The deal between
Ashton Technology Group
Philadelphia Stock Exchange
to introduce off-market block trading for institutions had a troubled start.
In 1996, the exchange's then-chairman failed to disclose to the exchange that he was an investor in Ashton at the same time he headed an exchange committee that recommended a contract with Ashton. The disclosure triggered an exchange shake-up, and delayed the Philadelphia project for 18 months.
, is a controversial figure as well. As the former head of
, a pioneer in computerized trading, Rittereiser drew the ire of Wall Street traditionalists by siphoning orders away from old-line firms. He also has advocated a so-called "central limit order book" for collecting all stock market orders in one place, another plan that entrenched Wall Street interests have resisted.
He is a 37-year veteran of the securities industry, and among his many jobs, he was vice chair of
First Jersey Securities Inc.
, where he effectively ran the company from 1985 to 1987.
First Jersey, headed by the notorious Robert E. Brennan, was charged with allegedly manipulating the market for shares of small companies it underwrote. In 1996, a federal appeals court upheld a $71 million fine against Brennan and First Jersey. Last year, Brennan settled a lawsuit brought by New Jersey authorities, by agreeing to pay $45 million to investors. But the U.S. Securities and Exchange Commission and New Jersey state regulators say Brennan has consistently sought to hide his assets overseas, leading to a contempt action in tangled legal proceedings that still continue more than a decade later.
Rittereiser blames the legal problems during his stewardship on Brennan, and says his job was to implement court orders to clean up the firm.
Running Wall Street firms runs in Rittereiser's family - his brother, Robert, is an industry veteran who is now chairman and chief executive of New York-based Gruntal & Co.
Fredric Rittereiser became president and chief executive of Ashton in October 1996, after selling Instinet to Reuters. Ashton, founded in 1994, is a holding company that today has four subsidiaries, including Gomez Advisors Inc., an e-commerce market research company best known for its online-brokerage ratings. It was another Ashton subsidiary, Universal Trading Technologies Corp., that developed the Philadelphia exchange's eVWAP program.
A company Rittereiser owns, The Dover Group, has received about $460,000 in consulting payments from Ashton. He says the fees are payments in lieu of salary ("The company can't pay me a million dollars a year") but adds that he soon may get a more traditional compensation contract with Ashton.
"I am a controversial guy in the sense I face some tough decisions," he says. "
I tell it like it is, and therefore get this type of label."