Managers of some of the nation's largest public pension funds said New York Stock Exchange proposals to revamp the 211-year-old exchange were not enough to ensure complete independence of its regulatory function from its market operation.
In a sharply worded statement, Sean Harrigan, president of the $154.7 billion California Public Employees' Retirement System, Sacramento, blasted the proposals as "woefully inadequate." He said the reform plan would not significantly restore investor confidence and does not have strong enough investor representation on the proposed board of directors. In addition, he said the plan lacks a "proper regulatory framework. I am inclined to agree with those at the Securities and Exchange Commission who believe it is time to set up a separate regulatory body, given the continuing disclosures of skimming and self dealing by specialists."
Alan Hevesi, New York state comptroller, told reporters during a conference call that while the reform plan was an improvement from the exchange's current structure, several proposals did not go far enough. "The public representation and the investor community representation on the board and the separation of the regulatory function from the management function … must be clearly delineated to give comfort that there will be true independence and no conflicts of interest regarding the regulatory process and methodology." Mr. Hevesi controls the $96 billion New York State Common Retirement Fund.
Jack Ehnes, CEO of the $103 billion California State Teachers' Retirement System, Sacramento, said the reform plan was simply a starting point, "but it's not the finish by any means." In a phone interview, he agreed that the proposal did not go far enough to ensure the independence of the exchange's regulatory function and said the exchange was "not stepping forward with the gold standard" because the proposal did not include a requirement to split the chairman and chief executive officer roles. He called on SEC to step in vigorously to guide exchange reforms