The Blog Of The Securities Industry Professional Association

The $35,000 question?

A vote for Bandes, Blumenschein and Norensberg could impact your wallet

As Broker Dealers struggle daily to stay in business the idea of FINRA fees being doubled shortly brought on a chorus of calls from members asking the dissident candidates to try and repeal them. The Members have taken it hard on the chin over the last few years while FINRA fat cats make millions. In an exclusive interview with the candidates, all three have decided that Fee increases are insulting when in fact the top brass at FINRA is making tens of millions each year. In fact, in 2008 alone the top 15 members of FINRA received compensation of approximately 30 million dollars….30 million! Click on this link to view the actual tax return filed by FINRA and bare in mind that in addition to this disclosed compensation, FINRA is refusing to disclose additional payments made to the out going CEO and other Executives. This is supposed to be a non profit organization isn’t it?

While the small firm worries about how they are going to pay for the next annual audit the enclosed tax return indicates that “$20,000 a year for health Cubs will be expensed to you the member”. I’m still trying to figure out why any of these millionaires need an extra $20,000 of your money so they can have a nice health club and a car and driver in multiple cities. Read the returns and try not to throw up.

While a reduction of regulatory fees is a nice start, in our discussion all three candidates believed that the financial strengthening of all firms would be good not only for owners but for the investing public as well. The Net Capital requirement of 5k has been in debate for many years and although it has not been raised, FINRA now has the authority to declare that certain items are a potential contingent liability and force you to put up additional capital or be closed down. All three candidates believe there should be a set standard that both the Certified Public Accounting Board uses as well as the SEC. Having a 24 year old examiner declare a contingent liability when a PCAOB accountant for 25 years disagrees tells me there needs to be an agreed upon status. All three will immediately fight to make a clear and precise standard for firms and examiners to follow.

By now some of you must be wondering about the $35,000 figure in the title of this article so without further delay here are the facts. As you know, $35,000 was the maximum amount that FINRA claimed the IRS would permit members firms to receive in the ill fated NASD/ NYSE merger in 2007. That letter has never been published because FINRA has it under seal and on your proxy right now there are several demands to make the actual amount that could have been paid disclosed to everyone and not just attorneys and me. The fact of the matter is that the amount has been disclosed in court and the actual figure that could have been paid was in the range of $70,000 to as much as $110,000. Click here for actual court record and scroll to the highlighted area.

With this in mind all three candidates have agreed that upon being voted onto the board their first order of business will be to immediately demand the board to distribute a minimum of $35,000 in funds to all member firms of record. In addition, the candidates believe that if a higher payment is possible, that the funds above that also be immediately distributed to the member owners. This is your money not the regulators and in case you missed it, the Investment Committee which is responsible for overseeing over 1.5 billion dollars LOST 600 Million dollars of your money in 2008 alone by investing in ‘undisclosed Hedge Funds”. Once again, -click here for full complaint-

At the current burn rate FINRA will be bankrupt in three years and will be asking for TARP money as well so wouldn’t it make sense to get your money out now before it’s wasted on outrageous salaries and investments in risky unknown hedge funds? In addition, if the money is distributed to members then a rational discussion on Net Capital increases can occur. Imagine if the consensus agrees that the new minimum net capital for all firms will be 25k and you are given back $50k from FINRA? You can use half of your payment to fund your firm and show a stronger balance sheet (which will be great for the investing public to see) and at the same time you can use the balance to grow, invest or maybe just retire. The key is that it’s YOUR money not the Regulators. You are a shareholder and its time to reap your rewards and dividend before it’s too late. All three candidates will fight from day one to get you your rightful money and will bring transparency to you regarding those on the board who are trying to stop you from getting YOUR money. Vote for Bandes , Blumenschein and Norensberg today before its too late. It’s a simple question: Do you want an additional $35-50k of your money sent to you? The only chance you have of that happening is to vote for the dissident ticket that you the members nominated and they will fight from day one to get you your money

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July 26th, 2010


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