Post Mortem: FINRA’s 2023 Board of Governors Election

A blog by Stephen Kohn, Chair, Financial Professionals Coalition

September 21, 2023

So, the 2023 FINRA Board of Governors Election has come and gone.  As you most likely know, both the large firm candidate and the small firm incumbent candidate have secured their seats on the board.  It has to be a hollow victory for them, considering they both ran, UNOPPOSED; hardly a contest.

To make matters worse, the impartial vendor responsible for receiving and tallying the votes, may have alerted FINRA that it appeared to them that, in the small firm “race,” there may be an insufficient number of votes to make a quorum, thereby having to declare the election invalid.

So, what is FINRA to do?  They go out and hire a proxy solicitor, to call the non-voting small firms and urge them to submit a ballot abstaining if their intent is to not vote for the incumbent; abstentions count as a vote and are thereby included as part of a quorum. 

FINRA's use of proxy solicitor to solicit abstentions in the 2023 Board election has been met with mixed reactions.  Some have praised FINRA for its efforts to increase member engagement in the election process, while more have criticized the move, arguing that it is an attempt to stifle dissent and maintain the status quo.

Actually, I buy into both of those arguments, but that ain’t the way to increase member engagement in the election process.  Draconian rules and enforcement have shown us FINRA’s true colors and destroyed the desire to have a voice, because that voice may be heard but not listened to.

There is anecdotal evidence that calls from the proxy solicitor have pointedly solicited abstentions as a way to achieve a quorum, thereby validating the election of unopposed candidates.  The fact that FINRA had to resort to use a proxy solicitor to reach a quorum at all has raised concerns among some members and observers and points to flaws in the process.  This should be a clear message to FINRA that the age-old problem of apathy and fear of retribution runs rampant in the small firm community

So, ‘FESS UP, FINRA!   How about, in the name of transparency, publish the vote count.  Let us all see if the incumbent and the large firm “winners” got more votes than the abstentions that you paid to get.  In fact, how about publishing election results for the last 10 years?

The Financial Professionals Coalition is intent on providing a voice for all of the disenfranchised Financial Professionals that are expected to blindly adhere to a business-stifling rulebook.  The Coalition is intent on providing a voice for all of the small Broker/Dealers that have been afraid of retribution if they do not participate in FINRA elections or voice opposition to “Rulemaking by Enforcement.” The Coalition has and will continue to press FINRA to the promised “Transparency” thereby giving their members some knowledge about what makes their “Master” tick.

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