The Catholic University of America

 

 

Richard Ketchum, chairman and CEO of FINRA, addressed the
CUA Law Securities Alumni Association annual luncheon on Nov. 4, 2010.

 

FINRA's Top Officer is Keynote Speaker
at 2010 Luncheon of Securities Alumni Association

 

It’s not every day that one can catch up with cherished friends at a relaxed and informal lunch, while at the same time benefit from a small-setting professional tutorial from some of the leading names in the industry.
 
Year after year, the annual luncheon of Catholic University’s Securities Alumni Association manages to offer both, due in no small part to the reputation and connections of the securities law program itself.
 
This year was no exception, as approximately 65 alumni, students and guests gathered on Nov. 4 at the Army-Navy Club in downtown Washington, D.C., to reconnect with each other and also to hear from Richard Ketchum, chairman and CEO of FINRA, the largest independent regulator for securities firms doing business in the United States.
 
Ketchum devoted his keynote remarks to the implications for the securities industry of the Dodd-Frank Act, signed into law during the summer of 2010 as the centerpiece of financial regulatory reform agenda for the Obama administration.
 
Passed by Congress as a response to the recent recession, the new law is the most sweeping change to financial regulation in the United States since the Great Depression.
 
Among the many changes it poses to the industry is its dictate to the SEC to devise a uniform fiduciary duty rule for brokers and investment advisers. Ketchum, who served as CEO of the New York Stock Exchange from 2006 to 2009, noted that the development of new trading products has obliged stockbrokers to frequently act as investment advisers as well.
 
It can create a conflict of interest, such as when the broker has a financial interest in the product that he or she sells. The Dodd-Frank Act requires the avoidance of conflict of interests in that regard, and Ketchum suggested that the brokerage firms develop more simplified and understandable disclosure practices.
 
The regulatory chief also spent a few minutes discussing the “flash crash” on May 6 2010, during which the Dow Jones Industrial Average plunged about 600 points only to recover those losses within minutes.
 
Richard Ketchum with Professor David Liption (right),
director of Catholic University's Securities Law Program.
 
Ketchum explained that today’s blazing-fast computers and internet communication tools have tilted the trading industry toward computerized, algorithmic-driven, order generating systems.   They are programmed to react instantly when the systems smell a buy or sell opportunity. A uniform sell order can cause the market to drop in a flash. 
 
Ketchum is a member of a joint committee of the SEC and the Commodity Futures Trading Commission that has been tasked with devising a workable solution to the problem.
 
The luncheon’s organizer, Professor David Lipton, switched to a more personal tone when he greeted the assembled alumni, nearly all of whom are graduates of the Securities Law Program that he directs.
 
“I always have an excited feeling knowing what a special group you have become. So many of you have helped the program. So many of you have extended your hand to another graduate,” said Lipton.
 
“The only thing I know how to do or say with certainty is to remind each of you how much I appreciate your presence, your friendship, your professional achievements,” he concluded.