FINRA plans to name veteran regulator Richard Ketchum as its new chief executive, succeeding Mary Schapiro, who just became chairman of the SEC, according to sources quoted by the Wall Street Journal.
Ketchum, now the chief executive of NYSE Regulation Inc., which regulates conduct at the NYSE, previously served in senior regulatory roles at the SEC, including as head of market regulation. He has led NYSE Regulation for the past five years. During the 1990s, Ketchum was a senior executive at the old National Association of Securities Dealers, FINRA's predecessor.
The WSJ reports that at the NYSE, Ketchum helped boost enforcement following a scandal in which the floor traders known as specialists were accused by the SEC in 2004 of improperly taking advantage of customer orders to earn profits for themselves. Along with Schapiro, he also played a lead role in the 2007 regulatory consolidation that combined the brokerage-supervision activities of the NYSE and NASD.
The WSJ notes that Ketchum is widely respected for the length and variety of his service. "But he was criticized during the 1990s for defending Nasdaq's stock-trading system from foes who said its bid-ask spreads were set at artificially wide levels," the Journal said.
The SEC later came down against Nasdaq market-makers, charging them with improper collusion and requiring the NASD to spend $100 million over five years to beef up enforcement.
Ketchum was reportedly chosen by the 21-member board of FINRA, which includes representatives from the public and the financial-services industry, including small brokerage firms that comprise the bulk of the agency's membership. An announcement is expected soon.