An alleged extortion and bribery scandal involving a former Arkansas state treasurer and a local brokerage firm is bringing attention to the way the Financial Industry Regulatory Authority (FINRA) elects members to its board. The self-regulator reserves three of its 22 positions for representatives of small brokerage firms. And that can cause problems, because at those firms, there are fewer degrees of separation between top executives and underlings. When one of those executives gets named to the FINRA board and a lower-level employee gets into trouble, it can reflect on the board member – and on FINRA as a whole. More on Reuters here.
