Upcoming Elections for FINRA Committee

Chip Jones, FINRA’s Senior Vice President
Chip Jones, FINRA’s Senior Vice President

FINRA, the Financial Industry Regulatory Authority, will soon have an election for two members of the Small Member Firm Committee.

Chip Jones is FINRA’s Senior Vice President of Member Relations and Education, and he sat down with with Wendy Lanton, Chief Compliance Officer of Lantern Investments, in the latest episode of FINRA’s on-line television show, A Few Minutes with FINRA.

Lantern Investments, which is headquartered in New York, is a broker/dealer, Lanton noted, which provides a variety of trading and investment strategies to retail clients.

Lanton noted she is also the Chair of FINRA’s Small Firm Advisory Committee (SFAC).

Though Lantern Investments is considered a small firm, Lanton noted that her firm has thirteen offices nationwide.

Lanton noted that the committee is made up of ten people from small broker/dealer firms and also three members of FINRA.

Of the ten firms, five are chosen by FINRA while the other are voted on by eligible members. The elected members are done geographically.

Jones then noted that in August FINRA announced the upcoming elections of two regions of the Small Member Firm Committee.

On August 19, 2018, FINRA announced the upcoming election for two regions: The North and West Regions.

Wendy Lanton, Chief Compliance Officer of Lantern Investments
Wendy Lanton, Chief Compliance Officer of Lantern Investments

“The SFAC provides guidance to FINRA staff, particularly regarding the potential impact of proposed regulatory initiatives on FINRA’s small firms.” FINRA noted at the time of the announcement. “The SFAC meets five times a year, primarily in Washington, DC, prior to each FINRA Board of Governors meeting. SFAC members are expected to attend SFAC meetings in-person and may be requested to attend certain regional meetings or other FINRA meetings. Potential candidates should ensure that their other commitments will allow for their in-person attendance at all SFAC meetings.

“Any eligible candidate wishing to have his or her name added to the ballot must submit the relevant information via the candidate profile form to the Corporate Secretary of FINRA no later than Friday, September 28, 2018. The candidate profile form is available online at www.finra.org/notices/SFACElection/082918 and as an attachment to this Notice.

“On or about Tuesday, October 16, 2018, FINRA will mail the official Election Notice and ballots to the executive representatives of small firms in the North and West Regions. Voting will conclude in November 2018. The newly elected North and West Region representatives will take office in January 2019.”

Lanton noted that the SFAC specifically contributed to affecting a FINRA rule recently: The Continued Membership Application process was proposed to be changed and Lanton noted the committee believed it was “too difficult to navigate” and FINRA “tweaked things a little bit,” as a result.

Lanton also said the SFAC which has been lobbying Congress to get exemptions from certain auditing requirements.

“Several years ago, it was mandated that small firms get PCAOB accounting firms to do their auditing. Audit prices went through the roof and small firms were left scrambling to find a PCAOB firm they could afford,” Lanton told Jones.

PCAOBPCAOB stands for Public Company Accounting Oversight Board and such audits, Lanton noted, were time consuming and expensive and so small broker/dealers, along with some of the SFAC, have been lobbying Congress for an exemption.

Indeed, earlier this week, the House Financial Services Committee passed the Small Business Audit Correction Act, which would do just that.

Lanton also noted that the SFAC has created a sub-committee to study and provide ideas to resolve unpaid arbitration awards.

FINRA is a self-regulatory organization (SRO) and is a regulator to firms which trade on the NYSE/NASDAQ.