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NYSE Interim Chairman Promises Extensive Reforms - 2003-10-17


The interim chief of the New York Stock Exchange Thursday promised lawmakers in Washington that within days he will unveil far reaching reforms intended to win back the investor confidence shaken by a financial scandal last month. Retired Citibank chairman John Reed has been the head of the stock exchange for only a few weeks. He was called in when long serving chairman Richard Grasso was forced to resign, after he revealed that his compensation package totaled nearly $200 million.

Outraged by both the huge salary and the secrecy around it, lawmakers asked Mr. Reed, if his predecessor had in fact received the money.

"The facts are that Mr. Grasso did receive a check and cashed it for $139.5 million, prior to my election [last month]," he said. "The first question I asked was, has the money been paid out? The answer is yes."

The capital markets panel of the House Financial Services Committee is demanding that the New York Stock Exchange enact reforms that would end perceived conflicts of interest and open its books on matters of executive pay. Mr. Reed, whose principal job is to find a permanent replacement for Mr. Grasso, promised to implement rigorous new standards of corporate governance.

"There is no way that the New York Stock Exchange could ask that listed companies have standards of governance, which we ourselves don't meet," said Mr. Reed. "I fully expect that we would embrace a set of standards that go even beyond that which we expect of listed companies."

But while Mr. Reed promises bold reforms, he vehemently opposes calls to separate the exchange's regulatory and business functions. That, he said, would be an end to the self-regulation that he believes is preferable to intrusive scrutiny from government agencies.

Mr. Reed said the stock exchange is acutely aware of the damage to its reputation caused by the compensation scandal.

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