US regulators approved a plan last night to sharpen governance at the scandal-torn New York Stock Exchange after it gave assurances it will split its chairman and CEO posts.
The NYSE plan, approved 5-0 by the Securities and Exchange Commission, would cut the size of the exchange's board to between six and 12 directors from between 24 and 27, create a new advisory panel and install a chief regulatory officer.
Mr John Reed, the retired banker hired to lead the NYSE out of trouble, pledged the NYSE will hire different people for its next chairman and chief executive, said SEC chairman Mr William Donaldson before the commission voted.
"In this way, the NYSE should be in a better position to protect against the concentration of too much executive authority in one individual," Mr Donaldson said.
Dividing the chairman and CEO jobs was not part of the formal reform plan. Mr Reed's promise to do it came only in the past two days after SEC commissioners pushed hard for the idea, which Mr Reed and the NYSE board earlier had waffled on.
The separation was welcomed by a spokesman for Calpers, the largest US public pension fund. It sued the NYSE and specialist trading firms on Tuesday, claiming that widespread fraud and lax oversight cost investors millions of dollars.
Calpers spokesman Mr Brad Pacheco said splitting the CEO and chairman posts was a "positive step." But, he said, the $154-billion pension system expects further reforms and the new NYSE executive set-up will not affect the legal act ion.
AFP