Finra board member quits after sanctions
Joel Blumenschein, an industry governor for the Financial Industry Regulatory Authority Inc., is no longer on its board.
Joel Blumenschein, an industry governor for the Financial Industry Regulatory Authority Inc., is no longer on its board.
He stepped down in the wake of reports last month that he had settled failure-to-supervise charges brought by Finra enforcers in September.
“I felt it was the honorable thing to do,” Mr. Blumenschein, president of Freedom Investors Corp. of Brookfield, Wis., said last week after agreeing to a suspension as a principal for three months and a fine of $30,000.
“It’s not good for Finra if I sit there” on the board, he said.
A Finra complaint charges Mr. Blumenschein with doing nothing to intervene when a Freedom Investors broker, Gary Gossett, “made a series of unsuitable penny trades in the retirement account of a customer of limited means.”
Mr. Blumenschein was one of three small-firm candidates elected to the Finra board in 2010.
His case marks the second time that a small-firm Finra governor has left the board in the wake of regulatory proceedings.
In 2008, Richard Goble, head of North American Clearing Inc., resigned from his post after the Securities and Exchange Commission charged him with misusing customer money market funds in an attempt to keep his struggling firm afloat.
Last year, a federal judge found Mr. Goble guilty, permanently barred him from the securities industry and ordered him to pay a $7,500 fine. He has appealed that decision.
Like Mr. Blumenschein, Mr. Goble was a successful petition candidate for the Finra board.
Under Finra rules, petition candidates can challenge candidates nominated for industry seats by a Finra nominating committee.
The Finra board has 22 members, seven of them industry seats.
Finra does not plan to change the by-laws that govern elections, said spokeswoman Nancy Condon.
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