Broadcast: November 14, 2003
This is Bob Doughty with the VOA Special English Economics Report.
Last week we told about the New York Stock Exchange and the resignation of its chairman, Richard Grasso. This week we tell about proposals by the temporary chairman, John Reed, to reform the world's biggest stock market.
Mister Grasso spent thirty-five years there, the last eight as chairman. He left in September after the public learned about his pay. The Board of Directors had awarded him a deal worth almost one-hundred-eighty-eight-million-dollars.
Critics said investors could not trust the board because of its close ties to the investment companies that the exchange supervises.
Earlier this month, Mister Reed proposed that instead of twenty-seven directors, he wants at most twelve. He asked all but two of the current directors to resign. The two are former Secretary of State Madeleine Albright and Herbert Allison Junior. Mister Allison is chairman of T-I-A-A-CREF, a financial services company. Both joined the board this year.
Mister Reed said his plan would create the first totally independent board in the two-hundred-eleven-year history of the exchange. He also says the exchange should continue to have the power to police itself. Critics of his plan called for greater separation between those who enforce the rules of the exchange and those who must obey them.
Members of the exchange will vote on the plan November eighteenth. For his services as temporary chairman, Mister Reed will be paid one dollar.
There have also been calls to reform an important group of members of the New York Stock Exchange. These are called specialists.
Specialists are central to trading on the New York Stock Exchange. Each stock listed on the exchange is represented by a specialist. They receive requests to buy stocks. They bring buyers and sellers together. They buy and sell stocks for themselves. Specialists also are expected to use their own money to help control stock prices.
Recently, the exchange accused five specialist companies of using their position unfairly. It says they put their own interests ahead of those who trade stock for the public. The exchange is seeking total fines of about one-hundred-fifty million dollars. The Securities and Exchange Commission in Washington is urging higher fines and a wider investigation.
This VOA Special English Economics Report was written by Mario Ritter. This is Bob Doughty.