Jim Nagengast, Securities America CEO, wins Finra board seat

He prevails over a candidate backed by Finra's board to fill one of three large-firm positions.

Jim Nagengast, chief executive of Securities America Financial Corp., won a seat on the Finra board in a special election Thursday.

Mr. Nagengast will fill one of the three seats on the Financial Industry Regulatory Authority Inc. board that are reserved for representatives of large firms. He prevailed over Shelley O’Connor, co-head of wealth management at Morgan Stanley.

Mr. Nagengast will replace Stephen Cutler, former general counsel and vice chairman of JPMorgan Chase & Co., who resigned from JPMorgan and the Finra board earlier this year to join the law firm Simpson Thacher & Bartlett.

The race was decided at a special meeting of Finra large-firm members.

Mr. Nagengast, who was nominated by petition, won in an upset over Ms. O’Connor, who had been tapped by the Finra board’s nominating committee.

“The fact that the Finra board-backed candidate lost the election may mean that Finra doesn’t have its finger on the pulse of industry sentiment,” said Ben Edwards, associate professor of law at the University of Nevada-Las Vegas.

A Finra spokesman declined to comment.

Finra elections are most often contested for the three seats reserved for small firm representatives, although there are occasionally competitive races for large-firm seats and the seat for medium-size firms.

The Financial Services Institute, which represents independent broker-dealers and financial advisers, endorsed Mr. Nagengast.

FSI helped Brian Kovack, president of Kovack Securities, win a write-in campaign for the Finra board in 2015. Another leader of an IBD, Amy Webber, CEO of Cambridge Investment Research Inc., also serves on the Finra board.

“We were proud to endorse Jim and work with him and his team to help him win this election and shape Finra’s future for the better,” FSI president and chief executive Dale Brown said in a statement. “Working through FSI, independent financial services firms are growing their representation and effectiveness with regulators and elected officials … through constructive engagement.”

Finra’s board has been criticized in the past for operating with too little transparency. Over the past year, the organization has posted more information about the body on its website and is considering other governance reforms as part of its Finra 360 self-examination.

Most Finra board decisions are reached by consensus, according to board members who spoke at Finra’s annual conference in Washington in May.

The body is comprised of 24 members — 10 of whom are industry members and 13 public members. Finra chief executive Robert W. Cook also sits on the board.

“Finra will benefit from Jim’s industry knowledge and experience as we work to advance our mission of protecting investors and ensuring the integrity of our markets,” Finra chairman William H. Heyman, vice chairman and chief investment officer at the Travelers Companies Inc., said in a statement.

Mr. Nagengast has worked at Securities America, an Omaha, Neb., independent broker-dealer, since 1994 and has served as its CEO since 2010.