Big Board’s Chairman Known for Dedication, Ethics and Iconoclasm : Phelan Praises SEC’s Handling of Boesky Case
John J. Phelan Jr.’s typical 15-hour day starts in his posh office, where the pinstripe-suited chief of the New York Stock Exchange confers with powerful corporate executives and monitors billions of dollars worth of trades via four computer screens and a high-speed digital ticker tape on the wall.
But the man who oversees the world’s biggest securities market still finds time to walk around the frenzied trading floor or grab an occasional $3.50 haircut from the barber in the basement of No. 11 Wall Street.
“I think the contrast is one of the nicest things about the exchange, which is that all kinds of people have been able to come into it, find their niche, make their living, do other types of things,” Phelan says. “It’s kind of a microcosm of the United States.”
Shrewd, aggressive and articulate, the 55-year-old chairman and chief executive of the NYSE has steered it through some of the most turbulent and exciting times since the first New York stockbrokers founded the exchange under a buttonwood tree in 1792.
Spearheaded Change
Phelan, who was the exchange’s president before becoming chairman, has been credited with transforming the Big Board from a stodgy, antiquated institution into a frenetic computerized marketplace locked in hot competition with a growing number of rival stock exchanges worldwide.
In order to attract more business, he has challenged some of the most sacred rules in the exchange’s charter, ranging from restricted hours to the one-share, one-vote rule that listed companies must abide by.
Despite a distaste for air travel, he has journeyed from Peking to Paris to generate more interest in the securities industry. He has raised the possibility of 24-hour trading, with rotating shifts to handle the added work.
Phelan has presided over Wall Street’s greatest extended rally and nine sessions in which the number of shares changing owners in a day topped 200 million. That compares to an average daily volume of about 11 million shares in the 1970s.
Perhaps more importantly, Phelan is widely considered a spokesman for high ethical standards in a profession that lately has been tainted by scandal, notably the case against speculator Ivan F. Boesky, accused of illegally reaping millions of dollars by trading on non-public information.
“I’m certainly annoyed as anybody about Boesky,” Phelan said. “When there are so many other good things going in the world, all of a sudden a fellow like this crops up, and you’ve got one or two bad apples in the bunch.
“Unfortunately, there’s going to be more coming out of this, but I think the important thing is that the system itself and all its pieces are trying to cleanse themselves.” Phelan credited the Securities and Exchange Commission with catching Boesky, despite widespread criticism that the watchdog agency treated him with excessive lenience.
Praise for the SEC
“Having lived in this environment of trying to catch people, I certainly do praise them for it, because it’s very difficult to catch somebody, particularly a professional, who has been doing an enormous amount of trading, and to pick out from all that trading what he has stolen,” Phelan said.
He made the comments during an interview in his sixth-floor office, a vast suite of polished wood furniture, tall ceilings, muted gray carpets and advanced technology.
A descendant of Irish Catholic immigrants, graduate of Adelphi University and father of three grown sons, Phelan has graying hair, rosy cheeks, a wry smile and a shameless New York accent.
He has spent most of his adult life on Wall Street, first with his own securities business and later as an NYSE officer. He became chairman and chief executive in May, 1984.
Phelan’s salary remains a closely guarded secret, but estimates have ranged from $750,000 to well over $1 million. NYSE spokesman Richard Torrenzano said the salary of President Robert J. Birnbaum is $500,000, “so that ought to give you some idea what the chairman makes.”
Arriving at the exchange via limousine by 7:30 a.m., Phelan is preoccupied with the job during the day and often into the night, when he is called on to make appearances at dinners or give speeches on behalf of the exchange.
But the pressures of running an exchange where 1,563 companies list stock worth more than $2.1 trillion have little outward effect on Phelan, who says he relaxes by reading mystery novels, sailing the family boat or attending concerts. He stays in shape by walking on a treadmill machine.
“I hate exercise, absolutely detest it, and am forced to do it because I’m convinced it’s necessary if you like to stay healthy and vigorous,” he said. “I think the job keeps me healthy as well, and I like the stimulus of it. I also have learned over the years to compartmentalize my life so that I can, most times, get onto something else and don’t carry a lot with me.”
Despite his belief in the stock trading system and its enormous potential for growth, Phelan expresses some worry over what he calls a decline of ethical standards, as reflected by the Boesky scandal.
“We do have some concern that people in Wall Street today are just coming for money. Years ago, you used to see them coming for other things,” he said.
“But on the other hand, I think those of us in--I hate to say it--the older generation, around for 25 or 30 years, have a certain responsibility as well, because we are the ones who are supposed to pass on the ethics and values in an industry that’s totally changing, in which the amount of money is absolutely enormous, in which the temptations involved are so great.”
