SEC Names a New Chief for Its Market Regulation Unit

In a move that could strengthen its efforts to reform Nasdaq and other stock markets, the Securities and Exchange Commission on Tuesday appointed Richard R. Lindsey, currently its chief economist and a strong ally of SEC Chairman Arthur Levitt, as director of its powerful division of market regulation.

Lindsey will succeed Brandon C. Becker, who had held the post since 1993. Becker said Tuesday that he had decided to resign to look for a job in the private sector.

In a statement, Levitt praised Becker for providing “critical leadership to ensure orderly markets” and for serving investors. SEC spokeswoman Jennifer Scardino said that although Becker was not pressed to leave, Levitt did not try to persuade him to stay.

“Brandon decided it was time for him to move into the private sector,” she said. “The chairman was supportive and encouraged him.”

The market regulation division supervises the nation’s brokerage firms and securities exchanges--including Nasdaq, which is under investigation by the SEC’s enforcement division and the Justice Department’s antitrust division.

Analysts say Lindsey’s appointment may make it easier for Levitt, who has made market reform a top priority, to transform Nasdaq into a more investor-friendly market. Some of Nasdaq’s critics expressed delight at the change.

Lindsey, 41, who became chief economist in July, is a former finance professor at Yale University. He will be the first economist to head the market regulation division. In a September opinion piece in the Wall Street Journal, he spoke out publicly supporting the SEC’s inquiry into Nasdaq and its parent, the National Assn. of Securities Dealers.

Becker, also 41, has supported Levitt’s efforts to reform Nasdaq and other markets, drawing up sweeping proposed rule changes as Levitt and his staff desired. But some senior commission staffers have contended that Becker at times needed to be prodded, and some faulted him for taking what they viewed as a laissez faire attitude toward Nasdaq and other exchanges before Levitt took office.

Becker’s mentor at the SEC and a predecessor as head of the market regulation division was Richard G. Ketchum, who is now the NASD’s chief operating officer. Becker and Ketchum have confirmed that they remain friends. Becker has strongly denied, however, that their friendship influenced him and noted that he has taken many steps that were unpopular with the NASD.

Becker did not respond to numerous calls seeking comment late Tuesday.

In a move that received little publicity at the time, Levitt earlier this year took the SEC’s examination section away from Becker’s supervision. The section sends examiners to stock exchanges and brokerage firms to look at the books and make sure rules are being obeyed.

While the move was explained as an effort to promote efficiency, SEC sources said Levitt also was dissatisfied with what he viewed as a lack of aggressiveness by the examiners under Becker and his predecessors.

Among Lindsey’s toughest jobs will be shepherding into effect the proposed rule changes for Nasdaq and other markets, against strong opposition from some powerful Wall Street firms. Some of the rules, for example, would take away Nasdaq dealers’ privileged access to the best available prices for Nasdaq stocks, and therefore would hurt their profits.

In a brief interview, Lindsey declined to comment on Nasdaq. But he said that as an economist, “I believe in markets and that markets work pretty well,” although, he said, they need government oversight.

Both the NASD and the New York Stock Exchange, where Lindsey had once served as a consultant, declined to comment on the change. NASD spokesman Stephan Beauchesne said, “The NASD’s policy is not to comment on the SEC’s personnel changes.”

But Linda Lerner, general counsel of All Tech Securities, a small, maverick Nasdaq dealer firm that has often accused the NASD of failing to enforce basic trading rules, said: “I think Mr. Lindsey has demonstrated a great depth of understanding of the Nasdaq market, and I congratulate the commission on its excellent choice.”

Becker will stay on temporarily as an adviser to Levitt on international derivatives.