Securities Industry Commentator by Bill Singer Esq

[F]INRA encourages the involvement of its member firms and engagement with its stakeholders through its advisory and ad hoc committees, as well as the National Adjudicatory Council (NAC), Regional Committees, the FINRA Board of Governors (FINRA Board) and the FINRA Investor Education Foundation Board (Foundation Board). FINRA can combine feedback and guidance from its advisory committees and industry outreach with the input from the investing public and others representing them to enrich its regulatory programs and develop solutions that are more practical, tailored and effective. 

FINRA has 15 advisory committees that provide feedback on rule proposals, regulatory initiatives and industry issues. In addition, FINRA consults with 16 ad hoc committees created by various departments on specific subject-matter issues. The FINRA Board includes both industry and public members who offer their unique perspectives in their oversight of management in the administration of FINRA's affairs and the promotion of FINRA's goals and objectives. In addition, the Foundation Board directs the FINRA Investor Education Foundation, a non-profit foundation furthering FINRA's investor protection goals by helping empower underserved Americans with the knowledge, skills and tools to make sound financial decisions throughout life. 

FINRA conducts elections each year to fill member firm positions on its five Regional Committees, the NAC, the Small Firm Advisory Committee (SFAC) and the FINRA Board. The FINRA Board appoints the remainder of the advisory committee members and FINRA staff selects ad hoc committee members. In addition, the Foundation Board members are appointed by FINRA. 

This Notice provides: (i) an overview of each elected or appointed vacancy to be filled in 2019; (ii) a description of responsibilities for the various bodies; and (iii) a summary of how eligible individuals can become candidates for appointment or election. . . .

How I wish that I could believe so much as one word in FINRA's Special Notice. Unfortunately, year after year after year, we read the same promises of a more inclusive and more responsive self-regulatory-organization, but the results always come off more as a thin smear of plaster rather than a gut-job and rebuild -- which is what is needed. I have long argued that FINRA is run by a gerrymandered Board of Governors engineered to minimize the input of the majority of the organization's Small Member Firms. The Board used to be one-firm-one-vote but is now rigged in favor of larger firms and powerful interests. Shamefully, this purported self-regulator offers no vote to the hundreds of thousands of registered representatives who are its member firms's most valuable asset, and no vote to the millions of public investors and/or their advocates. In the end, FINRA is little more than the lap-dog of its large firms and a glorified trade group pretending to represent Wall Street's "stakeholders," whatever that term means. 

As a vocal but sincere critic of Wall Street self-regulation, as a proponent for the enfranchisement of all industry stakeholders into what I call a private-sector-regulatory-organization, as one of the founders of the NASD and then FINRA Dissident Movement, I note with bemusement that the one and only time the SRO asked me to serve in any capacity was in 2000, when former NASD Chairman Frank Zarb appointed me to the "NASD Chariman's Advisory Group," which met four times that year. As best I could tell, the main purpose of those meetings was to sit around a large conference table and eat lukewarm chicken. No . . . I have little interest at this point in my career in sitting on one of FINRA's 15 so-called "advisory" committees. Frankly, I'm content to be that lone voice in the wilderness calling upon FINRA to atone for its sins but doing so with some humor and a generous dose of sarcasm. For those of you who do wish to make a difference and re-direct the misguided voyage of FINRA, go online, fill out FINRA's "Indication of Interest in FINRA Service Form" http://www.finra.org/about/committees/indication-interest-finra-service-form and do your very best to rescue the self-regulatory-organization from those who have hijacked it. 

One last point, my criticism of FINRA's failings as an institution is not directed at either its President/Chief Executive Officer Robert Cook or its Executive Vice President/Enforcement Susan Schroeder. There is NO question in my mind -- none whatsoever -- that Cook and Schroeder are the best professionals to have held their respective titles in the history of NASD and FINRA. Did I actually write that? Wow! I'm either getting soft in my old age or those two have truly impressed me -- let's go with the latter choice. Cook and Schroeder are intelligent, thoughtful and sincere, and both have a keen sense of the competing industry forces and outside demands that buffet FINRA daily. As I often lament, however, my anger with FINRA is not based upon what the self-regulatory-organization is but with what it should be, and what it could be. With Cook and Schroeder, we have regulators capable of re-imagining and refashioning FINRA.  Your role is to politely nudge them in that direction. My role is to hector and harangue them into taking action. If you do your job, they will send you a nice thank-you note. If I do my job, they will continue to throw darts at my photo on the dartboard in their office.

• Securities Industry Commentator
• Bill Singer