VOL. 124 | NO. 238 | Friday, December 4, 2009
Memphian Williams Has Economic Front-Row Seat From FINRA Board
By Andy Meek
“…To be on that front line of what regulation is going to be in the future – it’s definitely been a learning experience and something I will value and appreciate for the rest of my life, no question.”– Duncan Williams
Company: Duncan Williams Inc.
Basics: Williams is a board member of FINRA, the prominent financial industry agency that assists in regulating securities firms and their representatives.
When Memphian Duncan Williams joined the board of the Financial Industry Regulatory Authority in 2007, his colleagues included representatives of powerhouse firms with familiar names.
But Robert McCann, the former president of Merrill Lynch & Co. Inc.’s retail unit, and Thomas Russo, the former chief legal officer at Lehman Brothers Inc., left the FINRA board earlier this year. Their companies went out of business as standalone entities as a result of the U.S. economy’s near-death experience in 2008.
Williams, the president and CEO of a Memphis-based investment banking firm that shares his name, will remain on the
FINRA board at least until his term runs out next year. His leadership role with the prominent financial industry panel puts him on what he said is the front line of a business landscape that continues morphing in front of his eyes.
He cites the departures of McCann and Russo as one example.
“That’s where you really feel it. Right in front of you,” said Williams, who shared details of his association with the FINRA board this week in a speech to the Memphis Rotary Club.
Experience to value
Williams also is chairman of the Leadership Academy in Memphis and an advisory board member of SunTrust Bank. The Duncan Williams firm turned 40 this year.
His colleagues currently on the FINRA board include James Burton, the former CEO of the World Gold Council, and Harvey J. Goldschmid, a former commissioner at the U.S. Securities and Exchange Commission.
“To be on the front line of what’s happening and to see it as it progresses … to be on that front line of what regulation is going to be in the future – it’s definitely been a learning experience and something I will value and appreciate for the rest of my life, no question,” Williams said. “Being on the board, I’ve also had the opportunity to have personal and face-to-face conversations with people who are setting policy.
“We have a dinner, and it’ll be with somebody from the Federal Reserve or the Treasury or from the administration. So you get to spend time with people who are making policy. And that’s a pretty awesome deal.”
FINRA’s official function, as stated on its Web site and in literature about the agency, is to regulate all securities firms operating in the U.S. That means the agency, which has fewer than 3,000 employees, oversees several thousand brokerage firms and about 644,000 registered securities representatives.
FINRA, created in July 2007, also provides the binding arbitration process that customers of investment firms submit to when they have disputes or disagreements with securities firms and brokers.
A frequent criticism of the agency – which reared its head again when former FINRA head Mary Schapiro was tapped to be the new SEC chief – is that it too frequently has played “small ball,” missing the big investment scams of late.
Fines the agency levied against financial companies totaled $40 million last year, down 73 percent from $148.5 million in fines in 2005, according to a Wall Street Journal analysis.
The agency’s enforcement staff recently signaled it may take action against Morgan Keegan, the Memphis-based investment firm under fire for its marketing and sale of a bevy of mutual funds that went belly-up starting in 2007 and which are the subject of hundreds of arbitration claims. The funds also are the subject of multiple regulatory probes.
The agency is aware of the criticism against it. A month or so ago, for example, it formed a new Office of Fraud Detection and Market Intelligence.
“This office will provide a heightened review of incoming allegations of serious frauds, and serve as a centralized point of contact internally and externally on fraud issues,” said FINRA Senior Executive Vice President James Donovan at a conference last month.
Meanwhile, Williams said his time on the board, plus his efforts expanding Duncan Williams Inc. into a national player with offices in Houston, New York, Chicago and elsewhere, has taught him this:
“There are a lot of laws on the books. You always have to question, does making more laws make sense, or does enforcing the (existing) laws make better sense?” Williams said. “As a board member and a business owner, I will tell you that more rules aren’t always the answer. It’s making sure the rules we have are the right rules and that they do what they need to do when they need to do it.”