Reformers Win Seats on FINRA Board

Reformers Win Seats on FINRA Board

The Financial Industry Regulatory Authority’s board of governors seats reserved for small and mid-sized firms have been filled with two broker/dealer owners seeking to reduce the burdens the regulator places on smaller firms. 

Joe Romano, president of Chicago-area Romano Wealth Management and Brian Kovack, president and co-founder of Fort Lauderdale-based Kovack Securities, were selected to fill the open small and mid-sized firm seats on the board. Running unopposed, John Thiel, head of Merrill Lynch Welath Management, will also assume a seat on the board.

“I welcome our newly elected Governors, John, Brian and Joe. They bring valuable perspectives and a keen understanding of the securities industry to FINRA's Board,” Richard Ketchum, FINRA Chairman and CEO, said in a statement Thursday.

Kovack and Romano, both owners of brokerages, campaigned to be elected with a similar messages: Stop antagonizing smaller firms. Kovack believes FINRA needs to become more effective in protecting customers and preserving market integrity “without unnecessarily antagonizing member firms who are just trying to do the right thing.

Romano said he is looking to reform the regulator’s exam process with his bid for the small firm seat. “Susan Axelrod, who heads up examinations, has said they’re moving more toward a risk-based process where they want to get the big things, rather than the little slap-on-the-wrist things. Unfortunately, in reality that just has not translated down to the examiners on the front line. That’s a problem,” Romano says. 

Both ran as “petition candidates” (Kovack calls himself a “dissident” candidate.) FINRA’s nominating committee, a subset of the current board, usually hand picks one individual for each seat. Unless another member petitions to get on the ballot, it's more like an unopposed appointment. 

Unlike FINRA's hand-picked candidates, these members needed to petition other firms, in some cases hundreds of other firms, to even appear on the ballot. In FINRA's way of choosing its oversight board, a nominating committee selects a single individual for each open seat; any member that wants to contest that selection, or feels the regulator is not representing the interests of its members, needs to lobby other firms to be included in the vote. 

Wall Street’s self-regulator is overseen by a 24-person Board of Governors, with 13 seats held by public governors and 10 by industry governors. Ketchum has the remaining seat. FINRA governors are appointed or elected to three-year terms and may not serve more than two consecutive terms.

In addition to Kovack, Romano and Theil’s elections, FINRA also appointed two additional governors to its board on Thursday. Kathleen A. Murphy, president of Personal Investing (a Fidelity Investments company), was appointed as an industry governor; and Randal K. Quarles, managing partner and co-founder of the Cynosure Group, was appointed as a public governor.

TAGS: Industry
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