By Joseph A. Giannone
NEW YORK, Aug 13 (Reuters) - Brokers delivered a stinging rebuke to industry watchdog FINRA when they approved seven proposals from a dissident calling on the Wall Street regulator to provide more disclosure about its own finances, its investing activities and possibly internal conflicts.
More than 24 hours after its annual meeting was wrapped up on Thursday, the Financial Industry Regulatory Authority announced that an overwhelming majority of members who voted approved proposals submitted by Amerivet Securities Inc, a small California broker which last year filed a lawsuit against FINRA.
'The preliminary results are hardly a surprise given FINRA's closed door, secretive culture,' said William Anderson, Amerivet's legal counsel, in a prepared statement after the vote was released.
In a July 29 letter to FINRA members in advance of the annual meeting, Johnson said the industry regulatory failed to protect investors from the collapse of Bear Stearns and Lehman Bros, or thwart Bernard Madoff's multi-billion dollar Ponzi scheme.
The proposals, like Amerivet's lawsuit, call on FINRA to disclose its executive compensation; commission an independent study of any officer ties with Madoff; provide details on FINRA's $1.6 billion investment portfolio and public access to board meeting transcripts.
Members also approved the proposal to introduce 'say on pay' voting, the hiring of an inspector-general and the disclosure of certain 2007 correspondence with the IRS.
The proposals, which FINRA had urged members to reject, are nonbinding.
'The board of governors continually reviews FINRA's policies and practices in order to ensure they support its mission to protect investors and the integrity of our markets,' FINRA's board said. 'The board will carefully review each of the proxy proposals beginning at its next meeting.'
In his statement, Anderson urged the regulator to adopt the provisions.
'It is now up to the board to act on these initiatives,' Anderson said. 'Hopefully the board will choose to implement them promptly.'
Of the 2,317 votes tallied at midday Friday, 83 percent approved disclosure of pay for the top 10 executives, 68 percent supported a new study of FINRA ties with Bernard Madoff and 76 percent wanted to know more about FINRA's investment policies and transactions.
Seven out of 10 supported disclosure of the IRS correspondence and 71 percent approved making board meeting transcripts public.
FINRA is a private corporation that was formed by Wall Street firms to regulate the nation's 4,700 brokerages, licensing broker-dealers and enforcing the rules.
FINRA's performance as a watchdog has been criticized following the collapse of securities firms Bear Stearns and Lehman Brothers. It was slammed for its failure to catch Madoff, a former Nasdaq chairman who operated his Ponzi scheme for decades.
Amerivet also submitted proposals demanding a look at correspondence between FINRA and the Internal Revenue Service, contending the regulator could have distributed more than $35,000 per broker following the 2007 merger of the NASD and NYSE Regulation.
FINRA members on Thursday also elected seven governors, including Pershing LLC Chief Executive Richard Brueckner, Deutsche Bank Americas CEO Seth Waugh and Edward Jones Managing Partner James Weddle.
Fourteen individuals also were appointed to the board.
(Reporting by Joseph A. Giannone; Editing by Richard Chang, Bernard Orr) Keywords: FINRA/PROPOSALS (joseph.giannone@thomsonreuters.com; +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Aug 13 (Reuters) - Brokers delivered a stinging rebuke to industry watchdog FINRA when they approved seven proposals from a dissident calling on the Wall Street regulator to provide more disclosure about its own finances, its investing activities and possibly internal conflicts.
More than 24 hours after its annual meeting was wrapped up on Thursday, the Financial Industry Regulatory Authority announced that an overwhelming majority of members who voted approved proposals submitted by Amerivet Securities Inc, a small California broker which last year filed a lawsuit against FINRA.
'The preliminary results are hardly a surprise given FINRA's closed door, secretive culture,' said William Anderson, Amerivet's legal counsel, in a prepared statement after the vote was released.
In a July 29 letter to FINRA members in advance of the annual meeting, Johnson said the industry regulatory failed to protect investors from the collapse of Bear Stearns and Lehman Bros, or thwart Bernard Madoff's multi-billion dollar Ponzi scheme.
The proposals, like Amerivet's lawsuit, call on FINRA to disclose its executive compensation; commission an independent study of any officer ties with Madoff; provide details on FINRA's $1.6 billion investment portfolio and public access to board meeting transcripts.
Members also approved the proposal to introduce 'say on pay' voting, the hiring of an inspector-general and the disclosure of certain 2007 correspondence with the IRS.
The proposals, which FINRA had urged members to reject, are nonbinding.
'The board of governors continually reviews FINRA's policies and practices in order to ensure they support its mission to protect investors and the integrity of our markets,' FINRA's board said. 'The board will carefully review each of the proxy proposals beginning at its next meeting.'
In his statement, Anderson urged the regulator to adopt the provisions.
'It is now up to the board to act on these initiatives,' Anderson said. 'Hopefully the board will choose to implement them promptly.'
Of the 2,317 votes tallied at midday Friday, 83 percent approved disclosure of pay for the top 10 executives, 68 percent supported a new study of FINRA ties with Bernard Madoff and 76 percent wanted to know more about FINRA's investment policies and transactions.
Seven out of 10 supported disclosure of the IRS correspondence and 71 percent approved making board meeting transcripts public.
FINRA is a private corporation that was formed by Wall Street firms to regulate the nation's 4,700 brokerages, licensing broker-dealers and enforcing the rules.
FINRA's performance as a watchdog has been criticized following the collapse of securities firms Bear Stearns and Lehman Brothers. It was slammed for its failure to catch Madoff, a former Nasdaq chairman who operated his Ponzi scheme for decades.
Amerivet also submitted proposals demanding a look at correspondence between FINRA and the Internal Revenue Service, contending the regulator could have distributed more than $35,000 per broker following the 2007 merger of the NASD and NYSE Regulation.
FINRA members on Thursday also elected seven governors, including Pershing LLC Chief Executive Richard Brueckner, Deutsche Bank Americas CEO Seth Waugh and Edward Jones Managing Partner James Weddle.
Fourteen individuals also were appointed to the board.
(Reporting by Joseph A. Giannone; Editing by Richard Chang, Bernard Orr) Keywords: FINRA/PROPOSALS (joseph.giannone@thomsonreuters.com; +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.