updated 12/18/2003 10:53:51 AM ET 2003-12-18T15:53:51

Moving quickly after federal regulators approved an overhaul plan for the New York Stock Exchange, the Big Board named Goldman Sachs investment firm president John Thain as the exchange’s new chief executive.

Major Market Indices

The announcement Thursday came only a day after the Securities and Exchange Commission approved the NYSE’s proposal to overhaul its governing structure, including splitting its top executive positions to avoid a concentration of power.

Thain, 48, will succeed interim CEO and chairman John Reed, who has held those positions since the September ouster of Dick Grasso amid a furor over the size of his pay package.

Grasso’s $188 million pay package raised the issue of an imperious chief executive and exposed potential conflicts of interest stemming from the exchange’s structure.

At a news conference where Thain was introduced, Reed, who led the search for a permanent successor, said, “I think we have an exceptional person at a time when frankly we require an exceptional person. There are a lot of things we need to get done and I think John will do that,” Reed said. Video: Big Board names new CEO

Reed also said Thain was known for “integrity, intelligence, and extensive knowledge of the financial markets.”

But the selection could disappoint those who were hoping that the new NYSE CEO could come from outside Wall Street. Goldman Sachs is one of Wall Street’s most prominent investment firms.

On Wednesday, SEC commissioners voted to approve an overhaul plan for the nation’s largest stock exchange after NYSE separately agreed to separate the jobs of chairman and CEO. The plan also calls for the NYSE to establish a smaller and more independent board of directors to oversee regulation of the exchange and appointment of a chief regulatory officer.

Reed has resigned as interim CEO but will stay on as interim chairman while the search continues for a permanent chairman of the NYSE. Reed, a retired Citigroup co-chief executive who is being paid a symbolic $1 to overhaul how the exchange governs itself, says he hopes to name a permanent chairman by year’s end.

Thain’s appointment is effective Jan. 15, and Reed said Thain will be paid $4 million a year.

In a statement, Thain said he viewed the appointment as “a tremendous opportunity and challenge” and said he intends “to build on the strengths of this great institution.”

Thain has been president of Goldman Sachs Group since May 1999 and previously oversaw its European operations as well as Goldman’s involvement in electronic trading platforms.

The NYSE’s trading system in which human “specialists” are responsible for matching buyers ands sellers of stocks has been criticized as being antiquated.

At the news conference, Thain said his goal was to ensure the exchange remains “the most liquid and most efficient marketplace and that may involve a greater degree of electronic trading.”

Thain had been seen as a possible successor to Goldman Sachs CEO Henry Paulson, though Paulson has not announced plans to retire.

Paulson praised Thain and the NYSE’s selection of him, in a statement Thursday.

“John has distinguished himself throughout his career by his rigorous intellect and personal character,” he said. “While we are sorry to see him leave Goldman Sachs, the New York Stock Exchange is fortunate to gain such an able and effective leader.”

Reed proposed the NYSE’s overhaul plan, which was endorsed last month by nearly all the exchange’s members.

SEC Chairman William Donaldson described the overhaul plan on Wednesday as “a significant step forward in meaningful reform.” Another commissioner, Harvey Goldschmid, said “Much more may be needed.”

But the NYSE decision to split the chairman and CEO jobs wasn’t enough to satisfy officials of the biggest U.S. public pension funds, controlling hundreds of billions of dollars in nine states. They continued to insist that the proposed NYSE reforms are insufficient to restore investors’ trust shattered by revelations of the Grasso pay package.

“We are very disappointed that the SEC has voted to approve the Reed plan without seeking further changes besides splitting the chair and CEO positions,” the fund officials said in a statement Wednesday.

On Tuesday, the nation’s largest public pension fund, the $154 billion California Public Employees Retirement System, announced it is filing a class-action lawsuit against the NYSE and seven trading firms, alleging that fraudulent practices cost it millions of dollars in recent years. The pension fund is seeking unspecified damages, but fund officials said it could add up to hundreds of millions of dollars if other parties join the suit.

The NYSE and the SEC have been investigating the alleged trading abuses. CalPERS officials said they decided to sue rather than rely on the SEC because the agency has not fulfilled its regulatory duties.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com