FINRA agrees to more disclosure on pay, rejects Madoff probe

NEW YORK (BestGrowthStock) – Wall Street watchdog FINRA said on Tuesday it would be more transparent about how it pays executives and how it manages its $1.6 billion portfolio.

But the Financial Industry Regulatory Authority rejected some of the other proposals from its broker-members, including releasing transcripts of board meetings and creating a new probe into its alleged ties with Bernard Madoff in the years before he pleaded guilty to running an estimated $65 billion Ponzi scheme.

FINRA plays an influential role policing financial markets and supervising Wall Street brokers, but it is a private company and keeps a tight lid on its activities.

FINRA will disclose compensation for its ten most highly paid employees every year and will publish the names of the money managers it hires to manage its portfolio, Chief Executive Richard G. Ketchum said in a letter posted on the FINRA web site.

The watchdog will start reporting both pieces of information with its 2009 annual financial report, due to be released later this week.

Separately on Tuesday, FINRA proposed changes to its dispute arbitration system that investor lawyers say will help customers win more cases against their brokers.

A majority of FINRA’s broker-members last month approved proposals seeking more information about how the watchdog pays executives and its ties to Madoff, who is serving a 150-year sentence in a North Carolina federal prison.

FINRA on Tuesday rejected a proposal to make transcripts of all board meetings public, but it “will communicate to firms and publish on its website rulemaking items discussed and decisions the Board has reached on new rules,” according to the letter.

It also rejected four other proposals, including a proposed independent study into FINRA’s ties to Madoff.

“The board believes this issue was fully addressed by its special review committee last year, which concluded that no staff relationships with the Madoff family influenced FINRA’s regulatory efforts,” Ketchum wrote.

The other rejected proposals included hiring an independent inspector general and a review of the $35,000 payments to FINRA broker-members in connection with the 2007 merger of the National Association of Securities Dealers and the regulatory arm of the New York Stock Exchange that created FINRA.

(Reporting by Maria Aspan; Editing by Dhara Ranasinghe)

FINRA agrees to more disclosure on pay, rejects Madoff probe