The Blog Of The Securities Industry Professional Association

Small Firm Committees : a waste of members money

Is it really worth it?

After years of fighting for small members rights, we are beginning to question whether its worth it financially to continue with any of these elections nationwide. The Financial Industry Association (FIA) and later the SIPA , along with others like attorney and small firm advocate, Bill Singer of  Broke and Broker , were able to literally end the FINRA practice of having nominating committees decide who should be on the various boards across the country.  We were so proud of this development and made huge strides year in and year out to get the small firm voice heard.   Nearly every member of the small firm seats for the Board of Governors or the National Adjudicatory Council (NAC) has been a member of the SIPA and for that we are very proud of our accomplishments and we could not do it with out the loyal support of all our members.  However, has the time come to realistically ask about the giant elephant in the room that nobody wants to ask about?  What exactly has been accomplished and at what cost?

We shall first explore accomplishments.  We can do this very simply by asking a series of Yes or No questions, nothing fancy.  As you read the list just answer Yes or No in your mind.

Has regulatory burdens decreased the last 8 years?

Are there more  small firms than there were in 2008?

Have you experienced a decrease in  FINRA fees and dues since the merger?

Have examinations become more streamlined and reasonable ?

Is it easier to raise money in a investment banking deal today?

Have the burden and cost of PCAOB audits for small firms decreased?

Is it easier to expand your business and broker limit today?

Do you believe your voice as a small firm owner is viewed as important to FINRA?


Now lets explore the cost function of all these various committees that have been assembled.

District Members: There are currently 11 districts that consist of 3 FINRA members that meet Quarterly.  Thats 33 members who meet 4 times per year at hotels that are not exactly Motel 6.  However, all 33 do not meet together, instead they combine 3 districts together according to region and they meet quarterly.  Instead of 4 meetings of 33, we have 24 multiple regional meetings across the country  In addition, FINRA staff and Directors all attend these meetings and share lunch and dinner, and of course cocktails.  The cost for air, food,transportation and meals is staggering.

Small Firm Advisory Board:  This Group meets quarterly to give advice and input to the Board of FINRA.  This 12 member group meets every  quarter to advocate for the small firms in FINRA.  Thats 12 people that fly around 4 times a year with food and transportation and expensive hotels paid for by you. To date, I still have no idea what they accomplish.  I am usually told by former SFAB members that ” We stop a lot of things from being enacted” .  Still waiting on the answer as to what they stopped.  If you answered ‘NO” to all of the questions above, then you may have your answer.

National Adjudicatory Council:  Also known as the NAC, this group consist of 3 small firm members who not only meet Quarterly, but are required to attend District meetings as well.  So that’s at least 8 meetings of travel, meals hotels and transportation charges.  But here is the kicker:  Sitting members of the NAC each get paid approximately $40,000 per year to be a NAC member.

Board of Governors:  There are three small firm members on the Board that meet at least quarterly but they also make appearances at NAC and SFAB meetings as well.  Everything is paid for and they stay and have conferences at places like The Four Seasons. Travel, meals and more are included and if you fly from a certain distance your seats are 1st class.  Board members make a base of $60,000 but this can increase to as much as $75,000 depending on how many committees you serve on.

FINRA has been running at an operating loss for much of the last 8 years. Click here to see FINRA financials  and instead of letting the member’s money grow it is being used to pay for operating costs year after year. Time for your YES or NO question test on the cost of all this ‘representation”:

Do you know of a single accomplishment achieved by any of these committees?

Do you want to continue to pay higher fees for things like CRD ?

Do you want your share of the FINRA money to be spent on lavish meetings in which no cost is spared?

Do you feel like the money spent on these meetings is helping your firm?

Do you feel that this is money well spent?

Do you get a report directly from your representative on any of these levels about what was discussed, fought for or accomplished?

Do you believe the members on these committees truly care about your firm or your struggles?

Your answers are your own of course, however as these elections come up, it is a good guideline for you to discuss with candidates and elected officials.  You should ask these same questions to anyone seeking your support, and more importantly, ask them why they need to be paid with your money because its drying up quickly.  The money in the FINRA war chest which was once 1.5 billion and is now half that amount and all the interest and capital gains are used now to offset FINRA operating losses.  Eventually this well is going to run dry.








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November 7th, 2017



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