Judge Refuses to Dismiss a Suit that Demands Transparency from FINRA

Judge Refuses to Dismiss a Suit that Demands Transparency from FINRA


A federal court in Washington rejected a motion to dismiss the lawsuit filed by a small California brokerage firm against Financial Industry Regulatory Authority, or FINRA, the Wall Street watchdog.

Last week, Judge John Mott rendered a decision declaring that FINRA does not have immunity in the instant case and that Amerivet may go ahead with its lawsuit.

Amerivet Securities, a tiny California brokerage firm, is asking the court to force FINRA, a private company that police brokers and dealers, to open its books.

According to Amerivet, it submitted 7 proxy proposals, which were approved overwhelmingly by the members of FINRA during its annual meeting last year. The board of FINRA did not execute any of the nonbinding proposals, but it did agree to fully divulge its compensation for top executives.

The president of Amerivet, Elton Johnson, has written a letter dated Feb. 7 to the 4,700 member firms of FINRA. He said, “Problems at FINRA persist: organizational transparency is practically nonexistent, the FINRA ombudsman is all but a joke, FINRA executives and board seem to operate without accountability, and there has been no reform with respect to executive compensation.”

The spokeswoman of FINRA declined to comment, while William Anderson, Amerivet’s attorney, said that a court hearing has been scheduled for March 4 in Washington.