James Nagengast, CEO of Securities America Inc., is challening the Financial Industry Regulatory Authority Inc.'s hand-picked nominee for a seat on the regulatory body's board of governors.
Both Mr. Nagengast and Finra's choice for the seat, Shelley O'Connor, co-head of wealth management at Morgan Stanley, are vying to fill the vacancy left by Stephen Cutler, former general counsel and vice chairman of JP Morgan Chase & Co. Mr. Cutler resigned from JP Morgan and the Finra board earlier this year to join the law firm of Simpson Thacher & Bartlett.
In an election notice Monday, Finra said that a special meeting of large firms would be held on June 28 for the election.
Outside nominees for a Finra board of governors' seat are unusual as the board's nominating committee selects candidates for those positions.
On Wednesday, the Financial Services Institute, a trade group representing IBDs, endorsed Mr. Nagengast.
"Jim's vision, integrity and experience will help Finra in all aspects of its critical work," said Dale Brown, FSI's CEO, in a statement. "We strongly urge all large firms to vote for Jim — he will be a tremendous representative for our industry."
In May, Mr. Nagengast received sufficient petition signatures from several large firms to be on the official ballot, according to FSI.
If he wins, Mr. Nagengast would be joining two other leaders of an independent broker-dealer on the Finra board. They are Brian Kovack, president of Kovack Securities, and Amy Webber, CEO of Cambridge Investment Research Inc.
Mr. Nagengast was not available on Wednesday to comment.
The 24-person Finra board is comprised of 12 public governors; 10 governors from the financial services industry; chairman William Heyman, vice chairman and chief investment officer of The Travelers Companies Inc.; and Finra CEO Robert W. Cook.
Of the industry members, three represent large firms, three are from small firms and one is from a medium-size firm. Other industry members include a New York Stock Exchange floor member, an independent dealer and insurance firm and one money management company.
Board terms last for three years.