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by Bill Singer Subscribe to RSS Feed: Blog Home | Past Entries FINRA's CEO Search Stumbles at the Gate Written: January 27, 2009

By Bill Singer

http://RRBDLaw.com

http://BrokeAndBroker.com

 

Please see earlier blog http://www.brokeandbroker.com/index.php?a=blog&id=115 for context of this entry.

In response to yesterday's blog posting about FINRA's non-disclosure of the names of the members of the search committee charged with finding a replacement for departed CEO Mary Schapiro, some readers suggested that such "secrecy" was not only understandable but in keeping with the self-regulatory organization's past.  For the record, I do not believe that non-disclosure of the names and affiliations of members of the search committee is "understandable," and it is certainly not part of the regulator's tradition--if anything, it is part of a worrisome trend by too many politicians and regulators to keep us in the dark and uninformed. The spinning of public disclosure has become an art form in which once volunteered substantive facts are now replaced by evasive references lacking in substance and whose only purpose seems to be to further what I view as inappropriate, private deliberations behind closed doors.  Am I paranoid? Perhaps.  But you tell me--what other reason is there for FINRA's most recent hide-and-seek press release?

To reiterate, on January 23, 2009, FINRA posted a press release entitled FINRA Board of Governors Launches Search to Replace Schapiro; Stephen Luparello to Serve as Interim FINRA / CEO Board Also to Act to Fill Two Board of Governors Vacancies. http://www.finra.org/Newsroom/NewsReleases/2009/P117753 In pertinent part, we the investing public and industry are not informed as to who is on the search committee or what their affiliations are (or even how that committee was constituted); we are only told that

The Board of Governors of the Financial Industry Regulatory Authority (FINRA) has established a search committee to identify candidates to replace FINRA CEO Mary L. Schapiro, whose nomination to become chairman of the Securities and Exchange Commission (SEC) was approved by the U.S. Senate yesterday.

I would refer you to http://www.finra.org/Newsroom/NewsReleases/1996/P010572, which is the NASD's July 2, 1996 Press Release  entitled: NASD Chairman Tully Names Search Committee to Find Successor to Nasd President and CEO Hardiman.  In relevant part, that release stated:

The Committee is composed of seven members and includes industry, non-industry, issuer, and public representatives. Each member of the Search Committee currently serves on the NASD Board or the Boards of NASD Regulation, Inc., or The Nasdaq Stock Market, Inc. In addition to Mr. Tully, who is Chairman and Chief Executive Officer of Merrill Lynch & Co., Inc., and who will chair the Search Committee, the members of the Committee are as follows:

John H. Biggs, Chairman and Chief Executive Officer of the Teachers Insurance Annuity Association (TIAA) and the College Retirement Equity Fund (CREF) in New York. Elaine L. Chao, President and Chief Executive Officer of the United Way of America in Alexandria, Virginia, former Director of the Peace Corps, and former Deputy Secretary of the U.S. Department of Transportation. Jon S. Corzine, Chairman of Goldman, Sachs & Company in New York and Chairman of the firm's Management Committee. Richard M. DeMartini, President and Chief Operating Officer of Dean Witter Capital and member of the Management Committee of Dean Witter, Discover & Co., in New York and current Chairman of the Nasdaq Board of Directors. Robert R. Glauber, adjunct lecturer at the Center for Business and Government of the Kennedy School, Harvard University in Cambridge, Massachusetts, and former Under Secretary of the U.S. Treasury for Finance in the Bush Administration. James S. Riepe, Managing Director, member of the Management Committee and Director of T. Rowe Price Associates, Inc., a Nasdaq-listed company, and a former Chairman of the Investment Company Institute.

The 1996 Search Committee selected Frank Zarb to head NASD.  A decade later, on January 12, 2006 when Mary Schapiro was selected  to replace departing CEO Robert Glauber, FINRA released a press release http://www.finra.org/Newsroom/NewsReleases/2006/P015848 entitled: NASD Board Names Future Successor to Chairman and CEO Robert R. Glauber Effective December 2006.  I have highlighted the only reference to the search committee in that press release:

n announcing Mary's election now, the Board of Governors is acting to ensure a smooth handover in NASD's leadership as Bob Glauber prepares to step down late this year at the end of his current term," said Richard F. Brueckner, Chief Executive Officer of Pershing LLC and Presiding Governor of NASD's Board of Governors. Mr. Brueckner also served on the special Board committee charged with selecting NASD's next Chairman and CEO. The search committee was composed of a majority of non-industry members of the NASD Board.. . .

From full disclosure of the names and affiliations of each search committee member some 13 years ago, to an oblique reference ("majority of non-industry members") lacking any names three years ago, to the most recent release that merely recites the name "search committee."  I know that with the election of President Obama, "hope" is supposed to have come to America; but I'm not sure that we also bargained for "obfuscation " from our regulatory community.  What the hell are you folks at FINRA hiding that you didn't just volunteer the names and affiliations of those on the search committee?

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