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NYSE to Hold Hearings on Governance

May 16, 2003|From Bloomberg News

The New York Stock Exchange, under fire for failing to meet governance standards it prescribes for its listed companies, told the Securities and Exchange Commission on Thursday that it will hold hearings on the issue in June.

The Big Board will solicit comments from organizations and individuals it represents for their view "on how to improve our corporate governance," NYSE Chairman Richard Grasso wrote in a letter to SEC Chairman William H. Donaldson, a former NYSE president.

Donaldson in March ordered the NYSE and nine other exchanges to tell him by Thursday how they plan to ensure their governance policies are ethical models for their members. Shareholder activists and government officials criticized the NYSE for not adequately representing investors and not disclosing information on its own operations even as it regulates members' disclosure practices.

"The proposals better be far-reaching or they'll get sent back to the drawing board," said Patrick McGurn, senior vice president of Institutional Shareholder Services. "I don't think the SEC will accept anything less at this point."

The NYSE will hold the hearings and begin soliciting comments in June, and has no timetable for development of a final policy, exchange spokesman Raymond Pellecchia said.

The NYSE established a corporate governance committee in February that will coordinate the hearings and "seek broad input," Pellecchia said. Grasso's letter said the committee will seek comments from exchange "constituents," who include traders on its floor, brokerage firms that own memberships, listed companies, and individual and institutional investors.

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