[by Howard Haykin] FINRA issued on Friday, 5/11, its annual notice for the Upcoming FINRA Board of Governors Elections.  Controversy overhangs this year's election of a Governor to represent Small FINRA Member Firms, which is scheduled to take place during the annual meeting of FINRA firms on or about Monday, 8/13/12. All told, three Governors will be elected - one each to represent the Small FINRA Member Firms, the Mid-Size Member Firms and the Large Member firms.  A formal notice of the meeting, including the precise date, time and location, will be mailed to executive representatives in early July. 2012 Controversy. The 2012 elections take place soon after a Governor representing the small firms stepped down under pressure.  Joe Blumenschein, president of Freedom Investors Corp. of Brookfield, WI, and the Small Firm Governor whose term of office was set to expire in August 2012, recently resigned under pressure after he had agreed to accept disciplinary action - $30K fine, 3-month suspension - to settle FINRA charges that he had failed to adequately carry out supervisory responsibilities at his member firm.  This was an unprecedented event. A second controversy is the fact that the FINRA Nominating Committee opted not to designate a Candidate for the open Small Firm Governor seat.  At least 2 factors played into the decision:  (i) in recent years, these elections have been marked by a high level of contentious debate;  (ii)  in at least the last 2 elections, a write-in candidate has defeated the candidate nominated by the FINRA Nominated Committee - so why bother selecting another candidate, if this is the direction that these elections are likely to follow. Nominees for the Governor Seats. In the current Election Notice, FINRA introduces the candidates nominated by the Nominating Committee.  FINRA By-Laws further permit eligible individuals who have not been nominated for election to the FINRA Board by the Nominating Committee to be included on the ballot for the election of governors by following the petition procedures set forth in the By-Laws and as further described in this Election Notice.By-Laws and as further described in this Election Notice. Composition of the Board. The FINRA Board consists of 22 members, including:

• the CEO of FINRA - presently Richard 'Rick' Ketchum;
• 11 Public Governors;
• 1  Floor Member Governor;
• 1  Independent Dealer/Insurance Affiliate Governor;
• 1  Investment Company Affiliate Governor;
• 3 Small Firm Governors;
• 1 Mid-Size Firm Governor; and
• 3 Large Firm Governors.

Nominated Candidates. The following individuals were nominated by FINRA's Nominated Committee - Profiles of the nominees are attached in the Election Notice:  

• Large Firm Governor: Seth Waugh, CEO, Deutsche Bank Americas.
• Mid-Size Firm Governor: Dennis Ferguson, EVP and Director of Clearing, Sterne, Agee & Leech, Inc.
• Small Firm Governor: No Selection Made.

No Small Firm Governor Nominee. The Committee determined for 2012 that it would not select a nominee for this category.  Instead, any eligible candidates who obtain the requisite number of petitions will be included on the ballot.  A link to the Election Notice is provided at the end of this post.

FINRA Staff Contacts. Direct questions to:   Marcia Asquith, SVP and Corporate Secretary - (202) 728-8949; or  Grant Callery, EVP and General Counsel - (202) 728-8285. For further details on how to petition candidates for the Governor Seats, and for other details, go to:   [FINRA Election Notice, 5/11/12].