James Needham; Headed N.Y. Stock Exchange
Tuesday, April 10, 2007
James J. Needham, 80, the first full-time, salaried chairman of the New York Stock Exchange, who presided over the Big Board during the legislative and regulatory tumult of the early 1970s, died April 6 at his home in Southampton, N.Y. He had myelodysplastic syndrome, a bone marrow disorder.
Mr. Needham was a certified public accountant and held a seat on the Securities and Exchange Commission before the NYSE hired him in 1972 to guard against reforms proposed in Washington that would make the securities industry less clubby and far more competitive to smaller investors.
Among the major changes he tried to prevent on his four-year watch was the elimination of fixed brokerage fees -- a nearly 200-year-old practice -- and the implementation of negotiated rates for stock transactions.
John C. Coffee, a securities law expert at Columbia University, said Mr. Needham "was on the wrong side of history" on rate reform.
In time, the 1975 congressionally mandated ban on fixed fees "proved to be a huge boon for the securities industry," Coffee said. "Once competitive rates were abolished by Congress, we got more trading, and the public was more willing to buy securities." He said commissions for smaller investors were as high as 10 to 15 percent, but today "it's pennies." He described the NYSE as "a cartel that fixed rates."
At first, Mr. Needham proposed to work with Congress on negotiated commission rates, if Congress would in essence do away with third-market trading -- when a publicly traded stock moves from investor to investor and circumvents a stock exchange.
He later took a harder stand, memorably challenging the SEC to fight the change "on the courthouse steps" to prevent a change to negotiated rates. He argued that the change would reduce incentive for NYSE membership.
Because of what some regarded as an outwardly brash personality, Mr. Needham wound up angering important constituencies in New York and Washington. He further had the misfortune to serve during a major market downturn, which made elimination of fixed commissions harder for many companies to endure, as some reduced fees by 50 percent to lure clients. Many companies merged; others were shuttered.
Mr. Needham was widely reported to have been pressured into resigning in April 1976. He left office nearly two years before his contract was to expire and was replaced by William M. Batten, a former chief executive of the J.C. Penney department store chain and an exchange director lauded for his diplomatic skills.
The contractual remainder of Mr. Needham's $400,000 annual salary was paid to him as a lump sum on his departure.
He made news in 2003 for criticizing what he considered NYSE excesses, including the $139.5 million payout package at the time for NYSE Chairman Richard Grasso. Mr. Needham said Grasso and the NYSE board should resign, adding, "The NYSE is now beginning to look like Enron and all those other crummy companies."
James Joseph Needham was born Aug. 18, 1926, in Queens, N.Y. As the eldest of three children, he helped support his family after his father died. After Navy service during World War II, he graduated from St. John's University in Queens with a bachelor's degree in business administration in 1951.
After college, he joined Price Waterhouse. He was a partner at A.M. Pullen & Co. before becoming, in 1969, the first accountant appointed to the SEC.
Later, he arrived at the NYSE after a massive reorganization that did away with the board of governors and replaced it with a paid chairman who led 20 directors, half from the brokerage community and half from the greater business world. Mr. Needham was credited with making advances toward computer automation on the exchange to reduce paperwork and trading backlogs.
After leaving the Big Board, he did corporate consulting on planning, financial and regulatory matters and served on company boards. President Ronald Reagan named him U.S. ambassador to the International Exposition in Japan in the mid-1980s, and he served a term on the Southampton Town Council in the early 1990s.
His wife, Dolores Habick Needham, whom he married in 1950, died in 1993.
Survivors include his wife of 11 years, Patricia Campo Needham of Southampton; five children from his first marriage; a brother; a sister; and two grandchildren.