’s looking out for you?

The Ballots for the contested FINRA Board of Governor Elections are in the mail and /or in the hands of some members already. The surprise of the ballot is the inclusion of a Proxy submitted by one its members that ask for basic transparency of the organization. If you have not already made up your mind perhaps we can guide you by giving you a few questions to ask out loud before you choose.

Do you trust FINRA? It’s a simple yes or no answer that is at the heart of this election. Do you believe FINRA has YOUR best interests in mind or do they cater to a certain segment of Firms? If you believe that FINRA has shown itself to be completely trust worthy, then by all means vote for their handpicked candidates. The fact that FINRA feels it must pick candidates for you has always baffled me and others. However if you inherently trust that FINRA has your best interests in mind then vote for the candidates that they want to be your “Voice” for the years to come. Now that some of you have decided to trust FINRA whole heartedly, we would ask you to read the rest of the Proxy and to decide for yourself why FINRA is against simple requests like disclosing the total Compensation of its highest ranking employees? If you trust FINRA then you should certainly be able to rely on the fact that they would never dole out Millions of dollars behind the scenes without notifying members. Another request asks for basically a YES or NO answer on whether they invested or had certain other relationships with Madoff or his family. If you totally trust FINRA and its intentions you should want them to once and for all put this question to bed by answering the question and disclosing all relationships. Another question that needs to be addressed is the investment loss of over 600 Million dollars in 2008 by the FINRA investment committee, which incidentally, is made up of Board members that you will be voting on. That amounts to roughly one-third of all the money FINRA had in its accounts and its also money that you as a B/D owner have a share in. Once again, if you believe and trust in FINRA with all your heart I would suggest you vote YES to this as well so that FINRA can demonstrate and disclose that the investment losses were probably due to losses from investing in AAA rated bonds and CD’s. Lastly, if you trust FINRA and its motives with everything you have I would suggest that you also vote YES to the request for an independent Inspector General for FINRA. Since FINRA has nothing to hide and has always acted with the best of intentions, the private Inspector General (which incidentally the SEC has) will most likely find absolutely nothing at all and will report back that FINRA is a trust worthy organization that has no problems nor abuses or ethical conflicts. I believe that if you trust FINRA you should by all means vote for their handpicked nominees and as a show of support for FINRA you should vote YES on proxies 2-8 so all the ‘conspiracy theories’ can be put to bed and FINRA can concentrate on Investor Protection and helping small firms just like yours prosper in this difficult environment. It’s all about trust.

For those of you who for some strange reason do NOT trust FINRA…you may proceed to the next story. I have some information just

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July 15th, 2010



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