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Regulation and Compliance > Federal Regulation > FINRA

‘Dissident’ Candidate Vies for FINRA Board Seat

By Melanie Waddell

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Securities attorney Brian Kovack is aiming to outrun the Financial Industry Regulatory Authority-backed midsize firm candidate in FINRA’s upcoming Board of Governors election.

Kovack, president and co-founder of Kovack Securities Inc., in Fort Lauderdale, Florida, has been officially endorsed by the Financial Services Institute, which primarily represents independent broker-dealers. He hopes he can secure enough votes to push out competing FINRA candidate John Muschalek, vice chairman of First Southwest Co.

In June, Kovack “easily earned” more than the required number of petition signatures to be on the ballot, a “strong show of support from his fellow midsize FINRA firm members,” according to FSI.

“Having an owner of an independent firm on the FINRA Board is critical for our industry,” said Dale Brown, FSI’s president and CEO, in a statement. “Brian will bring the invaluable experience of running a family-owned firm and a track record of service and leadership in the industry to the FINRA Board.”

The election for the small, midsize and large firm board of governor seats will take place at FINRA’s July 30 board meeting.

John Thiel, head of Merrill Lynch Wealth Management, is unchallenged as the FINRA-nominated large-firm governor candidate. Vying for the small firm seat are Stephen Kohn, president and CEO of Stephen A. Kohn & Associates Ltd., and Joe Romano, president of Romano Wealth Management. Neither were nominated by FINRA.

Kovack, who’s running what he dubs a “dissident” campaign, would push for “immediate reforms” to FINRA policies in three areas — FINRA’s arbitration process, exams and U4 disclosures.

“As it stands now, reform is needed to FINRA’s arbitration process to reduce frivolous claims,” Kovack told ThinkAdvisor in an interview.

He also believes modifications need to be made to the reportable information that reps must disclose on their U4 registration form, which is available to investors on FINRA’s BrokerCheck database. For instance, there should be “de minimis exceptions” regarding disclosures of unsatisfied judgments and liens or agreements with creditors, he says.

While FINRA has made “incredible strides” in its exams of member firms, Kovack still sees room to “improve the efficiency” of the exam process. “A member firm could be involved in an exam for a year or longer.”

Kovack served on the National Association of Securities Dealers Board of Governors and the FINRA Interim Board of Governors as a midsize firm representative in 2006. He also recently completed a three-year term on the FINRA District 7 Committee, and served a one-year term on the FINRA Regulatory Advisory Committee in 2013.

In addition, he has served as a FINRA Dispute Resolution arbitrator since 2003, and in 2004 completed the FINRA Institute at Wharton program, where he earned the Certified Regulatory and Compliance Professional designation. He also maintains Series 7, 24, 27, 53, 63 and 65 licenses.

— Check out FINRA’s ‘Total Warfare’ Against Brokers in Arbitration on ThinkAdvisor.

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