How much is too much to pay a financial regulator? A number of critics have posed this question to the Financial Industry Regulatory Authority (FINRA), the country’s largest independent securities regulator which oversees over 4,500 financial brokerage and securities firms.
According to its most recent financial report, FINRA paid eight members of its ten-person board of directors more than a million dollars each in 2010. Cumulatively, the FINRA board members earned more than $12.7 million, up from the $10.6 million that the board received in 2009.
FINRA executives earn significantly more than the chairs of comparable government agencies, whose compensation is set by the Executive Schedule. FINRA Chairman and Chief Executive Richard Ketchum earned more than $2.6 million in 2010. By contrast, Securities and Exchange Commission (SEC) Chair Mary Schapiro earned only $165,300 last year, while Federal Reserve Chair Ben Bernanke earned $199,700.
However, Schapiro, herself a former FINRA chief executive, received approximately $3.2 million in her final year at that agency before being nominated to her current position with the SEC by President Obama in January, 2009.
One FINRA-regulated brokerage, Amerivet Securities, filed an action against the organization in August, 2009, alleging excessive executive compensation, among other claims. A District of Columbia Superior Court denied FINRA’s motion to dismiss in March, 2011. Because Amerivet seeks only further inspection of FINRA’s corporate books, and not damages, the court ruled that FINRA cannot claim immunity as a self-regulatory organization.
Amerivet’s legal action is still pending, with no trial date yet set.