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Jan 25, 2010 3:11 pm


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An irreverent Wall Street Blog
by Bill Singer


Blog Home | Past Entries

The Great Debate: FINRA

Written: January 25, 2010

My recent blog entry FINRA Fires (Streamlines) Five Regulators certainly touched some nerves and elicited quite a bit of email. That’s good because it shows that I continue to raise provocative, relevant issues.

Among the issues that some readers and I debated, were my contentions that

FINRA is overpaying some of its executives, FINRA’s CEO should not be permitted to serve on public company Boards, Service on public Boards should not be a sinecure that undermines corporate-governance reform,   Regulatory organizations should not be investing in risky securities,  The promised NYSE-NASD consolidation is taking too long,  FINRA should be broken up into smaller, more nimble regulatory organizations, and  FINRA’s recently announced layoffs are counter-productive.

Below, I present one ongoing email thread with a reader who requests anonymity.  While we do not a agree on a number of issues, I believe that the debate is interesting and fairly presents the considerations on both sides of several divides. Note, I have edited to preserve anonymity and confidences.



READER: Bill, I normally agree with much of what you say. Some of the things that you said in the recent BrokeAndBroker Blog on FINRA don’t make much sense to me and I thought it incumbent of me to mention them.

Paying senior people decent salaries does not offend me. They shouldn’t get paid much less in a loss year than in a gain year so long as their mission is not to produce profits. You may argue that based upon their competencies or the fact that they don’t have business risk that they should earn less than people in the private sector. I accept that argument. If FINRA doesn’t pay people fair and reasonable compensation, the only people that will attract are incompetents or people who would work there for the glory of it or who are independently wealthy.

BILL SINGER: I am all in favor of getting paid as much as you can. Nonetheless, to be paying the SEC Chair $162,000 per annum but paying that same individual nearly $3 million at FINRA does suggest something amiss in these days – particularly given the atrocious record of FINRA under Mary Schapiro’s stewardship. Moreover, given her FINRA salary, I find it reprehensible that a regulator would have sufficient time to sit on two public and one private board – and to do so in a compensated manner! Either she abused her position at FINRA by not allocating sufficient time to the self-regulator or she abused the concept of fair governance by taking money from public companies for services not commensurate with her fees. More to the point, FINRA may have saved some $30 million through early-retirement and the recent layoffs; however, did it first eliminate its asinine advertising campaign, its effort to supplant the CFP Board as the new RIA/Financial Planning self-regulatory organization, and its million dollar lobbying campaign? Finally, you forget that I was a regulator at both the AMEX and NASD – under no circumstances have I ever suggested that the rank-and-file of regulators are over-paid. This is purely a shot at senior management. . .