Cook, the FINRA chief, echoed that point in his speech Monday.
“A broker who has an unpaid lien because of a debt accrued due to a medical issue in her family must disclose that lien,” he said. “That event should not be treated the same as fraud or stealing money from customers.”
At least one executive from a firm identified in the Reuters analysis serves on FINRA’s 24-member Board of Governors - Brian Kovack, president of Fort Lauderdale-based Kovack Securities Inc.
Thirty-four percent of the firm’s 388 brokers have a history of FINRA flags, according to the Reuters analysis.
In a statement, Brian Kovack attributed those figures to the firm’s decision to take on a large number of new brokers from another brokerage in 2014, which prevented the firm from using its usual vetting process for new employees.
Asked why, three years later, the firm still has a high concentration of brokers with FINRA flags, Kovack said it took “considerable” time to ensure the review of new brokers’ backgrounds was “fair and transparent.”
After the review, the firm asked some advisors to leave, Kovack said, without specifying how many or the reasons they were dismissed.
Self-Regulation
FINRA is not a government agency, but rather an industry-financed “self-regulatory organization” - as FINRA puts it - that is not subject to public records laws and receives no taxpayer support.
Its annual operating budget of about $1 billion - supporting about 3,500 staffers in 16 offices - comes primarily from dues paid by member firms and individual brokers. FINRA has the power to fine, suspend and ban firms and brokers, and it can refer potentially criminal cases to the Securities and Exchange Commission (SEC).