The Blog Of The Securities Industry Professional Association

SIPA Members Sweep FINRA Elections!

Mandate to be sent to Board

The recent FINRA Board election was nothing less then astounding considering the fact that the SIPA members faced not only strong challenges by well known FINRA nominees but by habitual board candidates that appeared to try and dilute the dissident vote as a favor for FINRA. Much to our surprise though, the members and supporters came out in droves and quite frankly the margin of victory was nothing short of astonishing. After laying low for a couple days and evaluating the results, I have come to just one conclusion: Members are mad as hell and they are not going to take it anymore!!

The election results indicate that SIPA candidates Jed Bandes, Joel Blumenschein and Ken Norensberg received nearly twice as many votes as their competitors. This is especially impressive when you consider that Ken had to run against not one, but two candidates and still had the supporting numbers. This election was not a rejection of the FINRA candidates themselves but was clearly a rejection of anything associated with FINRA. How do I know this for sure? Well for one the numbers don’t lie and in any election of any kind that I have ever observed, a double digit victory is considered a landslide, however in this case the voting members actually voted the SIPA slate to 30 to 40 % victories and in one case over 2:1 voted for our candidate. While we would love to sit here and say it’s solely because of our outstanding candidates and devoted membership, the truth of the matter is that proxy 2 through 8 on the voting card gives a better example of what the member’s mentality is.

Proxy 2 through 8 basically received about 70% yes votes across the board and its obvious that members have had enough of FINRA, its lack of transparency and its hand picked nominees. When you lose the trust you lose votes and FINRA is no different then the Democratic Party as we are seeing right before our eyes during this election season. The members of FINRA are demanding the Board disclose to them their involvement, if any, with Madoff. They are demanding to have a voice and transparency on Executive Compensation and they want to have some sort of say on what the Board gives to outgoing executives. All three SIPA candidates voted in favor of these proxies while the FINRA nominees (save for Lisa Roth) chose not to disclose their vote. Lisa in fact voted against some of the proxies including the Madoff disclosure. The question now facing the board is where do we go from here?

The new small firm slate that will be seated at the board favors the complete disclosure of proxy 2 through 8. This coupled with a 70% of the member’s supporting the proxy presents the rest of the FINRA board with a bit of a dilemma. They have the right to not address the issues and ignore the mandate or they can fully comply with the member’s request. One of the most important disclosures being requested is to make public to all the members the complete IRS disclosure letter regarding the payment of $35,000 to members as part of the NASD/NYSE merger. Court documents indicate the actual amount that could have been paid was $75,000 to $110,000. The SIPA slate has vowed that once the document is made public they will motion to have the balance or as much as possible immediately released to the members. This in itself could prove the down fall of FINRA if it is obvious the members were lied to. On the other hand if the balance of the Board chooses to ignore the mandate, we believe a Delaware shareholder fight is likely to ensue. No other Corporation in the world could ignore 70% of its shareholders demands on its Board of Directors. Stay tuned for this and other battles as the SIPA slate gets ready to go to work for you. We’d like to thank all the members for their support, e-mails, phone calls and contributions. We would also like to remind members that the slate now works for you and if you have questions, comments and concerns contact us or the Board members directly. You put them into office and you have the power to also remove them. Unlike other trade organizations, we believe in transparency and action so if we feel the slate has gone back on their word or is not doing the things they said they would then we would lead a campaign to elect other candidates that will. Have no fear though; this slate is strong, committed and ready to speak on your behalf.

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August 18th, 2010


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