Edwards says that, in calling for a board that's made up mostly of public representatives, Finra's by-laws signal at least a superficial acknowledgment that it wants to tip the balance in favor of the public. To get it right, he suggests Finra fill public seats with people who don't share the same perspectives, beliefs and biases of people who fill industry seats.

If they were true to the spirit of those by-laws, picking real representatives of investors for public seats, Finra might be paying more attention to the embarrassing studies released this year that revealed how easily a broker could find a new job after being fired.

Earlier this week, the Washington, D.C.-based Securities Litigation & Consulting Group released data showing that 1,314 brokers who had previously been fired found new jobs in the 12 months ending June 30 -- 1.25% of all brokers hired. That's a 50% increase in the percent of hires who had previously been fired in the 12 months that ended June 30, 2008, the consulting group said.

I'll bet that a board with 12 public governors drawn from the ranks of state securities regulators, groups like the Consumer Federation of America, and staffs of university-run securities arbitration clinics would have been laser-focused on those percentages as they began to rise significantly in 2010. Instead, the consulting group's data shows the problem has become progressively worse.

Among its 12 public governors, Finra actually does have some conflict-free people with relevant expertise who you can imagine pushing for the little guy. Among them: Harvard professor Brigitte C. Madrian is an expert on behavioral economics and household finance. Susan Wolburgh Jenah spent 30 years as a regulator in Canada. Leslie F. Seidman is former chairman of the Financial Accounting Standards Board.

But somehow, Finra always gets it only half-right.

In September, Finra will add two people to its public roster. One of them, Hillary A. Sale, is a great choice for a public representative. She is a law professor at Washington University in St. Louis and a respected expert in securities regulation.

The other, Eileen Murray, is co-CEO of the money management firm Bridgewater Associates. She might be a valid contender for an industry seat, but I'm hard pressed to see how she's the right choice to represent the public. Her career in finance began in 1980 at Morgan Stanley, followed by a job at Credit Suisse First Boston before joining Bridgewater.

I hope Sale, who has been critical of Finra in some of her academic work, raises hell on that board. Too bad her fellow governors in those public seats can't all boast her detachment from the industry that pays Finra's bills.

Susan Antilla is an investigative reporter and columnist for TheStreet who has written for The New York Times, Bloomberg and other global news organizations. The opinions expressed herein are hers.

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