Securities Lending and Short Sale Roundtable
September 29, 2009
PANEL ONE — Overview of Securities Lending: Participants; Process; Benefits and Pitfalls
Jerry Davis, Chairman of the Board of Trustees, City of New Orleans Employees’ Retirement System
Commander Jerry D. Davis is the Employee Representative on the Board of Trustees for the New Orleans Employees’ Retirement System. He was first elected to this five-member board in 1986 and was re-elected for his eighth term effective July 1, 2008. He was elected Chairman of the Board in 1994, after serving as Chairman of the Investment Committee for seven years, during which time the Fund progressed from a fixed-income-only allocation to a balanced mix of asset classes. During his unprecedented tenure, the Fund has grown from $94 million to $420 million, while providing generous pensions and allowing for the lowest employer cost ratio in the state. In his CEO role, he manages relationships with local government officials, 47 investment firms, four law firms, the Board’s consultants, actuary, and the state auditor.
Jerry pursued a dual career in military service and civilian government for over forty years before retiring from the Coast Guard in 2002. During that career he alternated between reserve and active service, being called to active duty six times. He was selected three times to command Coast Guard forces, and served for several years on the staff of the Commandant and/or the District Commander. He earned eleven decorations and was promoted through thirteen ranks, finally serving as a port operations commander during Operation Desert Storm.
He subsequently retired from City of New Orleans employment in May of 2006, where his last post was Personnel Administrator, responsible for all training and performance evaluation for the City’s 8,000-member workforce. He continues, as an unpaid volunteer, in two roles: in addition to his trustee responsibility, he is serving a six-year term as the Employee Representative on the Civil Service Commission, appointed by the City Council in 2005. His role there is both legislative and judicial, with responsibility for adopting changes to Civil Service Law as well as adjudicating employee appeals of wrongful discipline.
A 1970 graduate of Tulane University, Jerry has addressed over 200 audiences in eleven countries, on issues as varied as fund management, securities litigation and military logistics.
David Downey, Chief Executive Officer, OneChicago
David G. Downey serves as Chief Executive Officer of OneChicago, the Securities Futures exchange in the US.
Mr. Downey began his career in the securities and futures industry in 1983 on the American Stock Exchange in New York. In 1985 he joined Timber Hill Inc.,(THI) a firm specializing in the business of market-making on the floors of various stock, future and derivative exchanges around the world. After moving to Chicago in 1985 he began trading as a member of the CBOE and over the years held memberships at the CBOT and the CME. In 1991 he assumed the title of Vice President of US floor trading Operations for Timber Hill and was instrumental in the spread of electronic tools for traders on the various exchange floors.
In 1995, Mr. Downey turned his attention to the development of Interactive Brokers (IB) where he served as Executive Vice President. IB provides direct access (”on line”) trade execution and clearing services to institutional and professional traders for a wide variety of electronically traded products including options, futures, stocks, forex and bonds worldwide.
Mr. Downey is a 1982 graduate of Boston College where he earned Bachelor of Arts Degrees in Economics and Political Science.
Irving J. Klubeck, Managing Director, Pershing LLC
Irving Klubeck is a Managing Director for Pershing LLC, where he is a member of Customer Processing and Services, and is responsible for Securities Lending Operations and Global Clearance and Settlements. Mr. Klubeck re-joined Pershing in 2004 after two years with State Street Corporation leading their effort to provide hedge fund operations to their alternative investing clients. Mr. Klubeck began his career with Pershing in 1978 and has worked in the firm’s Treasurers, Securities Lending (Sales and Operations), and International Operations departments. Mr. Klubeck is currently the President of the Securities Industry and Financial Markets Association’s (SIFMA) Securities Lending Division and is an active participant in numerous industry task forces and working groups. Mr. Klubeck earned a Bachelor of Business Administration degree in Finance from Pace University and is also a graduate of the Securities Industry Institute, sponsored by the SIFMA at The Wharton School. He holds NASD® Series 7, 24, and 63 licenses.
William F. Pridmore, President, William F. Pridmore, Ltd.
Bill has over 30 years of diversified experience as an independent consultant and senior manager in Institutional Trust and Commercial Banking. This includes extensive experience in all aspects of Global Securities Lending, Global Custody, Master Trust Securities Operations and Securities Finance.
Bill currently works as an independent consultant out of an office in the northern suburbs of Chicago. He provides advice to large institutional investors on their participation in the securities lending and short-term investment markets. His consulting clients have included large public and private pension funds, multinational insurance companies and mutual fund complexes.
For the potential lender of securities, there is no shortage of highly knowledgeable and experienced people willing to provide advice about securities lending. But this advice is usually from the perspective of a vendor selling their product. Often the lender has a difficult time determining when their interests may not be aligned with the lending service vendor. Bill helps the institutional investor bridge that knowledge gap and provides an unbiased perspective.
Over his career, Bill has been actively involved in the formation of international organizations that promote sound securities lending practices. He has frequently been asked to speak on the topic of Securities Lending, most recently at the 2009 IMN Securities Lending and Repo Conferences held in Arizona and New York. In 1992, Bill assisted in the organization and acted as Chairman of the first RMA/ISLA joint International Securities Lending Conference held in Scotland.
Bill received a M.B.A. with a Concentration in Finance from the University of Chicago in 1981. He received his B.A. in Economics from Georgetown University in 1977.
Adam V. Reed, Ph.D., Julian Price Scholar in Finance and Associate Professor of Finance at the UNC Kenan-Flagler Business School
Professor Reed is the Julian Price Associate Professor of Finance at The University of North Carolina’s Kenan-Flagler Business School. Professor Reed’s research focuses broadly on short selling, equity lending, capital markets and mutual funds. The research asks how institutions affect the traditional view of markets and asset prices, and it has helped uncover important features of financial markets that have had direct, significant impact on academics, practitioners and regulators. The research provides clarity on the following key questions. How does short selling affect market efficiency? How are prices in options markets related to short selling costs? And, how does the presence of search costs affect prices and price dispersion in the market for borrowing stock? Professor Reed’s research has been published in The Journal of Finance, The Journal of Financial Economics, and the Review of Financial Studies. The research has been cited in The Wall Street Journal and The New York Times. Professor Reed worked for the Board of Governors of the Federal Reserve System. He received his PhD and masters degree in finance from the Wharton School at the University of Pennsylvania and his BA in applied mathematics and economics from the University of California at Berkeley.
PANEL TWO - Securities Lending and Investor Protection Concerns: Cash Collateral Reinvestment; Default; Lending Agent Compensation and Fee Splits; Proxy Voting
Patrick Avitabile, Managing Director, Global Head of Equity Trading, Securities Finance, Citigroup
Patrick Avitabile is a Managing Director and Global Head of Equity Trading for Citigroup’s Securities Finance business where he is responsible for the business’ trading units in New York, London and Hong Kong. Patrick has 27 years of experience in the Securities Lending industry.
Avitabile joined Citigroup in 1994 as the European Securities Finance Product Manager and he resided in London for 4 years. Prior to joining Citibank, he held various management positions within Securities Lending at the Banker’s Trust Co.
Avitabile received his M.B.A. from New York University, an M.A. from S.U.N.Y. at Stony Brook and a B.A. from St. John’s University.
Ed Blount, Executive Director, Center for the Study of Financial Market Evolution
Ed Blount has worked in the securities lending community for 35 years, with Citibank, Bankers Trust, ASTEC Consulting, and now as Executive Director of the Center for Study of Financial Market Evolution (CSFME), a non-profit research firm based in Washington, D.C., and Zurich, Switzerland.
In 1992, Ed was the first to create peer reviews and then derive securities lending benchmarks, by forming an institutional research cooperative that grew to include more than 150 securities lenders, 30 lending agents and 50 borrowers. By 2004, Ed had designed and developed Lending Pit, the first daily loan pricing service which grew to cover 90,000 securities issues by the time it was sold to SunGard Data Systems in 2006. Since then, Ed has been working with the Risk Management Association and Securities Industry Financial Markets Association to create a database of loan activity with which to test the allegations of borrowed proxy abuse posed by certain academic researchers. Over one billion securities loans will be included in the final database.
A former U.S. Marine Captain, Ed has degrees from Fordham University, Pepperdine University and New York University. Ed is also contributing editor for the ABA Banking Journal and a frequent speaker at industry conferences and roundtables worldwide. He was inducted into the Securities Services Hall of Fame in June, 2009.
In 2006, Ed Blount co-authored “Managing Liquidity Risks in Cash-based Lending Programs,” in Securities Finance: Lending and Repurchase Agreements, edited by Frank Fabozzi and published by Wiley. In April 2007, Ed presented his paper, “The Impact of Short Sales and Securities Lending on Capital Market Portfolios: 1990 through 2006,” at the IMF-World Bank conference in Moscow, Russia. His latest paper, “Liability Dynamics: A New Framework for Counterparty Risk Management?” appeared in the March 2009 issue of the Risk Management Association (RMA) Journal.
In many published articles over 28 years as contributing editor for the ABA Banking Journal, Ed has conducted in-depth interviews with senior officials and board members of the Securities & Exchange Commission, Federal Reserve Board, Federal Reserve Bank of New York, Bank for International Settlements, Basel Committee on Banking Supervision, European Commission, and the European Central Bank.
Karen Dunn Kelley, Chief Executive Officer, Invesco Fixed Income; Executive Vice President, Invesco Aim Distributors, Inc.
Karen Dunn Kelley is Chief Executive Officer of Invesco Fixed Income, with responsibility for its fixed income and cash management business, which employs 114 investment professionals and with $161.9 billion in assets as of June 30, 2009.
In addition to Ms. Dunn Kelley’s current position, she is also a member of Invesco’s Executive Management and Worldwide Institutional Strategy Committees. She is president and principal executive officer of Short-Term Investments Trust and AIM Treasurer’s Series Trust and serves on the board for the Short-Term Investments Company (Global Services) plc, AIM Global Management Company, Ltd and Invesco Mortgage Capital Inc.
Ms. Dunn Kelley has been in the investment business since 1982, and has a vast amount of experience in both sales and asset management in the short and long term areas of the fixed income market. She began her career at Drexel Burnham Lambert on the Fixed Income High Grade Retail Desk, which included trading and brokering of high grade corporate, government, hybrid, mortgage and money market securities to the retail distribution network. In 1985, she was promoted to vice president and assistant manager of Drexel Burnham Lambert’s Fixed Income High Yield Retail Desk, which included expanded responsibilities for the daily trading and brokering operations of the high yield retail desk. During this time, she structured swaps, hedges, arbitrages, as well as risk positions. In 1986, Ms. Dunn Kelley joined Federated Investors (Pittsburgh) and became involved in the asset management business aspect of the fixed income division. She was responsible for the cash management of the entire Federated family of funds which consisted of over 40 different mutual fund products. Funds managed were governed by the Investment Company Act of 1940 and she gained significant experience with SEC Rule 2a-7 which governs money market funds. She also managed U.S. long duration government securities portfolios and held positions in various capacities including government bond trader, repo trader, and federal funds trader. During her tenure at Federated she managed the back office operations staff and was responsible for daily interaction with securities custodians for all portfolios. This position covered the settlement process of fixed income holdings, foreign equities, and repurchase agreements.
Ms. Dunn Kelley joined Invesco Aim Management Group, Inc. in 1989 as a money market portfolio manager with initial responsibilities for all money market operations from portfolio administration to portfolio management for taxable, tax-free and treasury portfolios. In 1992, her responsibilities were expanded to include longer term government portfolios and was named chief money market and government officer. In 1994, Ms. Dunn Kelley was responsible for the creation of Invesco Aim’s Short-Term Investments Company (Global Series) plc portfolios domiciled in Ireland, which evolved to include U.S. Dollar, Sterling and Euro denominated portfolios. Other portfolios created and managed under her leadership include private trusts; U.S. ERISA portfolios and Canadian domiciled money market funds. Under Ms. Dunn Kelley’s leadership, Invesco Aim has built one of the world’s most respected cash management organizations in the industry. In April 2007, she was named Chief Executive Officer of Invesco’s newly combined fixed income and cash management teams. The combined team creates one the largest fixed income operations in the world, with a comprehensive range of products and operations in key markets globally.
A native of Brooklyn, New York, Ms. Dunn Kelley graduated magna cum laude with a Bachelor of Science degree from the Villanova University, College of Commerce and Finance.
Bruce G. Leto, Partner and Chair, Investment Management Group, Stradley Ronon Stevens and Young, LLP
Bruce G. Leto is a Partner and Chair of the Investment Management Group at Stradley Ronon Stevens & Young, LLP in Philadelphia, Pennsylvania. Mr. Leto joined Stradley Ronon in 1986 and became a partner in 1993. He has served as a member of the firm’s Board of Directors at various times from 1994 until the present. For 23 years, Mr. Leto has counseled investment companies, investment advisers, independent directors and broker-dealers on securities and corporate matters relating to pooled investment products, including registered and unregistered open- and closed-end investment companies. Mr. Leto counsels such clients on registration, transactional and compliance matters, and on various other issues, including securities lending. In 1997, Mr. Leto was involved in successfully obtaining a no-action letter in the securities lending area for a client relating to the percentage of a fund’s portfolio that may be loaned.
Mr. Leto is an Advisory Board Member of the Mutual Fund Directors Forum — a nonprofit membership organization for investment company independent directors dedicated to improving mutual fund governance. He is also an Advisory Board Member of Board IQ, a publication specifically geared toward issues confronting boards of trustees/directors.
Mr. Leto is a frequent lecturer at seminars sponsored by the Investment Company Institute, the Independent Directors Council, the Philadelphia Bar Association and other organizations. He speaks on topics such as mutual fund director issues, soft dollars and directed brokerage, securities lending, master/feeder structures and multiple classes of shares, pricing of investment company securities and valuation of portfolio securities. In addition to other noteworthy recognitions, Mr. Leto was selected in September 2009 by mutual fund industry news source Ignites as a 2009 “Fund Titan” in the category of Outside Counsel. Fund Titan awards recognize legal and compliance professionals who make a significant mark on the mutual fund industry.
Mr. Leto graduated from Villanova University School of Law (cum laude) in 1986 and from Haverford College (cum laude) in 1983.
Kathy H. Rulong, Executive Vice President, The Bank of New York Mellon Corporation, Executive Director of BNY Mellon Global Securities Lending
Kathy Rulong, an executive vice president of The Bank of New York Mellon Corporation, is the executive director of BNY Mellon Global Securities Lending and is responsible for leading the securities lending business throughout the world. Managers from the department’s trading, collateral reinvestment, client service, and new business development units report directly to her. Additionally, managers from operations, risk management/compliance and systems groups report on a dotted line to Ms. Rulong. She also chairs the Securities Lending Management Committee and is a member of the Corporation’s Operating Committee.
Ms. Rulong’s tenure includes more than 20 years in various management positions within Mellon. From 1998 to 2002, Ms. Rulong managed domestic trading for Mellon Global Securities Lending and was responsible for overseeing Mellon’s domestic trading activities. These activities include specialized lending desks for U.S. treasuries and agencies, corporate fixed-income securities and domestic equities.
Prior to joining Global Securities Lending, Ms. Rulong managed Mellon’s Money Managers Sales group from 1989 to 1998. This group, a unit of Mellon’s broker/dealer subsidiary Mellon Financial Markets, is responsible for marketing a broad range of fixed-income securities to large institutional investors.
In 1984, she rejoined Mellon, after five years in public accounting, as a manager of the bank’s wholesale funding activities and participated in asset/liability management decisions for assets totaling $15 billion.
Ms. Rulong began her career at Mellon in 1973 as a management trainee and worked in the Capital Markets Department as a taxable securities trader and salesperson. She received her bachelor of arts degree in mathematics and economics from Northwestern University.
Julia R. Short, Managing Director, Product Management, RidgeWorth Investments
Julia Short is President and CEO of RidgeWorth Funds, in addition to being a Managing Director for RidgeWorth Capital Management, Inc. In this capacity, her responsibilities encompass the oversight of the RidgeWorth Funds, including coordination and support to the RidgeWorth Funds Board of Trustees, management of all vendor relationships for the Funds, internal liaison on fund matters, marketing and fund communications, as well as the strategic development of the Fund family from conception through implementation.
Julia began her career with SEI Investments in Oaks, PA as an account representative in the Brokerage Services area. After achieving a leadership role within the Brokerage Services Team, Julia joined the SEI Mutual Funds Group and began working with the STI Classic Funds (STI Classic Funds became RidgeWorth Funds on March 31, 2008). Julia served as relationship manager for the Funds until September 2004 at which time she joined RidgeWorth Capital Management, Inc. as the Product Manager for the RidgeWorth Funds.
Julia graduated summa cum laude from the University of Pittsburgh in 1994 with a B.S. in Applied Mathematics and a minor in Physics. She has both her Series 7 and Series 63 NASD licenses. She is married to Steve, with two children, Jason and Sara.
Christianna Wood, Chairman of the Board, International Corporate Governance Network
Christianna (“Christy”) is the Chairman of the Board of the International Corporate Governance Network (“ICGN”), a not-for-profit body with a global membership organization of 450 leaders in corporate governance in 45 countries, with institutional investors representing assets under management of around $9.5 trillion. She previously chaired the Audit and Accounting Practices Committee of the ICGN which engages regulators and standard setters on audit and accounting principles on behalf of institutional investors.
Christy is formerly CEO of Capital Z Asset Management, the largest dedicated sponsor of hedge funds, having sponsored 17 hedge funds totaling almost US$7 billion since 1998. Prior to joining Capital Z, Christy was the Senior Investment Officer for the Global Equity unit of the California Public Employees’ Retirement System (CalPERS) for five years, where she was responsible for over $150 billion, including $7 billion activist/corporate governance managers.
Ms. Wood has more than 25 years experience in equity and fixed income investment portfolio management, having served as Principal and Portfolio manager at a number of organizations.
Christy gained a Masters of Business Administration degree in Finance from New York University’s Graduate Business School, and BA degree in Economics cum laude from Vassar College. She also attended the London School of Economics and University College, London. She is a Chartered Financial Analyst and a Chartered Alternative Investment Analyst.
Christy is a Trustee of Vassar College and serves on the Investment, Audit and Social Responsibility Committees of the Vassar College Board of Trustees. She is also a member of the Board of H&R Block, serving on the Compensation and Nominating and Governance Committees. She is formerly a member of the Consultative Advisory Group of The International Auditing and Assurance Standards Board (IAASB), the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB) and the User Advisory Group of the Financial Accounting Standards Board (FASB).
PANEL THREE — Improving Securities Lending for the Benefit of Investors: Transparency; Electronic Platforms; Central Counterparties; Accountability
Gregory W. DePetris, Co-Founder and Chief Strategic Officer, Quadriserv AQS
Greg is Quadriserv’s Co-Founder and Chief Strategic Officer, and has played a leading role in guiding Quadriserv from a start-up to an emerging leader in bringing marketplace efficiency and innovation to the securities lending industry. Most notably, Greg is responsible for the overall strategic direction of the company, and has served as the chief liaison between the company and federal regulators, financial exchanges, institutional clients and the academic community. In addition, Greg has played a key role in the company’s successful equity and debt financings from institutions such as Bank of America Merrill Lynch, Citi Global Markets, Interactive Brokers, International Securities Exchange (ISE), Renaissance Technologies, Susquehanna Investment Group, Bessemer Venture Partners and SunGard.
Greg began his career as a commodities floor broker and proprietary trader. He co-founded Intrade (www.intrade.com), the world’s largest prediction market, and PDQ ATS (www.pdqats.com), a company designed to democratize modern-day trading through the creation of a confidential, high-speed electronic crowd. Greg is an advisor to a number of early stage companies and investment firms, currently serves on the boards of ExchangeLab, Inc., PDQ Enterprises, LLC, Sedgwick & Cedar, Inc., and is a frequent speaker on capital markets issues.
Christine Donovan, Managing Director, Investor Services & Markets Division, and Global Head of Securities Lending, Brown Brothers Harriman
Chris Donovan joined Brown Brothers Harriman (BBH) in 1999 to establish the firm’s securities lending business. She has had over 20 years of experience in the securities lending industry and is a frequent speaker at industry conferences. As a Managing Director of the Investor Services & Markets division, she continues to oversee Global Securities Lending at BBH. Prior to joining BBH, Ms. Donovan was the President and Co-founder of Boston Global Advisors (BGA), a securities lending agent acquired by Goldman Sachs. Ms. Donovan was also a Managing Director of Goldman Sachs & Co. and a Board member of The Goldman Sachs Trust Company. Immediately prior to founding BGA, she served as Department Head of Non-Dollar Equities in the Global Securities Lending Division of State Street. In 2009, Ms. Donovan was recognized by Global Custodian Magazine for her strong record of service to the securities lending industry, which included outstanding effort, ability, and innovation. She was inducted into the Global Custodian Securities Services Hall of Fame. Ms. Donovan received a Bachelor of Arts in Economics from Stonehill College where she served as a member of the Board of Trustees for 12 years. She also holds a Master of Theological Studies from Weston Jesuit School of Theology, now the Boston College School of Theology and Ministry.
Aaron Gerdeman, Senior Vice President, Managing Director, SunGard’s Astec Analytics
Aaron is a Senior Vice President at SunGard in New York. He manages product development for SunGard’s Astec Analytics, which provides market information services to the securities lending industry. Aaron has been creating benchmarking analysis, transparency tools, and market research reports for securities lenders and borrowers since he joined the Astec team in 2000. He co-authored a chapter on liquidity risks in securities lending for Frank Fabozzi’s 2005 book on securities finance. Aaron received a B.S. in mathematics and philosophy (summa cum laude) from Fordham University in New York, and an M.A. in economics from New York University.
Chris Jaynes, Co-Chief Executive Officer, eSecLending
Chris currently serves as co-Chief Executive Officer at eSecLending. Chris’ primary responsibilities within the company are product strategy and execution which includes oversight of global trading, collateral management, business development and relationship management with clients and borrowers. Chris previously served as eSecLending’s President where he was responsible for the oversight of all product related areas. He is one of the founding members of eSecLending and was part of the team that developed the auction model and built the firm's service capabilities. Chris is Chairman of the Board of Directors of Securities Finance Trust Company, eSecLending’s operating company. Prior to eSecLending, Chris served as Senior Vice President at UAM Global Securities Lending. Before that, he served as Vice President and Compliance officer for UAM Trust Company and as a Client Service Manager at State Street Bank. Chris is a CFA charter holder and received his B.S. from the University of Vermont.
Michael P. McAuley, Senior Managing Director and Chief Product Officer, State Street Corporation, and Chair, Risk Management Association
Michael P. (Mike) McAuley is a senior managing director and the chief product officer for State Street’s Securities Finance division. He is responsible, on a global basis, for product development and tax. He is also a member of the division’s senior management and strategic planning groups. Prior to assuming his current role in 2000, Mr. McAuley served as the senior managing counsel for Securities Finance. Before joining State Street in 1998, he was senior counsel at Boston Safe Deposit and Trust Company. He began his career as an ERISA attorney with the Boston law firm of Gaston & Snow. Mr. McAuley holds a Bachelor of Arts degree in economics from Boston College and a Juris Doctor degree from Suffolk University Law School. He is a member of the board of directors for the Risk Management Association and current chair of its securities lending committee. Mr. McAuley is also a member of the Massachusetts Bar Association.
Jeff Petro, Vice President, Group Head of Taxable Money Market Trading, Federated Investors, Inc.
Jeffrey A. Petro, Vice President, Group Head of Taxable Money Market Trading. Includes Repo, Commercial Paper, Governments and all Federated Investors Cash Management. B.S., Robert Morris University. Professional affiliations: President, Pittsburgh Stock & Bond Association, Joined Federated 1986; Investment Experience: 23 Years.
Shawn Sullivan, Managing Director, Credit-Suisse
Shawn Sullivan is a Managing Director of Credit Suisse in the Prime Services group within the Investment Banking division, based in New York. He is the Head of Prime Services Trading with global responsibility for the Credit Suisse securities lending and swaps platforms.
Mr. Sullivan joined Credit Suisse in April 2001 from UBS Warburg where he was an Executive Director in U.S. repo trading and equity lending. Prior to that, Mr. Sullivan worked at Lehman Brothers for nine years in the prime brokerage group.
Mr. Sullivan is a 1983 graduate from the United States Military Academy at West Point. He holds a B.S. Degree with a concentration in Mechanical Engineering.
PANEL FOUR — The Future of Securities Lending and Potential Regulatory Solutions: Market Evolution; SEC’s Role; Assessing any Regulatory Gaps
Mark Faulkner, Founder, Head of Innovation, Data Explorers
After graduating from the London School of Economics, Mark Faulkner spent the majority of his career specializing in International Securities Finance. Since 1987, he has held management responsibility at L.M. (Moneybrokers) Ltd., Goldman Sachs, Lehman Brothers and more recently at Securities Finance International Limited.
Whilst occupying these different posts he has gained experience as a lender, borrower, conduit borrower and prime broker. During his career he has worked closely with the UK Inland Revenue and has represented firms at the Securities Lending and Repo Committee and the London Stock Exchange’s securities lending committees. Being an independent advisor since 1995 has provided Mark with a unique insight into the operation of the securities financing market.
Mark has authored many books and papers on the subject of Securities Finance, including “An Introduction to Securities Lending” which was commissioned by The Bank of England’s Securities Lending and Repo Committee, The International Securities Lending Association, The London Stock Exchange, The Association of Corporate Treasurers and The London Investment Banking Association. He is a frequent speaker and moderator at international conferences.
Richard G. Ketchum, Chairman and CEO, FINRA
Prior to becoming CEO of FINRA, Mr. Ketchum was CEO of NYSE Regulation from March 2006 to March 2009. He served as the first chief regulatory officer of the New York Stock Exchange, a position he began in March 2004. From June 2003 to March 2004, Mr. Ketchum was General Counsel of the Corporate and Investment Bank of Citigroup Inc., and a member of the unit’s planning group, Business Practices Committee and Risk Management Committee.
Previously, he spent 12 years at NASD and The Nasdaq Stock Market, Inc., where he served as president of both organizations.
Prior to working at NASD and NASDAQ, Mr. Ketchum was at the Securities and Exchange Commission (SEC) for 14 years, with eight of those years as director of the Division of Market Regulation.
He serves on the Board of Directors of Appleseed, a non-profit network of 16 public interest justice centers in the United States and Mexico dedicated to advancing the rule of law, promoting effective government and creating opportunities for individuals’ economic advancement.
Mr. Ketchum earned his J.D. from the New York University School of Law in 1975 and his B.A. from Tufts University in 1972. He is a member of the bar in both New York and the District of Columbia.
John C. Nagel, Deputy General Counsel and Head of Global Compliance, Citadel Investment Group, L.L.C.
As the Deputy General Counsel and Head of Global Compliance of Citadel Investment Group, L.L.C., John Nagel is responsible for a wide range of regulatory and compliance matters. John leads the design and implementation of Citadel’s investment adviser compliance program, provides front-line regulatory support to Citadel’s diverse investing and trading businesses in the United States, Europe, and Asia, and handles regulatory inquiries. John has substantial expertise on regulations relating to insider trading, information barriers, listed and OTC derivatives, short selling, margin, position limits, and position reporting. John also is the lead regulatory in-house counsel to Citadel’s electronic trading businesses and affiliated broker-dealers. These affiliated broker-dealers include Citadel Securities LLC, one the largest options and equities market makers in the U.S. John is the Vice Chair of the Managed Funds Association Regulation Committee and is a member of the Board of Directors of the Boston Options Exchange LLC. In 2008, Institutional Investor News named John one of “20 Rising Stars of Compliance.” Before joining Citadel in January 2004, John spent 7 years as a member of the securities regulatory group at the Wilmer, Cutler & Pickering law firm in Washington, D.C. At Wilmer, John specialized in the regulation of financial institutions and financial markets, and represented broker-dealers, registered and unregistered investment advisers, investment companies, and other financial institutions on securities regulatory, compliance, and enforcement matters. John graduated magna cum laude with a degree in physics from Dartmouth College and graduated with high honors from Duke University School of Law.
Leslie S. Nelson, Managing Director of Global Securities Lending, Goldman Sachs
Les is a managing director in Global Securities Lending. He has responsibility for securities lending marketing in the United States and for managing the US exclusive lending program. In addition, he has responsibility for matters related to securities lending new market development in the United States. Les previously co-headed the US securities lending business and served as the manager of international securities settlements. Les joined the firm in 1984 and was named managing director in 2000.
Prior to joining Goldman Sachs, he worked at Procter & Gamble and served as an officer in the US Navy.
Les is a past president of the Securities Lending Division of the Securities Industry Association (SIA) and has been active in several industry initiatives, including the SIFMA Reg SHO Steering Committee, the SIFMA Prime Brokerage Committee, and the Agency Lending Disclosure Taskforce, which he chaired. Les is a member of the Parents’ Advisory Council of Kenyon College.
Les earned his BA from Cornell University and MBA from the University of Michigan.
September 30, 2009
PANEL ONE — Controls on “Naked” Short Selling: Examination of Pre-Borrow and Hard Locate Requirements
William J. Conley, Jr., Managing Director, Equities Division, Goldman Sachs
Bill is the head of Global Securities Lending and has responsibility for Trading, Marketing and Sales. He joined Goldman Sachs through the acquisition of Boston Global Advisors (BGA) in 1996.
From Boston, Bill relocated to London to establish a BGA presence and distribution capacity in 1997. He returned to Boston in 1999 and relocated to New York in 2001 to head securities lending in the Americas. He was named managing director in 2003 and partner in 2006.
Bill began his career in securities lending with the international equity group at State Street Bank in 1991. He is currently Chairman of the Board of Equilend, a securities lending industry platform. Bill received a BS in Finance and International Business from Northeastern University and currently serves as a Member of the Northeastern University Corporation.
Peter J. Driscoll, Chairman, Security Traders Association
Peter Driscoll serves as the Chairman of The Security Traders Association (STA), as well as the Chair of the STA Executive Committee and is a Co-Chair of the STA Washington Committee. Mr. Driscoll has been a member of the NASDAQ Institutional Advisory Council since 2002 and is also a member of the National Organization of Investment Professionals.
Mr. Driscoll is a Vice President and a Senior Equity Trader at The Northern Trust Company located in Chicago, IL. Mr. Driscoll, a life-long resident of the Chicago area, joined The Northern Trust Company in 2000.
Mr. Driscoll worked on the floor of the Chicago Stock Exchange from 1975 through 2000. During Mr. Driscoll’s last 10 years on the trading floor, he was the President of the Driscoll Trading Group, an institutional floor brokerage firm. Mr. Driscoll is also a former member of the Chicago Stock Exchange’s Floor Procedures and Rules Committees. He is a past President of the Security Traders Association of Chicago (STAC), past President of the STAC Fund, and is a former Director of STAC.
Mr. Driscoll earned his BS in Finance from Marquette University. He also holds an MBA from the Keller School of Management and an MS in Financial Markets and Trading from the Stuart School of Business.
Frank M. Hatheway, Ph.D., Chief Economist, NASDAQ OMX Group
Frank M. Hatheway is Chief Economist of the NASDAQ OMX Group Inc., and is responsible for a variety of projects and initiatives to support the markets and improve market structure. Since joining NASDAQ OMX, he has carried out a number of studies on NASDAQ and other markets, developed NASDAQ’s opening and closing auctions, and advised on major corporate initiatives such as the launch of the NASDAQ Options Market and NASDAQ OMX Europe.
Prior to joining NASDAQ OMX, Dr. Hatheway was a finance professor at Penn State University and a researcher in market microstructure. He has authored academic articles in the Journal of Finance, Journal of Financial Intermediation and other leading finance journals. Dr. Hatheway has served as an Economic Fellow and Senior Research Scholar with the U.S. Securities and Exchange Commission and received his Ph.D. in Economics from Princeton University.
William M. Hodash, Managing Director for Business Development, The Depository Trust & Clearing Corporation
Bill Hodash is the Managing Director for Business Development at DTCC, overseeing the identification and development of opportunities to expand DTCC’s various business lines, including focusing on data management, domestic regulatory initiatives and more generally on the Asia-Pacific region.
Mr. Hodash has managed a variety of functions during his 25 years with DTCC, including Product Management, Operations, Client Services, and Strategic Business Development. He served five years in several senior roles with Omgeo, DTCC’s joint venture with Thomson Reuters, and three years in London, opening and heading up DTCC’s first branch office outside the U.S.
Prior to joining DTCC, Mr. Hodash was an analyst in the Global Custody division of The Morgan Guaranty Trust Company of New York.
He is a Trustee of the SIFMA Securities Institute at the Wharton Business School, and holds an MBA from the Leonard N. Stern School of Business (New York University) and a B.S. from the State University of New York.
Paul F. Lynch, CFA, Senior Managing Director, Head of Global Trading, Securities Finance Division, State Street Corporation
Paul F. Lynch is a senior managing director and head of global trading, ECM, risk and portfolio strategy for State Street’s Securities Finance division.
Prior to assuming his current role, Mr. Lynch managed global trading for Securities Finance. Previous roles included managing the equity trading strategy group and overseeing the post-acquisition conversion of Deutsche Bank Global Security Services’ global portfolio management, trading, and collateral management functions. He was also instrumental in the development of EquiLend, an electronic securities lending platform developed by State Street and nine other industry leaders. In addition, he has been responsible for asset/liability risk management and portfolio strategy, euro implementation and product management for the third-party lending product.
Mr. Lynch joined State Street in 1996 as manager of the financial accounting department. Prior to that, he held positions in financial service firms, including Mellon Trust Asset Management, American Express and Coopers & Lybrand.
Mr. Lynch holds a Bachelor of Arts degree in economics from Boston College and a Master of Science degree in accounting from Northeastern University. He holds the Chartered Financial Analyst (CFA) designation and Series 7 and Series 63 registrations. He is a member of the CFA Institute and the Boston Security Analysts Society.
Michael Mendelson, Director of Global Trading Research, AQR Capital Management
Michael Mendelson is a Principal at AQR Capital Management LLC where he is a portfolio manager and is also responsible for portfolio financing. Michael is a member of the Firm’s Strategic Planning Committee and its Risk Committee. Before joining AQR, Michael was a Managing Director at Goldman, Sachs & Co. There he was the founder of and managed the Quantitative Trading group. He was also a member of the Equities Division Risk Committee. Michael holds undergraduate and graduate degrees from the Massachusetts Institute of Technology and a graduate degree from the University of California, Los Angeles.
Dennis E. Nixon, President and CEO, International Bank of Commerce, Chairman, International Bancshares Corporation
As the principal architect behind the unprecedented growth of International Bancshares Corporation and International Bank of Commerce, Dennis E. Nixon is widely recognized as one of the nation’s leading banking authorities and executives. Since joining IBC in 1975, Nixon has been instrumental in International Bancshares Corporation’s ranking as the largest minority-owned bank organization in the continental United States. Nixon’s knowledge in all areas of banking was pivotal in the development of IBC’s extensive acquisition and expansion efforts. The IBC family of banks has assets of $11.4 billion with 280 full-service branches, and more than 440 ATMs, throughout 104 communities in Texas and Oklahoma.
IBC’s strategic development designed by Nixon and his leadership team is best summed up in the company’s credo, “We Do More.” The bank’s outstanding growth and consistent performance with Nixon at the helm is what sets it apart from other institutions. An example of IBC’s growth is the 7-day full service in-store banking facilities at grocery stores such as H-E-B., Wal-Mart, Kroger, Randall’s and shopping malls. Nixon’s vision is to expand by providing the convenience of banking where people shop.
Internationally, Nixon was instrumental in the passage of the North American Free Trade Agreement. In May of 2008, IBC was recognized with the United States-Mexico Chamber of Commerce’s Good Neighbor Award for the bank’s contribution to the passage of NAFTA, on its 15th anniversary. Nixon has also been actively involved in its financial development, which has occurred between the U.S. and Mexico.
Nixon’s approach to banking, in which all customers large and small are cherished, is that which he describes as “local.” This unorthodox business environment has been achieved through years of building outstanding rapport with the communities IBC serves. This is clearly visible as he is avidly involved in the community and gives of his time willingly. Nixon promotes generosity and volunteerism from his employees by encouraging them to participate in charitable events. Through his selfless example, almost 70 percent of IBC employees participate in civic activities with various non-profit organizations. This commitment resulted in IBC receiving the Governor’s Volunteer Award for the State of Texas.
For his outstanding generosity, United Way honored Nixon with its acclaimed Platinum Corazón Award. His myriad of civic involvements, awards and recognitions have been on a national and international level. Other recognitions include the Junior Achievement Business Hall of Fame Award, the Paul Harris Fellow Award given by Rotary International for outstanding community service, and the Eleanor Roosevelt Humanities Award given by the State of Israel for outstanding services to humanity. In 2006, Dennis Nixon was inducted into the prestigious Texas Business Hall of Fame. In 2007, he was elected to serve on the board of directors of the United States Chamber of Commerce, and in 2008 he received the International Citizen Award from the World Affairs Council of San Antonio. Recently, he was selected to be the recipient of the Mr. South Texas 2010 honor by the Washington’s Birthday Celebration Association.
Other civic activities that Nixon participates in include the American Heart Association, the American Cancer Society, the Boys and Girls Club of Laredo, United Way of Laredo and other similar organizations to improve the health and quality of life for citizens of Laredo and South Texas. Nixon is Past President of the Laredo Chamber of Commerce as well as the Laredo Development Foundation. He is also a founding member of the Association of South Texas Communities and the Alliance for Security and Trade, bipartisan organizations for the betterment of South Texas. Nixon currently serves on the Board of Visitors of M.D. Anderson Cancer Center in Houston, TX.
Nixon is a graduate of the University of Texas. He is married to Elma “Bavi” H. Nixon, and has three children: Denise Nixon Bunk, Jonathan A. Nixon and Kristina E. Nixon Netzer; and four grandchildren, Samantha Rose Bunk, Charles Davis Bunk, Jonathan Dennis Nixon, and Sebastian Rolf Nixon.
William O’Brien, Chief Executive Officer, Direct Edge
William O'Brien joined Direct Edge as Chief Executive Officer in July 2007. As CEO, he is responsible for the management of all strategic, operational and administrative affairs of the company.
Prior to his appointment to Direct Edge, Mr. O'Brien was Senior Vice President, New Listings at The Nasdaq Stock Market, Inc. with responsibility for all Nasdaq efforts to increase U.S. listings, including IPOs, exchange transfers and structured products. He also was Nasdaq's Senior Vice President, Market Data Distribution, responsible for the sales, management and business direction of Nasdaq's real-time and historical market data business.
Mr. O'Brien joined Nasdaq in 2004 by way of Brut, LLC, where he had been Chief Operating Officer since 2002, helping lead the company through a period of significant growth and its acquisition by Nasdaq. He originally joined Brut as Senior Vice President and General Counsel in 2000. Mr. O'Brien also was Vice President and Assistant General Counsel at Goldman Sachs from 1998 to 2000 and was an attorney in Orrick, Herrington & Sutcliffe LLP's Market Regulation Group from 1995 to 1998. He has a B.A. from the University of Notre Dame and a J.D. from the University of Pennsylvania School of Law.
Thomas J. Perna, CEO, Quadriserv, Inc.
Mr. Perna retired as the Senior Executive Vice President at The Bank of New York, where he was head of the Financial Institutions Banking, Asset Servicing and Broker Dealer Services Sectors. Mr. Perna was also a member of the company’s Executive Committee.
Mr. Perna joined The Bank of New York in February 1986, when the bank acquired Fidata Trust Company (Bradford Trust Company), an innovative supplier of processing services to the institutional marketplace, where Mr. Perna served as President and Chief Executive Officer. Prior to joining Fidata, Mr. Perna served in systems and operations positions with the New York Stock Exchange member firms of DeCoppett & Doremus and H. Hentz & Company. He served on the Boards of Directors of the Depository Trust & Clearing Corporation (DTCC), Euroclear Bank S.A., Euroclear Clearance System Plc and Omgeo Plc, and is a member of a number of banking and securities industry associations.
Mr. Perna currently serves on the boards of Pioneer Mutual Fund Group and Broadridge Financial Solutions, Inc., and is a frequent speaker on capital markets issues.
PANEL TWO — Making Short Sale Disclosure More Meaningful: Public versus Non-Public Reporting; Consolidated Tape Disclosure; Timeliness of Information
James J. Angel, PhD., Associate Professor of Finance, Georgetown University
Jim Angel is an Associate Professor at the McDonough School of Business of Georgetown University. He specializes in the structure and regulation of financial markets around the world, and he has visited over 50 financial exchanges around the world. His current research focuses on short selling and regulation. He teaches undergraduate, MBA, and executive courses, including Financial Crises: Past Present and Future. Other courses include World Equity Markets and Regulation in Financial Markets
Dr. Angel began his professional career as a rate engineer at Pacific Gas and Electric, where he worked on FERC and CPUC related issues. Along the way he has also worked at BARRA (now part of Morgan Stanley) where he developed equity risk models. He has also served as a Visiting Academic Fellow in residence at the National Association of Securities Dealers (NASD — now FINRA) and also as a visiting economist at the Shanghai Stock Exchange. He has also been chairman of the Nasdaq Economic Advisory Board and a member of the OTC Bulletin Board Advisory Committee.
Dr. Jim received a B.S in Engineering and Applied Science and Economics from the California Institute of Technology, a Masters in Business Administration from the Harvard Business School and a Ph.D. in Finance from the University of California, Berkeley.
David Carruthers, Ph.D., Head of Quantitative Strategy, Data Explorers
Prior to joining Data Explorers, David spent 12 years as a risk consultant with Barrie & Hibbert, and 10 years in fund management.
Within Data Explorers he oversees the application of quantitative techniques in general, encompassing risk modeling for securities lending programs as well as the use of securities lending data by quantitative fund managers. He is leading the development of an industry standard framework for risk adjusted returns within the securities lending.
He is responsible for quantitative research based on the Data Explorers data set, including co-ordination of research from academic specialists in short selling and securities lending.
Richard Gates, Co-Portfolio Manager, TFS Capital LLC
Richard Gates co-founded TFS Capital in 1997 and serves as a co-portfolio manager at the firm. TFS employs proprietary quantitative models in its stock selection and also participates in a stock lending relationship of its “hard to borrow” securities. At the firm, Rich is responsible for overseeing trading and execution of the firm’s two open-ended mutual funds (TFS Small Cap fund and the TFS Market Neutral fund) and its two hedge funds. Across these four funds, TFS manages over $800 million. Year to date, TFS shorted over 116 million shares and longed over 282 million shares. Rich has a bachelor’s degree from the University of Virginia in Chemical Engineering.
Michael Gitlin, Vice President, T.Rowe Price Group, Inc., T. Rowe Price Associates, Inc., Global Head of Trading, T. Rowe Price
Mike Gitlin is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc. He is global head of trading for T. Rowe Price, and also has responsibility for the portfolio modeling and brokerage & trading services groups. Prior to joining the firm in 2007, Mike was head of U.S. equity sales for Citigroup Global Markets, where he also had served in the roles of head of Asia-Pacific sales trading, head of Asia-Pacific cash equities and head of international cash equities. Previously, he was also head of Asia-Pacific trading for Credit Suisse Asset Management and traded Japanese equities and bonds for George Weiss and Associates. Mike has had experience working in Hong Kong, Singapore and New York. He graduated with a B.A., cum laude, from Colgate University.
Jesse J. Greene, Jr., VP, Financial Management and Chief Financial Risk Officer, IBM
Jesse Greene is Vice President, Financial Management and Chief Financial Risk Officer of IBM where he is responsible for the identification, assessment and monitoring of financial risk elements for the corporation and leads the Corporate Financial Risk Management Board. In addition, he is responsible for the company’s retirement funds, worldwide real estate operations, investor relations and enterprise risk management.
Mr. Greene began his career at IBM in 1971, and has held a broad range of positions in IBM including Associate Engineer in the Advanced Systems Development division; Tax Attorney from 1975 to 1983; served 8 years in the Global Finance unit (financing customer purchases of IBM equipment), including the role of Vice President of Special Financing; and Assistant Treasurer for IBM from 1991 to 1994.
In 1994, Mr. Greene left IBM to join Eastman Kodak in Rochester, New York, first as Treasurer, then Vice President, Finance, acting Chief Financial Officer and Senior Vice President, Strategy and Information Technology. In 2000, Jesse joined Compaq Computer Corporation in Houston, Texas and served as Chief Financial Officer and Senior Vice President of Strategic Planning. In 2002, he returned to IBM as Vice President and Treasurer with responsibility for IBM’s balance sheet, cash flow, currency risk management, pension investments, real estate, investor relations and global tax operations. In 2007, he was named Vice President, Financial Management, continuing his existing responsibilities.
Mr. Greene graduated from Columbia University School of Law with a JD. He also holds an MBA from Columbia Business School, a Master of Science in Mechanical Engineering and Bachelor of Mechanical Engineering from New York University School of Engineering and Science. He is a member of the New York State Bar Association and the American Society of Mechanical Engineers. He currently is on the advisory board of Sponsors for Educational Opportunity in New York. He has served on the Board of Directors of the Strong Medical Center in Rochester, NY and has been a member of the Financial Executives International.
Joseph M. Mecane, Executive Vice President and Chief Administrative Officer for U.S. Markets, NYSE Euronext
Joe Mecane joined NYSE Euronext as Executive Vice President and CAO, U.S. Markets. At NYSE Euronext, Mr. Mecane is responsible for U.S. market planning, analysis and project oversight.
Prior to joining NYSE, he was Managing Director in the Equities Division of the UBS Investment Bank, responsible for overseeing the Broker Services business. He joined UBS in November 2004, when the firm acquired Schwab Capital Markets, where he was a Managing Director and Chief Operating Officer and oversaw Schwab’s Broker-Dealer business. Prior to joining Schwab in 2003, Mr. Mecane held a number of positions at Knight Securities. Previously, he had worked in the Securities Industry Practice group at PricewaterhouseCoopers LLP.
In addition to serving as a Governor of the Security Traders Association, Mr. Mecane is also a member of its Trading Issues Committee. His activities in other organizations include serving on the Trading Issues Committees of the Securities Industry and Financial Markets Association, the Security Traders Association of New York and the Wall Street Committee of the St. Jude Children’s Research Hospital. He earned his M.B.A. with honors from The Wharton School, University of Pennsylvania.
Michael Treip, Technical Specialist in the Market Infrastructure and Policy Department, U.K. Financial Services Authority
Michael Treip is a Technical Specialist in the Market Infrastructure and Policy Department of the UK Financial Services Authority. He is leading the FSA’s policy work on short selling, chairs the CESR short selling task force and is a member of the IOSCO task force. He is a lawyer of 20 years standing and has worked at the FSA for nearly 10 years, undertaking a variety of roles in the Enforcement and Markets Divisions. His regulatory experience spans policy, investigation, litigation and international cooperation. Latterly he has specialized in issues relating to market conduct. Before that, amongst other things, he acted as Secretary to IOSCO’s standing Committee 4 and Screening Group. Prior to joining the FSA he worked in private practice, specializing in criminal and public law, and in academia.