Grace Vogel has been the executive vice president of Member Firm Regulation for New York Stock Exchange Regulation since June 2004. Vogel's division conducts ongoing surveillance and annual exams of NYSE's nearly 400 member firms for financial, operational and sales-practice compliance. Registered Rep. spoke with Vogel about regulatory duplication and the NYSE's enforcement record.
Registered Rep.: You were “on the other side” (i.e., working for member firms) for years. How has your opinion of regulators changed?
Grace Vogel: I started my career as a regulator, first for NASD, then for NYSE, before a 12-year stint in the industry at J.P. Morgan & Co. and Citigroup. That's given me valuable perspective on the pain felt by many firms. Given the industry's track record in the past few years, regulators can't reduce their focus on investor protection. But there is a way to diminish the burden on the firms. That's why my boss, [NYSE Chief Regulatory Officer] Rick Ketchum, and I have worked hard since we joined the organization in 2004 to reduce regulatory duplication.
RR: How has that been done?
GV: We've focused upon coordinating NYSE Regulation and NASD regulatory efforts. Exams, rulemaking and enforcement are three areas that have had the greatest impact on reducing regulatory duplication.
RR: Critics argue that the NYSE was somewhat lax in its self-policing activities — until Spitzer came to life.
GV: NYSE's program was stronger than most people realize. Nevertheless, it is true that the December 2003 governance reorganization that led to NYSE Regulation reporting directly to a regulatory committee, and not the CEO, was an important factor in getting us to the next level. In terms of enforcement actions, from 2001 through Feb. 29, 2004, NYSE took 750 enforcement actions and levied total fines of $23.8 million. From March 1, 2004, when Ketchum took over, to today, 357 enforcement actions have been taken with $44 million in fines levied.