These have been tough times at the Financial Industry Regulatory Authority, far better known as FINRA. The nonprofit self-regulatory organization for stock brokers and stock brokerages has had to weather allegations it altered documents given to the Securities & Exchange Commission, fierce pushback from its effort to get jurisdiction over investment advisors and�still breaking�criticism of its free-pass policy to Jon Corzinebefore the collapse and billion-dollar-customer-funds-disappearance of his MF Global Inc. A federal appeals court ruled recently that FINRA lacks the power to go to court to collect fines assessed against ex-members. Advocates from both the left and the right think the organization has too much power and too little accountability.
Richard Ketchum
But you�d never know such discord from its just-released tax returns for 2010. The people at the top are ridin� high.
Chairman and CEO Richard G. Ketchum was paid a total of $2.6 million. That�s more than double the $1.1 million he was paid for the nine months he headed FINRA in 2009.
Ketchum might be the highest-paid regulator in the U.S. His 2010 haul was about 13 times that of Ben S. Bernanke, who as chairman of the Federal Reserve has sway over the entire world economy rather than just American stockbrokers.
More than a dozen other present and past FINRA regulators also pulled down pay topping $1 million for 2010�each package at least five times Bernanke�s compensation. Vice Chairman Stephen Luparello scored $1.4 million, and chief financial officer Todd T. Diganci and general counsel for regulation Marc Menchel, $1.2 million each. Even FINRA�s head P.R. man, Howard M. Schloss, clocked in at $1 million.
We invited the FINRA press office to explain why the organization�s top brass deserved so much more than Bernanke�s $200,000 annual paycheck. We were told only that the level of pay is �not new.� Indeed. According to the 2009 tax returns, Mary L. Schapiro, who headed FINRA for just a few months of that calendar year before taking a hug epay cut to become chair of the SEC, was paid $7.4 million, most of that presumably deferred compensation for prior years of service.
The 2010 FINRA tax returns state that those high pay packages were determined by a board of directions committee that �relied on a third-party compensation study performed by Mercer Inc. that compared FINRA executives to industry benchmarking data.� The return didn�t say what industry provided the data. Regulators�mostly in governments�generally aren�t that well paid. Since FINRA compensation seems to be at the very high end, did maybe that �industry benchmarking data� include private profit-making companies like investment banks and exclude government regulators? We asked FINRA for a copy of the study but was told it �is not public.�
Still, the tax returns (separate ones for FINRA and affiliates that run regulation, its arbitration system and investor education) say a lot. Top FINRA regulators are offered not one but two supplemental retirement plans. FINRA apparently gives so many expensive �gifts� to its workers that the agency also pays the tax bill.
Does FINRA do a lot of business in a certain sunny Pacific Ocean vacation spot? We don�t know for sure. But the agency actually wrote in the tax returns that it pays �the next cabin above economy � for all travel from the U.S. mainland to Hawaii.�
There is even what looks like a paid conjugal-visit policy. �A companion may fly to meet an employee on an extended stay at his or her work location,� the tax return says, adding that FINRA will reimburse the airfare.
Ketchum gets a car and driver in both Washington, where FINRA is based, and New York City. He also gets up to $20,000 for �personal financial and tax counseling� as well as paid �spousal travel for certain business-related events.�
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