(Bloomberg News) Freedom Investors Corp. president Joel Blumenschein resigned as a director at the Financial Industry Regulatory Authority after the agency sanctioned him last week for poor oversight of his company.
The resignation was first reported by The Wall Street Journal and confirmed by Finra spokeswoman Nancy Condon. Blumenschein was elected to the 22-member board of directors in 2010.
In a settlement with Blumenschein, Finra said the supervisory system at Freedom Investors, a Brookfield, Wisconsin-based brokerage, was "so inadequate that Blumenschein was unable to provide a consistent or coherent description of it."
"His testimony, under oath, was at times both evasive and contradictory, thus highlighting the system's inadequacies," the agency said in the settlement.
In a telephone interview, Blumenschein said he couldn't discuss the details of the settlement. He said he resigned to ensure that his case didn't have an impact on the board.
"Obviously there has been a large question of the integrity of the board and I believe that was wrong," he said. "There are very honorable people on the board so I stepped down for the betterment of the board."
As part of the settlement, Blumenschein agreed to a three- month suspension from supervisory work at the firm and a $30,000 fine. The company also hired an outside consultant to provide a report to Finra on how the firm has overhauled its systems.
Finra is a self-regulatory agency for the brokerage industry, overseeing more than 4,000 firms.