REFILE-UPDATE 2-Former SEC adviser eyed for markets regulator post-sources

Fri Apr 12, 2013 2:36pm EDT

By Sarah N. Lynch and John McCrank

WASHINGTON/NEW YORK, April 12 (Reuters) - U.S. Securities and Exchange Commission Chairman Mary Jo White is eyeing a former adviser to ex-SEC Chairman Arthur Levitt as a potential contender for a key post in the division that oversees financial markets, three people familiar with the matter told Reuters.

Joseph Lombard, a market structure expert at law firm Murphy & McGonigle, is considered a leading candidate for a position in the agency's Trading and Markets Division, they said.

A second name being floated for a possible job in the division is Chris Concannon, a former executive with Nasdaq OMX Group Inc who now works for high-frequency trading firm Virtu Financial LLC, according to the three sources, who spoke anonymously as the details were from closed-door discussions.

The Trading and Markets Division at the SEC is in charge of overseeing exchanges, brokerages and clearing agencies.

It is currently working to complete new rules for the $640 trillion over-the-counter derivatives industry, and is also in the midst of reviewing whether to make critical changes to equity market structure.

Lombard previously served on the executive team at Archipelago Holdings where he was president of the company's electronic brokerage subsidiary, according to his bio.

He also worked as a managing director in the global equities division of Merrill Lynch, and served as a senior counsel to Levitt from 1999 to 2001.

Concannon, meanwhile, is a partner at high-speed trading firm Virtu Financial LLC, which attempted to buy Knight in December, but lost out to rival high-speed trading firm Getco Holding Co. [ID: nL1E8MS3LY]

He worked as an attorney at the SEC from 1994 to 1997. He later held key positions at Instinet Clearing Services, Island ECN, and Nasdaq OMX Group.

Bloomberg reported earlier on Concannon being a contender, though a follow-up story by the Wall Street Journal cited people familiar with the matter as saying that Concannon had told executives at Virtu he was unlikely to leave his current post.

Both Lombard and Concannon declined to comment.

Market structure concerns, such as the role of high-speed traders in the market, became a front-and-center regulatory issue following the May 6, 2010 "flash crash" in which the Dow plunged roughly 700 points before sharply rebounding.

It has continued to be a focus of the SEC, especially following a recent string of technology glitches over the past year, from Nasdaq's botched handling of Facebook's initial public offering to Knight Capital's $440 million trading loss due to a software error.

The coveted director position is currently being filled by an acting director, John Ramsay.

Mary Jo White, a former federal prosecutor and partner at Debevoise & Plimpton, was sworn into the SEC Wednesday as its new chairman.

Although little is known yet about her views on market structure regulatory policy, White told lawmakers during her confirmation hearing that she wanted to examine computer-driven and high-speed trading to see whether any new rules were needed to protect investors.

"There must be a sense of urgency brought to addressing these issues to understand their impact on investors and the quality of our markets so that the appropriate regulatory responses can be made," she said.

The fact that she is already weighing job candidates for the Trading and Markets Division signals that she is following through on her pledge to keep the focus on market structure.

One source familiar with the SEC's thinking said that White was intent on finding people with experience in the securities industry to run the division.

"The people they've had have been reasonable people, good lawyers, but not industry people. And so what ends up happening then is the staff rules the roost - they have them at their mercy because they know the facts," the person said.

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