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Couple of articles on FINRA



Finra Executives Get Big Payday

BEN PROTESS, The New York Times On Friday July 1, 2011, 11:54 am EDT

Wall Street's self-policing organization is getting richer - and so are its top executives.

Richard G. Ketchum, chairman and chief executive of the Financial Industry Regulatory Authority, earned $2.6 million in 2010, according to a new filing. His pay, which included a $1.2 million bonus, was roughly the same in 2009.

Finra, a private nonprofit organization that regulates more than 600,000 stockbrokers, upped its total compensation 9 percent last year to $540 million, as it added some 200 new employees to its ranks. The organization's top 10 executives received nearly $13 million, up from roughly $11 million the year before, the organization's annual report shows.

Finra says it offers big paydays to compete with compensation on Wall Street.

"Finra strives to have a compensation structure that is competitive with the comparable segment of the market," Mr. Ketchum said in an interview earlier this year. "We have engaged an outside consultant, Mercer, that benchmarks salaries at Finra to make sure they are competitive with that market, but not excessive."

But some brokerage firms, which pay for the watchdog's operations through fees, have complained that Finra executives are overpaid. Regulators, they argue, should not earn millions of dollars.

Finra drew particular scrutiny after awarding a previous chief executive, Mary L. Schapiro, $7.3 million in 2009, when she left the organization to become chairwoman of the Securities and Exchange Commission. That same year, a small brokerage firm in Moreno Valley, Calif., sued Finra to rein in its pay packages at a time when the regulator was losing money on bad investments.

But Finra, born out of the 2007 merger between the National Association of Securities Dealers and the New York Stock Exchange's regulatory arm, is now back in the black. The organization turned a $54.6 million profit in 2010, up 12 percent from a year earlier, according to the annual report that was filed this week. Finra lost nearly $700 million at the height of the financial crisis, as its investment portfolio soured.

Now, Finra's investments and trading revenue are driving the recent earnings growth, according to the annual report. In the aftermath of the crisis, Finra shifted its investment portfolio to a lower-risk strategy, which includes mutual funds and hedge funds.

"Financially, 2010 was a sound year overall," Mr. Ketchum said in the report.
http://finance.yahoo.com/news/Finra-Executives-Get-Big-nytimes-1320907869.html?x=0&sec=topStories&pos=4&asset=&ccode=



Thu Jun 30, 2011 8:15pm EDT

* Ketchum received $1 mln salary, $1.25 mln bonus in 2010

* Eight of top 10 officers each received more than $1 mln (Adds detail on salary, bonuses; notes Ketchum joined FINRA in March 2009)

By Joseph A. Giannone

NEW YORK, June 30 (Reuters) - Leading brokerage industry watchdog FINRA may not have the same global cachet as running the Securities and Exchange Commission, but it generates a much, much bigger paycheck.

The Financial Industry Regulatory Authority more than doubled the salary, bonus and other compensation paid to Chief Executive Richard Ketchum last year to $2.6 million, according to its annual report posted to its website on Wednesday.

Ketchum, who joined FINRA in March 2009, received $1.01 million in total compensation but no bonus that year.

Ketchum received $1 million in salary, a $1.25 million bonus and nearly $350,000 in deferred pay and other benefits last year for policing the country's securities firms and brokers.

The report also shows the former NYSE and Citigroup (C.N) executive received a $1.2 million bonus in February and is on pace to earn $1 million of salary in 2011.

FINRA bonuses are paid after the end of the year, based on performance for the previous year.

Ketchum's predecessor, Mary Schapiro, by comparison earned $165,000 last year as chairman of the SEC, which has nearly 4,000 staff and spent $755 million on salaries and expenses.

FINRA is organized as a private company, but supports the SEC by regulating securities firms and market activity. Though not a household name, FINRA is a big-time company with $1.15 billion in total revenue and 3,000 employees watching some 4,600 broker-dealer firms.

Unlike the SEC, which depends on Congress for funding, FINRA funds itself with fees, fines, investments and other revenue. As a result, it can be more generous: eight of FINRA's 10 top-paid executives received more than $1 million in salary, bonus and other compensation.

Overall compensation and benefits rose more than 9 percent last year to $540.3 million, reflecting a net increase of 200 employees. Pay for the 10 officers last year was on par with compensation for 2009.

FINRA's annual report also revealed a decline in fines assessed to $42.2 million from $47.6 million in 2009. Last year FINRA issued 1,310 new disciplinary actions, expelled 14 firms and ordered $6.2 million in restitution.

Compensation for FINRA's top officers is a sore topic among some small brokerage firms, many of which are still convinced Schapiro in 2007 short changed members when the NASD merged with NYSE Regulation to form FINRA. Schapiro, who left to lead the SEC in 2009, received $9 million for her work in 2008.

The annual report also revealed that FINRA's $1.6 billion investment portfolio generated a 6.9 percent return and contributed $50.1 million of income last year. FINRA's investments had lost nearly $500 million in 2008, prompting the company to reel in risk-taking. (Reporting by Joseph A. Giannone; editing by Matthew Lewis, Bernard Orr)

http://www.reuters.com/article/2011/07/01/finra-compensation-idUSN1E75T29120110701