Not too long ago, I posted a blog complaining that FINRA’s Nominating Committee had basically abdicated its responsibility to identify suitable candidates for certain seats on FINRA’s Board. Perhaps not surprisingly, I never heard – from anyone, but least of all FINRA itself – why the Nominating Committee had punted. But, I put my head down and went on with my life, such as it is these days, content merely – as my law school professors would say – to have spotted the issue.
Until yesterday. Yesterday I got my weekly email from FINRA announcing the results of elections to fill seats on certain Regional Committees, the Small Firm Advisory Committee (SFAC), and the National Adjudicatory Council (NAC). The email had a link to the December 15 Election Notice, so, cleverly, I checked that out.
According to that Notice, in five of FINRA’s Districts, specifically, District 1 (San Francisco), District 3 (Denver), District 5 (New Orleans), District 6 (Dallas), and District 10 (New York) – there were still empty seats after the election. Seats for which, according to the Notice, “appointees [were] being identified.” Huh? That is really odd. Helpfully, there was a footnote in the Notice, and it explained that “[i]ndividuals are being identified for appointment to the Regional Committee seats for which no individuals self-nominated.” In other words, no one wanted the job.
In addition, the Notice reported that while someone appeared to have won election for the Midwest Region seat on the SFAC, in fact, that was not the case; indeed, there was no election. According to a footnote, “[n]ormally, the SFAC Midwest seat is an elected position; however, since no candidates came forward to run for election for this seat, FINRA filled this vacancy by appointment.”
Finally, in two of the so-called elections – for the two Large Firm NAC Member seats and the one Small Firm NAC member seat – while (yay) there were actual nominees for those seats, the races “were uncontested,” so FINRA didn’t bother actually to mail ballots to anyone and simply appointed the nominees.
I don’t know about you, but I find all of this extremely concerning. Not just for FINRA, but for the industry, and its future. What does it mean when no one is interested enough to bother to serve on a FINRA committee? It was NEVER like this back in the day. There was always a surplus of qualified candidates eager to serve on the committees; indeed, it was often a challenge for the nominating committee to winnow down the candidates to a manageable number. Not anymore, apparently.
I think the obvious and easy answer to my question is simply that no one wants to waste their time doing something that is pointless. Or thankless. Or will do nothing other than cause you frustration and aggravation. FINRA is, of course, a self-regulatory organization, meaning that, by statute, it exists at the pleasure of the industry members whom it regulates. But, no one really believes that anymore. No one believes that FINRA is truly interested in serving its member firms. To the contrary, the commonly held view is that FINRA doesn’t much care for its members, particularly small firms (who still comprise a majority of FINRA’s membership). And it demonstrates this in the often heavy-handed manner in which it runs its Enforcement program. Or by passing onerous and complex rules that are difficult and expensive to comply with, especially by small firms. Or by listening more closely to the concerns of lawyers whose job it is to sue broker-dealers than to BDs themselves.
What this means, in short, is that industry members know that their voices are not being heard by FINRA management, so what’s the point? And that’s a terrible shame. I have encouraged many people over the years to volunteer to serve on FINRA committees, particularly a national committee like the NAC. And the reason I do so is that I believe that change needs to come from within FINRA, from the industry people who sit on committees, and can provide real-world perspectives to the non-industry people on those same committees. If industry people have concluded that it doesn’t really matter what they think, or what they say, because FINRA is simply going to do what FINRA is going to do, then the future is bleak indeed.
