Securities Industry and Financial Markets Association
Encyclopedia
The Securities Industry and Financial Markets Association (SIFMA) is a leading securities industry trade group
Industry trade group
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...

 representing securities firms, bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

s, and asset management companies in the U.S. and Hong Kong. SIFMA was formed on November 1, 2006, from the merger of The Bond Market Association
Bond Market Association
The Bond Market Association was the international trade association for the bond market industry. It had headquarters in London, New York City, and Washington D.C. Twenty per cent of the membership was located outside of the US, while 70 per cent was located outside New York City...

 and the Securities Industry Association. It has offices in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...

 and Washington, D. C.

In October 2008, SIFMA laid off over 25% of its staff in the United States due to the "industry upheaval" which left its member firms in financial straits, and the loss of three of it primary member firms—Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...

, Bear Stearns
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...

, and Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...

. The dismissals came at the same time as the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 pledged to revamp the country's financial regulatory structure.

SIFMA announced in May 2009 that it would also shed its London-based European operation. That operation will be merged into the London Investment Banking Association (LIBA).

The 350-member American Securitization Forum (ASF) formerly operated as a forum of SIFMA. On January 14, 2010, ASF announced that it had chosen to terminate its affiliation with SIFMA as well.

US operation

SIFMA brings together the shared interests of more than 650 securities firms, banks, and asset managers. SIFMA's mission is to promote effective and efficient regulation, facilitate more open, competitive, and efficient global capital markets, champion investor education, retirement preparedness, and savings, and ensure the public’s trust in the securities industry and financial markets. SIFMA represents its members’ interests in the U.S. and in Hong Kong. It has offices in New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...

 and Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

, and its associated firm, the Asia Securities Industry & Financial Markets Association (ASIFMA), is based in Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

.

In June 2009, SIFMA began a campaign to combat the “populist
Populism
Populism can be defined as an ideology, political philosophy, or type of discourse. Generally, a common theme compares "the people" against "the elite", and urges social and political system changes. It can also be defined as a rhetorical style employed by members of various political or social...

 overreaction” against Wall Street’s role in the global financial crisis. It hired two aides who had worked for Henry Paulson
Henry Paulson
Henry Merritt "Hank" Paulson, Jr. is an American banker who served as the 74th United States Secretary of the Treasury. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.-Early life and family:...

 when he was Treasury Secretary, to help cleanse Wall Street’s image in the eyes of average Americans. The effort is aimed at policymakers and the media worldwide, and designed to beat back public skepticism over Wall Street’s commitment to change. SIFMA is paying $85,000 a month for polling, lobbying, and public relations to counter the "lynch mob", according to an internal SIFMA memo. In internal memos about confidential meetings with top financial executives, SIFMA said that the securities industry "must be perceived as part of the solution, which will allow it to better defend against populist overreaction."

In January 2010, SIFMA announced that it had hired the law firm Sidley Austin
Sidley Austin
Sidley Austin LLP, formerly known as Sidley Austin Brown & Wood LLP, is one of the oldest law firms in the world. It is the sixth-largest U.S.-based corporate law firm with more than 1,650 lawyers, annual revenues of more than one billion dollars, and offices in 17 cities worldwide, with the most...

 to consider filing a lawsuit challenging the Obama administration's banking levy. But an attorney familiar with the matter said: "I suspect SIFMA got out ahead of its key members." One person with a large bank said SIFMA had not consulted the bank about its position, and that it was "wildly premature" to pursue legal action.

In October, 2010, CEO Tim Ryan announced the organization's opposition in the residential real estate
Residential area
A residential area is a land use in which housing predominates, as opposed to industrial and commercial areas.Housing may vary significantly between, and through, residential areas. These include single family housing, multi-family residential, or mobile homes. Zoning for residential use may permit...

 market to a "system wide moratorium on all foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...

s," reacting to problems and pullbacks in the market by a number of SIFMA members, saying a moratorium "would be catastrophic." Financial writer Felix Salmon drew attention to the position, terming it "unhelpful," detailing it as "bizarre" and "sad, ... an inchoate and unhelpful blast of opposition ... [without] constructive solutions" proposed.

Political giving and lobbying

"SIFMA's political action committee
Political action committee
In the United States, a political action committee, or PAC, is the name commonly given to a private group, regardless of size, organized to elect political candidates or to advance the outcome of a political issue or legislation. Legally, what constitutes a "PAC" for purposes of regulation is a...

s gave more than $1 million during the 2006 election season, putting the organization in the top 25 of all PACs. Its combined $8.5 million in spending on federal lobbying last year placed it in the top 30. The financial-services industry is the biggest corporate player in national politics. Only organized labor donates more money to candidates for federal offices."

European operation

SIFMA also has offices in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

, though it announced in May 2009 that it would shed its European operation. The European High Yield Association (EHYA) in London is a trade association
Trade association
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...

 representing participants in the European high yield market. Members include bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

s, investors, issuers, law firms, accounting firms, financial sponsors, and other participants in the European high yield market. The European Securitisation Forum (ESF) promotes the efficient growth and continued development of securitisation throughout Europe. It advocates the positions, represents the interests, and serves the needs of its members—European securitisation market participants.http://www.europeansecuritisation.com/esfMission.shtml

Groups

SIFMA has three product and customer-based groups that focus on the U.S.: Capital Markets, Private Client, and Asset Management. The Capital Markets Group focuses on the primary
Primary market
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process...

 and secondary market
Secondary market
The page applies to the finanical term; For the merchandising concept, see Aftermarket .The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold....

s for equity
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

 and fixed income
Fixed income
Fixed income refers to any type of investment that is not equity, which obligates the borrower/issuer to make payments on a fixed schedule, even if the number of the payments may be variable....

 securities. Its customer focus is issuer
Issuer
Issuer is a legal entity that develops, registers and sells securities for the purpose of financing its operations.Issuers may be domestic or foreign governments, corporations or investment trusts...

s, underwriters, traders
Trader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...

, and institutional investor
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...

s. The Private Client Group focuses on investment products sold to private clients, as well as individual investor education. The Asset Management Group focuses on investment products about which asset managers provide investment advice or investment management services, and on institutional investors and hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...

s.

Senior management

T. Timothy Ryan, Jr., is SIFMA's CEO & President. He took the position after pulling his name from consideration for a United States Treasury Department  international policy advisor position in April 2007, after problems were noted concerning Ryan's financial portfolio, and he refused to take certain steps demanded by the Treasury Department's ethic lawyers. SIFMA's other senior management consists of Kenneth E. Bentsen (EVP, Public Policy and Advocacy), Ileane F. Rosenthal (EVP, Global Communications & Member Engagement), Randy Snook (EVP), and Ira Hammerman (Senior Managing Director & General Counsel).

In August 2008, SIFMA hired Michael Paese, former Deputy Staff Director of the Committee on Financial Services of the House of Representatives, as EVP, Global Advocacy; eight months later Paese left SIFMA to become director of government affairs at Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...

. Scott DeFife, who had reported to Paese, left SIFMA in December 2009.

After the 2006 merger which created SIFMA, the organization had a co-CEO structure, with the SIA's Marc E. Lackritz and BMA's Micah S. Green filling the positions. As a 2007 report summarized it, "Lackritz [then 60] ha[d] been a friend, colleague and mentor of Green's [then 49] for two decades." However, with slower-than-hoped-for integration of the merged organization's operations, and with questions about the handling of executive loans by BMA, Green resigned abruptly that year and Lackritz assumed the role of sole CEO. Nine months later, Lackritz retired and T. Timothy Ryan was named CEO.

Board of directors

SIFMA's Chairman of the Board is Blythe Masters
Blythe Masters
Blythe Sally Jess Masters is an economist and current head of Global Commodities at J.P. Morgan Chase. From 2004-2007, she was Chief Financial Officer of J.P...

 (Head of Global Commodities, JPMorgan Chase), and Vice Chair is Bernard Beal (CEO of M.R. Beal & Company). Other directors include Samir Assaf
Samir Assaf
Samir Assaf is the CEO of HSBC Global Banking & Markets.Student of the Lebanese Maronite Father's College at Achrafieh, Samir Assaf moved to France during the Lebanese civil war in order to finish his studies...

 (HSBC Bank plc), Shigesuki Kashiwagi (Nomura Holdings America Inc.
Nomura Group
The formerly Nomura zaibatsu is a company headquartered in Chuo, Tokyo.Nomura is one of the major industrial and financial conglomerate groupings of Japan. Osaka Nomura bank was founded by Tokushichi Nomura II in 1919 after many successful business ventures; it was established on the Mitsui...

) and Sallie Krawcheck
Sallie Krawcheck
Sallie L. Krawcheck , is the former president of the Global Wealth & Investment Management division of Bank of America. GWIM includes Merrill Lynch and U.S. Trust, the largest wealth management business in the world at $2.3 trillion in client assets...

 (former Chairman & CEO, Citi Global Wealth Management), among others.

Peter Madoff, brother of fraudster and "money manager" Bernard L. Madoff, and chief compliance officer and senior managing director of the Madoff investment advisor
Investment Advisor
The term Investment Advisor is an individual or firm who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities...

 and broker dealer businesses, stepped down from the SIFMA Board of Directors in December 2008. His resignation came amid growing criticism of the Madoff firm’s links to Washington, and how those relationships may have contributed to the $50 billion Madoff fraud.

The Madoff family had long-standing ties to SIFMA. Bernard Madoff sat on the board of directors of the Securities Industry Association, which merged with the Bond Market Association in 2006 to form SIFMA. Peter Madoff served two terms as a member of SIFMA’s Board of Directors. Over the years 2000-08, the two Madoff brothers personally gave $56,000 to political action committees controlled by SIFMA or its predecessor organizations in addition to dues paid to SIFMA by their firm, and tens of thousands of dollars more to sponsor SIFMA industry meetings. In addition, Bernard Madoff's niece Shana Madoff, who served as a compliance attorney at the Madoff firm, was active on the Executive Committee of SIFMA's Compliance & Legal Division, but resigned her SIFMA position shortly after her uncle's arrest.

Finances

In 2007 SIFMA had $105 million in both revenues and expenses. SIFMA's highest-paid officers that year were Donald Kittel (then CFO), $2.1 million, Marc Lackritz (then President & CEO), $1.5 million, and Randolph Snook (SMD), $1.1 million.

SIFMA's highest-paid officer in 2008 was its new President & CEO Tim Ryan (at approximately $2 million, for January-October). Ryan had been hired to replace Lackritz in January 2008, at a 43% ($600,000) higher level of compensation, for less than a full year. In related news, ironically, Ryan wrote in a USA Today
USA Today
USA Today is a national American daily newspaper published by the Gannett Company. It was founded by Al Neuharth. The newspaper vies with The Wall Street Journal for the position of having the widest circulation of any newspaper in the United States, something it previously held since 2003...

editorial in August 2009 that compensation practices at financial services firms should align with long-term, not short-term, performance.

SIFMA's top three highest paid officers in the fiscal year ending 31 October 2009 were CEO Tim Ryan at $2.43 million, Executive Vice President Randolph Snook at $1.04 million and General Counsel Ira Hammerman at $777,000. SIFMA received total revenue that year of $75 million, had total expenses of $82 million, and finished the year with a fund balance of $40 million.

External links

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