On Jan. 15, the NASD announced that its membership approved 22 members for its board of governors at the group's annual meeting in Washington, D.C.
But Alan Davidson, owner of Zeus Securities in Jericho, N.Y., and president of the 100-member Independent Broker-Dealer Association (IBDA), says the majority of firms did not vote in the election. Only after repeated requests, Davidson says, did the NASD inform IBDA's attorney, Robert Beers, that 38.5% of member firms voted.
"That means 61.5% didn't bother," Davidson says, even after getting calls from the NASD's proxy solicitation firm.
Davidson earlier had instigated a boycott of the election in a campaign he termed the "Green Flu," claiming small firms were not represented.
On the election proxy, members can check a box to vote for the entire slate of nominees, or withhold authority to vote for all of the nominees. A third option is to withhold authority to vote for any individual nominee. The ballot has no spot for write-in candidates.
The NASD declined to provide this magazine with any information regarding the election results, including the number of proxies and votes received, tallies for individual nominees and the number of proxies withholding support from all of the nominees.
NASD spokesperson Bob Leahy says it's NASD policy not to disclose the number of members who voted. The SRO says only that it got a quorum--a third of its 5,500 members.
An SEC spokesperson says the agency does not know the specific results of the election, adding, "When we approved the new election procedures two to three months ago, we made sure there were protections to ensure fairness and independence." The agency declined comment on a detailed set of questions regarding the NASD's election process and the SRO's policy of not disclosing election results.
Separately, in response to a Freedom of Information Act (FOIA) request by Registered Representative, an SEC FOIA officer confirms that the agency has no information on the election results, the process used in counting ballots or ensuring the privacy of those ballots.
Last Dec. 10, Davidson sent a letter to all NASD members urging them to withhold their votes for any of the candidates. All of the candidates were chosen by the NASD's nominating committee. The most recent election was the first contest in which member firms no longer were able to nominate a representative from their districts; the district nomination process was eliminated as a result of the SEC's 1996 remedial sanctions order against the NASD.
Davidson sought to delay the election to give dissident candidates from smaller firms more time to get on the ballot. Dissidents have to gather about 160 member signatures to be listed. Davidson says members had only 30 days from the time the candidates were announced in November to get those signatures--a difficult task during the year-end holiday season, he adds.
Davidson also claims IBDA members got several calls from a proxy solicitation firm retained by the NASD. "One member had six messages," which indicates the NASD had trouble reaching a quorum, he says.
Four small broker/dealers contacted by RR confirm that they received proxy solicitation calls, but also say they were contacted only once.
The slate of candidates was nominated by the NASD National Nominating Committee, chaired by Daniel Tully, former CEO of Merrill Lynch. Committee members are: John Bachmann, Edward Jones; Thomas Hale Boggs Jr., Patton Boggs; John Chalsty, Donaldson Lufkin & Jenrette; Alfred Osborne Jr., UCLA; and Bert Roberts Jr., MCI Communications Corp.
Eight industry candidates were chosen by the nominating committee along with non-industry representatives. The smallest firm represented by the industry candidates has 137 employees. The NASD is supposed to nominate a board that's representative of its members, but Davidson claims that about 90% of NASD members have fewer than 100 reps.
The full board will consist of 27 members; five were automatically appointed, including Richard Brueckner, a managing director at Pershing/DLJ who's chairperson of the NASD's National Adjudicatory Council and four NASD staff members: Frank Zarb, NASD chairman, CEO and president; Richard Ketchum, NASD COO; Alfred Berkeley, president of Nasdaq; and Mary Schapiro, NASDR president.