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Schapiro In at SEC. New CEO for FINRA

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Jan 23, 2009 5:00 pm

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An irreverent Wall Street Blog
by Bill Singer Subscribe to RSS Feed: Blog Home | Past Entries Schapiro Confirmed: Time to Work Together Written: January 23, 2009

By Bill Singer

First off, a bit of news:

The Board of Governors of the Financial Industry Regulatory Authority (FINRA) has established a search committee to identify candidates to replace FINRA CEO Mary L. Schapiro, whose nomination to become chairman of the Securities and Exchange Commission (SEC) was approved by the U.S. Senate. Stephen Luparello, FINRA’s Senior Executive Vice President for Regulatory Operations, will serve as Interim CEO while the Board committee conducts its search for a permanent CEO. FINRA’s Board has also accepted the resignations of two Board members representing large securities firms. Robert J. MCann left the Board when he resigned recently from Merrill Lynch. Lehman Brothers’ Thomas A. Russo vacated his Board seat when his firm underwent organizational changes and, as a result, no longer qualifies as a large firm because it now has fewer than 500 brokers. The Board is expected to nominate two new large firm Board candidates in February. Following formal publication of those nominations on FINRA’s website, the more than 180 registered large firms will have the opportunity to nominate additional candidates by petition. If no additional candidates are nominated within 45 days, the Board’s nominees will take office. If additional candidates are nominated, a vote by large firms will take place in accordance with FINRA’s By-Laws.

And now for some comments, in response to the above:

Without any reservation and with full sincerity, I wish Mary Schapiro nothing the but the very best as she embarks upon her role as Chair of the Securities and Exchange Commission.  As I have been quoted stating in the press, I have great respect for Mary's intellect and accomplishments, but I harbor equally strong concerns about her failures to implement substantive reforms at NASD/FINRA and her failure to reverse the divisive legacy she inherited from her predecessor Robert Glauber.  Perhaps with less need to focus on the politics of self-regulation, Schapiro will find more time to wrestle with the daunting challenges of federal regulation.  She will need to fix much that is wrong at the SEC, much that imperils the financial safety of our markets and nation. While she and I have long disagreed on many things, now is the time for all Americans to put aside past difference for the better of our nation.  I am willing to give her a chance--not to fail (as too many are apt to say) but to succeed.    I wish her well!  

As I argued in vain, FINRA should never, ever have partitioned its Board into constituents of large and small firms because that structure seemed likely to devolve into larger versus small firms--and that prophesy has proven true.  In light of the financial failure of so many once "large" FINRA member firms, and given the likely role of smaller FINRA firms as the workhorses for any industry recovery, I would again urge that this anti-democratic allocation of Board seats be revoked and voting returned to a one-member-one-vote basis.

Finally, I urge all FINRA member firms to take an active role in the process to identify candidates to replace Mary Schapiro and to insist that the new CEO be committed to healing the wounds within our community and to implement wide-ranging reforms to restore the regulator's and our industry's integrity.

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