In a highly unusual runoff for a seat on Finra’s board of governors, challenger Jim Nagengast, CEO of Securities America, beat Finra’s handpicked candidate Shelley O’Connor, co-head of wealth management at Morgan Stanley. Nagengast won during a special vote Finra called for a seat on the board representing large firms.

Nagengast announced he was challenging Finra’s nominee for the seat in May. He will fill the large-firm board seat left by Stephen Cutler, former general counsel and vice chairman of J.P. Morgan Chase & Co.

While outside nominations for Finra’s board of governors are rare, the Financial Services Institute (FSI) flexed its ever-increasing muscle to help Nagengast collect sufficient petition signatures from large firms to be on the official ballot.

Dale Brown, FSI’s president and CEO, also sent a message to all the institute’s members Wednesday before the election, encouraging them to vote for Nagengast. "Jim's vision, integrity and experience will help Finra in all aspects of its critical work," Brown said. "We strongly urge all large firms to vote for Jim—he will be a tremendous representative for our industry."

The election of Nagengast to Finra’s board gives FSI and its membership of 100 independent broker-dealers and advisory firms critical clout in shaping the future direction of regulation. FSI’s membership includes 160,000-plus affiliated brokers and advisors, who account for over 60% of all producing registered reps.

Securities America is the 10th largest independent investment advisory and brokerage firm in the country.

Nagengast chaired FSI’s 2012 national conference, and Richard Lampen, CEO and president of Ladenburg Thalmann, Securities America’s parent company, previously served on FSI’s board of directors.

“We were proud to endorse Jim and work with him and his team to help him win this election and shape Finra’s future for the better,” Brown said. “Working through FSI, independent financial services firms are growing their representation and effectiveness with regulators and elected officials, [pursuing] our model of success through constructive engagement.”

Nagengast joined two other leaders of independent broker-dealers on the Finra board. They are Brian Kovack, president of Kovack Securities, and Amy Webber, CEO of Cambridge Investment Research Inc.

“Finra will benefit from Jim’s industry knowledge and experience as we work to advance our mission of protecting investors and ensuring the integrity of our markets,” said Finra Chairman Bill Heyman. “We look forward to working with him.”

Nagengast joined Securities America in 1994 and became CEO in 2010. During his tenure, he served as chief financial officer, chief operating officer and president of the broker-dealer, and he is responsible for directing most departments throughout the firm.

Before that he worked as an analyst for Merrill Lynch Capital Markets and as a consultant for Marakon Associates. He is also a former member of the adjunct faculty at the University of Nebraska at Omaha and holds an AB in economics from Harvard University, and an MBA in accounting and finance from Columbia University.

Finra is overseen by a 24-person board of governors, the majority of whom are public. The 10 industry governors include three from large firms, one from medium-size firms, three from small firms, one floor member, one independent dealer/insurance affiliate and one investment company affiliate. Finra governors are appointed or elected to three-year terms and may not serve more than two consecutive terms.