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    May 21, 2008  




It’s not just a trendy political slogan—change has been happening since the turn of the new century at NASD.  Whoops, even the name has switched. It’s now called  FINRA (Financial Industry Regulatory Authority), and GC Grant Callery tells us FINRA’s busy dealing with its latest transformation: integrating a 450-employee organization that regulates NYSE member firms.


A compulsory-membership organization policing broker/dealers who sell securities to the public (5,000 of them total, from Charles Schwab down to mom and pop shops), FINRA took on its new name after last year’s combination with the member-regulatory arm of NYSE Regulation, which makes it the watchdog of NYSE members as well. GC duties at FINRA are actually split into two jobs, with Grant overseeing traditional concerns like employment issues and relations with the Board (which has 23 seats, recently reorganized to ensure diversity of representation—3 seats for large firms, 3 for small firms, 1 for independent financial planners, etc.). His counterpart Marc Menchel takes care of regulatory policy and now has the daunting task of combining the old NASD manual with the three-volume guide for NYSE types. We suggested that Grant help out by just smushing them all together (see pic), but it didn’t seem to have much effect.


As you can see by his artistic handiwork, Grant’s a frustrated photographer (favorite subject: his one-year-old grandson in Frederick). But doings at NASD/FINRA, where he’s worked since 1979, have kept him too busy to make his hobby a full-time calling. After it created the NASDAQ in the 70s and acquired the American Stock Exchange in the 90s, the NASD sold off its markets starting in 2001 to focus on oversight. Grant says between the divestitures and last year’s acquisition, he’s become much more of a transactional lawyer than he ever imagined. These aren’t everyday transactions, though: FINRA, organized as a Delaware non-stock corporation, is authorized by §15A of the 1934 SEC Act and has government-like authority to discipline it’s members. The merger with NYSE Regulation, Grant tells us, started as a typical M&A—it began with a term sheet and went from there—but included an “overlay of SEC approval.”


When looking for outside counsel, Grant sticks to the theory that “I never hire a firm—I hire a lawyer.” His go-to counselors are Joe Warin at Gibson Dunn and Brad Bennett of Baker Botts for litigation, Bill Haubert of Richards, Layton & Finger in Delaware for corporate, and a team at Shearman & Sterling in NY for transactional work. The real question, though, is what years of regulating have taught him about succeeding in the stock market. Sadly, not much: “I don’t play the market. I’m very bad at it.” 

John Ford is Bisnow’s Managing Editor. Got a story tip? By all means, pass it on to john@bisnow.com.

Gilbert Randolph
Intelligent Office
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