Mary Schapiro’s replacement as head of the Financial Industry Regulatory Authority Inc. is likely to come from outside the self-regulator that oversees that brokerage industry and its registered reps, industry executives said this morning.
Those comments came in reaction to the news of President-elect Barack Obama’s nominating her to head up the Securities and Exchange Commission.
“I suspect the new person won’t come from the current Finra staff,” said Art Grant, CEO of Cadaret Grant & Co. Inc. of Syracuse, N.Y., an independent broker-dealer with over 900 affiliated reps.
After the revelation of the alleged $50 billion fraud by Bernard Madoff, the selection of the new Finra chief executive will occupy a “highly political position,” Mr. Grant noted. “A Finra staffer won’t make it.”
“I don’t see anybody [at Finra] who’s a natural successor,” said another industry executive, who asked not to be named.
“I hope they land somebody with regulatory experience and experience in the business.”
When Ms. Schapiro succeeded Robert Glauber as CEO of Finra (at that time called NASD) in 2006, her rise was widely expected, the executive said. This time, no clear internal candidate exists.
Washington- and New York- based Finra regulates close to 5,000 broker-dealers and 680,000 registered representatives who work for those firms.
It is widely expected that in 2009, Congress and the new administration will attempt to overhaul the way the financial advice business is regulated, potentially consolidating power into one super regulator.
Nevertheless, executives at independent broker-dealers view Ms. Schapiro’s nomination to lead the SEC in a positive light.
“We’re encouraged to have an SEC chairman who understands independent broker-dealers’ and independent financial advisers’ business,” said Dale Brown, president and CEO of the Financial Services Institute, an Atlanta-based advocacy group that represents independent broker-dealers and advisers.
“We’ve enjoyed a very constructive relationship with Mary.”
Since 2004, Ms. Schapiro has met with executives from independent firms a number of times.
For example, in January 2006, she met with dozens of heads of independent firms in an exclusive meeting at the FSI’s annual conference in San Diego.
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