DURHAM, N.C., May 25, 2004 – LAWFUEL – Monday’s action by the New York…

DURHAM, N.C., May 25, 2004 - LAWFUEL - Monday's action by the New York Attorney General against former New York Stock Exchange (NYSE) chairman Richard Grasso may have been avoided, in part, if the NYSE had continued its pre-Grasso policy of releasing data for study by researchers, said Pete Kyle, professor of finance at Duke University's Fuqua School of Business. "Grasso seemed to exercise control over the NYSE in part by managing the flow of information," Kyle said. "Soon after Grasso took over, the NYSE curtailed its previously generous policy of providing information for study by researchers because finance professors were beginning to find some regulatory anomalies that were going to be embarrassing to the exchange." Kyle served as a consultant to the NYSE and later worked as a staff member for the Brady commission during its investigation of the 1987 stock market crash. He has participated in and helped organize conferences jointly with the NYSE on topics related to trading and liquidity. He also closely monitors the various rule changes that the NYSE is considering to make their trading processes more competitive. Kyle contends that had the NYSE continued to make its data more openly available for academic research purposes, the recent specialist scandal would probably have been uncovered and corrected by academic finance researchers many years ago. "That the release of information was curtailed tends to make me think that Grasso not only manipulated the flow of information about his compensation to allow himself to be paid overly generous amounts by a poorly informed board, but that he did not want the valuable enhancements to self-regulatory scrutiny that academic finance professors could have provided by doing academic research on NYSE-supplied proprietary data." Kyle notes that NASDAQ also had regulatory problems that were uncovered by finance professors doing their research in the 1990s. "This led to the major changes at NASDAQ, which make it a much better marketplace today than it would have been otherwise," he said.

DURHAM, N.C., May 25, 2004 – LAWFUEL – Monday’s action by the New York…

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