‘Shocking’ FINRA elections to feature rarely contested race for large-firm rep
Brokerage shops will have a rare opportunity to weigh in on who will represent large firms at FINRA as they cast ballots for two members of the regulator’s board of governors later this month.
Chris Flint, president and CEO of ProEquities, is vying to upset former Piper Jaffray chairman and CEO Andrew Duff to take one of the large-firm slots, a rarity in what has tended to be an amicable nominating process among representatives of the heavy hitters on Wall Street.
"It's just shocking," says Bill Singer, a veteran securities attorney who runs the Broke and Broker blog. "They all go to the same restaurants, they tend to agree as to who's going to run. That's why it's shocking that this year we have a petition candidate. My jaw hit the ground when I saw it."
Less surprising is the contested race for one of the small-firm members on FINRA's board, which is pitting incumbent Robert Muh, CEO of San Francisco-based Sutter Securities, against petition candidate Linde Murphy, managing director of Argent Financial Group in San Antonio. Each is vying for the support of a subset of the broker-dealer community — one that has long complained about being overlooked and marginalized by its regulator.
"Whether intended or not, FINRA is eradicating small firms through death by a thousand cuts delivered in the form of overwhelming regulation," Murphy says in her candidate statement. "Every week, we see more small firms shut their doors while our inbox is overloaded with request for comments on additional regulations, more systems to report to, fee invoices, and more."
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Both candidates decry the underrepresentation of small firms in FINRA's affairs, and pledge to advocate for those practices as board members, which must sign off on FINRA's proposed regulations.
"There's a crisis in the financial services industry for small broker-dealers," Muh says in his candidate statement. "The largest contributing factors are the cost of compliance and for those firms that maintain a retail business, the challenges facing an introducing firm in finding and maintaining an economic clearing relationship."
FINRA's board of governors numbers 24 seats, including three representatives of small firms, one representative of midsize firms, and three representatives of large firms. Thirteen of the seats are held by public representatives, and one seat each is allotted to an independent dealer or insurance affiliate; an investment company affiliate; a floor member; and FINRA's CEO, Robert Cook.
At the other end of the ballot, Flint is mounting an insurgent candidacy around the promise of championing the interests of retail-facing firms on FINRA's board.
"I believe the best way to serve and protect retail investors is to ensure that firms focused on the delivery of financial advice are sufficiently represented on the board," Flint says in announcing his candidacy.
"Throughout my career working with independent, wirehouse, credit union and insurance-owned broker-dealers, I have heard colleagues lament the underrepresentation of their firms on the FINRA Board," Flint says. "I will focus on changing this, and I will leverage what I've learned throughout the course of my career to do so."
Flint has won the endorsements of the Financial Services Institute and the Bank Insurance and Securities Association.
Duff, Flint's opponent, sits on the board of Piper Jaffray, which has transitioned out of the retail side of the business in favor of an institutional focus.
A spokeswoman for Piper Jaffray did not immediately respond to a request for comment on the challenge to Duff's board seat.
FINRA is planning to hold the election for its board of governors Aug. 19.