- The New York Stock Exchange’s Chief Regulatory Officer, Anthony Albanese, is leaving to join venture capital firm Andreessen Horowitz.
- There have been a number of federal investigations into trading practices made during his time overseeing the company’s internal watchdog group.
- NYSE has been under scrutiny from the SEC, including one investigation into stock trades made by Morgan Stanley brokers after the close of trading in late 2018.
- The SEC has also been investigating how the prices of some extremely popular stocks, like Slack, were disseminated to the public prior to IPOs and direct listings, a person briefed on the investigation told Business Insider.
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The New York Stock Exchange’s Chief Regulatory Officer, Anthony Albanese, is departing to join venture capital firm Andreessen Horowitz.
He’s leaving behind a number of federal investigations into trading practices made during his time overseeing the company’s internal watchdog group.
The departure of Albanese, who has overseen the roughly 100-person internal regulatory group since 2016, comes as NYSE has been under scrutiny from the US Securities and Exchange Commission. That includes one previously undisclosed investigation into stock trades made by Morgan Stanley brokers after the close of trading in late 2018, according to a person briefed on the investigation. It’s unclear when that investigation was initiated.
The SEC has also been investigating how the prices of some extremely popular stocks, like Slack, were disseminated to the public prior to initial public offerings and direct listings, the person said.
The Wall Street Journal first reported his move to the Silicon Valley firm. Albanese is going to Andreessen Horowitz in mid-November, a spokesperson for NYSE confirmed. It’s not clear who the exchange will name to take his place.
Andreessen Horowitz also confirmed the hire in a blog post, saying they had previously approached Albanese to work at Coinbase, a cryptocurrency trading platform.
“To be associated with two peerless names in global business and finance — the New York Stock Exchange and Andreessen Horowitz — is a source of honor and pride,” Albanese said in a statement sent by the NYSE. “The team we built at the NYSE is fearless and strong, and will serve our fair and orderly markets well as I join an equally talented team at a16z working to harness the incredible potential of digital currencies.”
NYSE has been under SEC scrutiny over its relationship with big customers
Albanese is ending his tenure at the 228-year-old exchange with a mixed record, even though he oversaw compliance at a time when the Trump administration was less generally less punishing of Wall Street firms than during the Obama years.
The SEC has been investigating the Big Board over an incident in December 2018 where exchange officials allowed brokers at Morgan Stanley to trade large blocks of companies like Yum Brands and Berkshire Hathaway for as long as eight minutes after the close of the trading, according to two people familiar with the investigation.
The incident, which was first reported by the New York Post, was a black eye for the exchange, which fielded complaints internally that it had bent the rule for a large customer, one person said.
The exchange’s internal regulatory group fined Morgan Stanley $75,000 in July 2019 because its brokers “had not sufficiently expressed verbal interest prior to the close of trading, and therefore, was not entitled to participate in the closing auction.” The SEC investigation is said to be focused on NYSE, not Morgan Stanley.
A spokesperson for the SEC declined to comment. A Morgan Stanley spokesperson declined to comment. NYSE declined to comment on any SEC investigations.
Federal regulators have also been probing alleged irregularities into how the exchange broadcast the demand for companies like Slack prior to their initial public offerings, three sources who are directly familiar with the investigation have told Business Insider.
SEC investigators are looking into whether brokers and designated market makers, which take on some risk to ensure that trades are completed, were withholding from the public data on the price of stocks prior to their trading — and saving that information for their clients, the sources said. One source directly familiar with the investigation, which Fox Business first reported last year, said it is still ongoing.
The regulator, along with the Justice Department, also said in June that it was scrutinizing the data businesses of exchanges like NYSE, Nasdaq, and others.
The Big Board went through a major change in oversight in 2016, the year Albanese joined the company.
Before then, the Exchange had relied on a Wall Street watchdog organization of brokers, called the Financial Industry Regulatory Authority, or FINRA, to oversee the trades made on its systems.
But in 2016, NYSE severed an $85 million a year contract with FINRA and took its entire regulatory group in-house, with the SEC’s blessing.
The NYSE, like other exchanges, is a self-regulatory organization, meaning that it can police its own conduct, but is under the supervision of the SEC. While federal regulators sometimes punish exchanges for breaking securities rules — like the $14 million in fines and penalties NYSE paid in 2018 for multiple failures that predated Albanese — the daily monitoring of trades is done in house.
Albanese joined the Big Board after spending about six months as the acting superintendent of the New York Department of Financial Services, the state’s top financial regulator. Prior to that, he had been chief of staff under Ben Lawsky, a hard-charging regulator who went after banks like BNP Paribas for money laundering.
During Albanese’s time at the regulator, he also oversaw the creation of the bitlicense, a regulatory framework that allowed for cryptocurrency exchanges to operate in New York.
But Albanese’s tenure raised eyebrows nearly from the beginning, especially from floor brokers, many of whom have never taken to ICE’s corporate culture since the Georgia-based company bought the exchange in 2013.
Some of those brokers viewed him with suspicion since he didn’t have deep experience in the knotty and technical world of market structure, one former broker told Business Insider.
The New York Stock Exchange’s parent company, Intercontinental Exchange, has separately drawn attention this year for trades by its own top executives.
Jeff Sprecher, the CEO of the Atlanta-based ICE and Chairman of the NYSE, and his wife, Georgia Senator Kelly Loeffler, sold millions in stock prior to a sharp market sell-off in March brought on by fear of the coronavirus.
The two have denied any wrongdoing, and Loeffler has said that her shares were sold by a third party.