Lobby's Co-CEO Quit After Probe
Thursday, May 17, 2007
Wall Street's largest and most important trade association yesterday acknowledged for the first time that one of its co-chief executives resigned abruptly earlier this year after an internal investigation uncovered loose financial management by him.
Micah S. Green, 49, resigned from the Securities Industry and Financial Markets Association (SIFMA) after the group's board learned about loans to employees that he had approved without sufficient authorization while he headed one of the two groups that merged to form SIFMA, industry executives familiar with the investigation said.
Green received at least one of those loans himself, which he paid back in full.
Green's sudden departure from SIFMA surprised both K Street and Wall Street. He was widely believed to be on track to become the sole chief executive of the association when Marc E. Lackritz, 60, relinquished his co-leadership role in a few years.
Instead, the organization issued a brief statement March 29 asserting that a single chief executive would be more efficient and that Green would "refocus his professional activities in the Washington, D.C. area." No mention was made of an investigation into the finances of the predecessor group, the Bond Market Association (BMA).
Yesterday, SIFMA altered its position to include inadequate procedures at the BMA as a reason for Green's departure.
"The SIFMA Board reviewed anonymous allegations regarding past practices at the BMA, one of SIFMA's predecessor organizations," SIFMA said in a written statement. "These allegations proved largely unfounded, but it was determined that certain internal controls and procedures at the BMA could have been improved. These procedural deficiencies were among the factors considered when SIFMA moved to a single CEO structure."
The SIFMA investigation found that over the past decade or so, the BMA gave about a dozen loans to employees that totaled nearly $1 million, industry executives said. Some were approved by the board, but many were not and should have been.
The largest of the loans was for nearly $200,000 and was interest-bearing. Some of the loans were interest-free. The executives familiar with the situation said all the loans had been repaid.
The investigation was prompted by an anonymous letter to the board last year that alleged free-spending practices at the BMA.
In an interview yesterday, Green expressed regret that he had not been more vigilant about his association's finances. "We were following procedures that were in place at the association," he said. "But those procedures should have been reviewed and changed, and they were not. If I could turn back the hands of time, I certainly would have changed them to require explicit board approval of loans."
"I thought it was my job to make sure that our practices fit within existing policies," he added. "But now, looking at it in a different light, I wish I had been more proactive in reevaluating the appropriateness of those existing policies and procedures."