In between dodging downpours from remnants of Hurricane Mitch, industry execs faced outbursts from the Rev. Jesse Jackson and SEC Chairman Arthur Levitt during the Securities Industry Association's annual conference Nov. 4-7 in Boca Raton, Fla.
Jackson chided the securities industry for overlooking talent from portions of American society. At a breakfast address, Jackson told attendees, "The representation here does not represent the brains, character and effort of America." He also pointed out that segments of the population are underserved by the industry. He used repeated references to Appalachia as one area that's close to Wall Street yet in need of private capital and brokers. His address was received with polite applause.
SEC Chairman Arthur Levitt praised the SIA for having Jackson. "As recently as five or six years ago, the kind of program that took place yesterday [Jackson's talk] simply would not have been possible," Levitt said.
But Levitt didn't let industry leaders off the hook. "There are some practices I continue to see that, quite frankly, trouble me," he said. Levitt criticized paying brokers "by their total output, instead of the quality of their output." Other problems: "Brokers aggressively pushing only their own firm's mutual funds [and] pushing stock that their companies are underwriting."
In a press conference following his speech, Levitt said one of the "most encouraging" trends has been the move toward fee-based compensation. "Research needs to be geared to the retail customer," he added, and "brokers should be rewarded for [meeting] specific training" goals and for selling "a broad range of products."
NASD head Frank Zarb regaled attendees with his "market of markets" concept. And at a press reception, the SRO rolled out an ice sculpture of its new Nasdaq/AMEX logo. Meeting with reporters, Zarb noted that the NASD was also working on deals with the Deutsche Brse in Frankfurt, Germany, and the Hong Kong Stock Exchange. Yet Zarb admitted that the NASD has come up short in examiner training, which he termed "very disparate" and a "mixed-bag." The NASD's solution is the NASD Institute, a training program for examiners and compliance pros to begin next year at New York University.
Surprise speaker Joe Torre, manager of the New York Yankees, easily received the most enthusiastic welcome at the conference. The audience ate up his anecdotes, savoring bits of the Yankees' World Series win in between Torre's tips on leadership. But the plainspoken Torre admitted leadership doesn't go far without talent. It was easy to win "with the players [Yankees owner] George Steinbrenner gave me," he said.
At a press conference during the SIA conference, Citigroup co-CEO Sanford Weill explained the rationale for the Nov. 1 departure of Salomon Smith Barney co-CEO James Dimon.
"It was very hard for Jamie to leave, but it's something that will work better for Jamie and all concerned," Weill told reporters. The problem was merging the firms' global investment banking operations. "We never came up with a way to get it done."
Michael Carpenter, former head of Travelers Life & Annuity, was put in charge of retail, and made co-head of investment banking. Weill was peppered with questions about Carpenter's track record and role as head of Kidder Peabody during that firm's bond trading scandal.
"That was a troubled situation," Weill said. "I think [Carpenter] did a very good job" at Kidder.
Weill credited Carpenter for offering suggestions on how to effectively merge the Citicorp and Salomon investment banking teams, and indicated that Carpenter was the bestperson to work with Citicorp management.