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Gordon S. Macklin, 78; a pioneer in electronic stock trading

February 01, 2007|Alex Pham | Times Staff Writer

Gordon S. Macklin, founder of the Nasdaq stock exchange and an architect of the modern system for electronic stock trading, died Tuesday of a stroke near his Delray Beach, Fla., vacation home. He was 78.

Macklin, who was president of the National Assn. of Securities Dealers from 1970 to 1987, introduced the world to electronic stock trading in 1971 via bulky cathode ray terminals that allowed thousands of brokers across the country to buy and sell shares over the computer instead of manually over the counter. That system was called the National Assn. of Securities Dealers' Automated Quotation, or Nasdaq.

"This was the first electronic stock market," said John Coffee, a Columbia University professor who specializes in securities law.

"Prior to Nasdaq, every market had a physical location. Nasdaq took dealers from around the U.S. and knitted them together electronically into one market. Like many things that changed the world, it started slowly with not a lot of attention," Coffee said. "And its significance was not recognized until a decade or so later. Now, all markets, including the New York Stock Exchange, are becoming predominantly electronic markets. So Nasdaq was the beginning of the future. And Gordon Macklin was the person most responsible for that."

Having been on the technological forefront of the securities market, Nasdaq in the 1990s became the venue of choice for hot technology companies such as Google, EBay. and Yahoo to debut their stock. More than a quarter of its listings are technology companies. But as the nation's second-largest stock exchange after the New York Stock Exchange, Nasdaq also is home to many non-tech firms, including Staples., Starbucks and Charles Schwab.

Today, 3,200 companies with a combined value of $3.7 trillion list their shares on Nasdaq.

After 17 years at the helm of Nasdaq, Macklin left in 1987 to become chairman and co-chief executive of Hambrecht & Quist Inc., a San Francisco investment banking firm that was behind the initial public offerings of such Silicon Valley luminaries as Apple and Genentech.

Macklin was credited with imposing discipline on a young entrepreneurial firm that had grown too quickly. Under Macklin, the firm increased its business, reduced employee turnover and slashed overhead costs by 20% during his five-year tenure.

"He developed some management processes that made us more of an institution, rather than an artists' colony," William Hambrecht, the co-chief executive of Hambrecht & Quist with Macklin, said in a 1992 interview with the San Francisco Chronicle. "He made committees and lines of authority really work and brought everyone together as a team."

From 1993 to 1998, Macklin was chairman of White River Corp., an insurance company that also invested in oil and software companies. Since then, he served as managing general partner of the Franklin Templeton Group, where he was the trustee or director of 48 funds.

He also served on the boards of many companies, including WorldCom Inc., whose chief executive and chief financial officer have been sent to prison for their roles in the telecommunications company's $11-billion accounting fraud. Macklin was among 10 former WorldCom board members who in 2005 reached a $54-million settlement with shareholders over the scam that led to the largest bankruptcy case in U.S. history.

While the WorldCom association tarnished his reputation, many defended Macklin as a competent advisor who was unwittingly caught up in the secretive and byzantine scam.

"Gordon was a great advisor to this company since our start-up days," said Inc. Chief Executive Patrick Byrne.

"At most, he was accused of not being alert enough, which is something that all of us are occasionally guilty of," said Coffee, who also is director of the Center on Corporate Governance at Columbia.

Still, the WorldCom debacle pained those who knew Macklin.

"He was just a good-hearted man," said Anna Fukara, Macklin's longtime personal assistant. "Anyone who had the chance to meet him would pick that up right off the bat. He was wise, witty and fun."

Macklin was born in Cleveland and earned bachelor's degrees from Brown University in 1950.

He worked at McDonald & Co., a securities firm, from 1950 to 1970.

He is survived by two daughters, two sons, 10 grandchildren and one great-grandson.

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