Finra's board of governors has agreed to take action on three of seven proxy proposals approved by members in August.
In an e-mail message sent to member firms last Tuesday, Finra chief executive Richard Ketchum said the regulator will be disclosing its executives' pay on a timelier basis, offering more disclosures about Finra board actions, and publishing the names of the money management firms that it hires to manage its portfolio.
Those actions were among the seven proxy items put forth by Amerivet Securities Inc. and overwhelmingly approved by the
Financial Industry Regulatory Authority Inc.'s broker-dealer firms.
Mr. Ketchum said Finra will not be acting on the remaining four proxy items: giving members a “say on pay” for top Finra officials, conducting an inquiry into any potential involvement by Finra board members with the Bernard Madoff firms, creating an independent inspector general and releasing an
Internal Revenue Service opinion letter concerning NASD's $35,000 payment to members following its 2007 merger with the regulatory arm of the
New York Stock Exchange.
SAY-ON-PAY
The say-on-pay proposal had the “potential to create the perception that regulated entities had the power to improperly intimidate regulatory staff,” he wrote.
Mr. Ketchum gave Finra's rationale for rejecting the other proxy items approved by members at its meeting this month:
• The question of any potential ties between Finra officials and Madoff firms was reviewed last year by a Finra committee.
• An inspector general for Finra isn't needed, as the organization is overseen by the Securities and Exchange Commission.
• The IRS letter was subject to seal by a federal court, and so would remain private. Board members were briefed about the letter by Finra attorneys prior to making the decision not to release it, Mr. Ketchum wrote.
He wrote that although Finra rejected making board minutes public, arguing that it would “affect the candor of board discussions,” the authority will publish on its website the “rulemaking items discussed and decisions the board has reached on new rules.”
Amerivet's attorneys dismissed Finra's response as an “illusory change.”
AMERIVET CRITICISM
Finra's board “ignored the mandate of its members and did not grant even one of the reforms as proposed,” Amerivet's attorney Jonathan Cuneo, founding member of Cuneo Gilbert & LaDuca LLP, said in a statement.
“Amerivet will continue to fight for reform at Finra through the judicial system and by sponsorship of reform proposals,” he said.
Finra spokeswoman Nancy Condon wasn't available for comment.
But true to its promise to disclose executive pay on a timelier basis, last Friday, Finra published its 2009 annual report, which for the first time disclosed executive compensation.
In the past, executive pay was disclosed only in Finra's public tax returns, which are filed later than its annual report.
E-mail Dan Jamieson at [email protected].
