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NFA Election – Ernest Jaffarian reply to statements of James Koutoulas and John Roe

From Ernest Jaffarian:

I find it necessary to speak to a number of mischaracterizations regarding the service of Doug Bry and myself on the NFA Board.

It was Doug Bry who originally suggested to me in 2011 that I pursue election to the NFA Board.  He did so out of a deep concern for the needs of CTAs and their clients in the wake of MF Global.  When the nominating committee chose to nominate the incumbent to a non-contested position on the ballot, he encouraged me to petition to be added to the ballot.  It was then that I encouraged him to do the same and run against another uncontested candidate, Aleks Kins of Alphametrix.  Doug Bry’s challenging the practice of non-contested elections was the first critical initiative in influencing the Board for the better.  Had Doug not taken this initiative, there would have potentially been significant reputational damage to the NFA and CTA/CPO community.

The CTA/CPO community voted us onto the Board.  We took the confidence that was placed in us extremely seriously. 

In my opinion, no one has worked more aggressively to further the interests of the CTA/CPO community than Doug.  Any suggestion that he has been ineffective is not only misguided but also inappropriate and completely untrue.

When we first joined the Board there were four representatives from the CTA/CPO community.  At that time there were 37 board members.  Today there are still four CTA/CPO board seats; however, the board has been downsized to 29 and the voting power of CTAs and CPOs has increased.  This change was a direct result of Doug working effectively with the Executive and Governance Committees to achieve more representation for the CTA/CPO community.  It is incorrect for Mr. Koutoulas to characterize this as some kind of NFA management maneuvering to eliminate the vote of our community.

One must remember that serving on the NFA Board involves engaging in a legislative process that requires working with fellow Board members to get things done.  Brinksmanship, confrontation, attacking people in the press, and threatening people with lawsuits will only take you so far in this context.  By comparison, Doug Bry, while using his giftedness and legal training as a trial attorney to present strong and clear arguments for change, is also thoughtful and appropriately aggressive in advocating for issues of concern.  To suggest that Doug is a “memo writer” is the opposite of the truth.  The pen is mightier than the sword, and Doug is a critical and independent thinker and a clear communicator both orally and in writing.  He demonstrates good judgment in promoting issues and is tenacious to carry them to conclusions.  And progress has been made

In 1993, a partner and I launched a new CTA.  At that time, Doug was building a CTA from the ground up.  Later, as a CPO, I have directed many allocations to “small” CTAs.  Contrary to the assertions of Mr. Roe, with years of entrepreneurial experience between us, Doug and I understand well the regulatory issues and the many challenges that confront CTAs and CPOs, both small and large. 

The letter that was sent with the ballots highlighted the progress that has been made and I will not repeat that here.  But I want to make it clear that credit should be given to Doug Bry for moving CTA/CPO concerns forward though others are attempting to take credit, ignoring facts.  Doug has my full support and respect.  He deserves yours as well. 

Mr. Koutoulas and Mr. Roe have proven to be polarizing and divisive figures on the NFA Board, and should have resigned to pursue their reform efforts from the outside when they publicly revealed their whistleblower suit and lost the trust and confidence of the other Board members. 

While Mr. Koutoulas is right that we probably agree on a lot of the issues of concern to the CTA/CPO community, the choice in this election is how you want to be represented.  If you desire to see progress made, I urge you to support Doug Bry and myself.

Ernest Jaffarian

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Lothian is executive chairman and CEO of John J. Lothian & Co. and editor of the John Lothian Newsletter. He publishes MarketsWiki.com, MarketsReformWiki.com, MarketsWikiEducation.com, JohnLothianNews.com and three industry newsletters.