Local banker to be leader of Nasdaq Alfred Berkeley of Alex. Brown named president; To take over job in June; No. 2 stock market is under pressure to adopt reforms

Alfred R. Berkeley III, a senior investment banker with Alex. Brown Inc., yesterday was named the first president of the Nasdaq Stock Market Inc., which has been under pressure to reform.

Berkeley was selected over 130 executives who were identified for the job by an outside search firm.


He intends to step down from Alex. Brown, the Baltimore-based investment banking and brokerage firm, in June to head Nasdaq, the world's second-largest stock market.

Berkeley, 51, joins Joseph R. Hardiman, president and chief executive of Nasdaq's parent, the National Association of Securities Dealers Inc., who is also an alumnus of Alex. Brown.


Berkeley won't be working with Hardiman for long, though.

Hardiman, 58, announced yesterday that he will retire from the NASD sometime next year.

"I am looking forward to some leisure time, and I am looking forward to doing some consulting work with a number of markets around the world," said Hardiman, who joined NASD in 1987.

"Right now a full-time job is not in my future."

Hardiman said the appointment of Berkeley and two other officials who were recently named to executive posts places the NASD's future in good hands.

"We are all delighted here at the NASD to have someone of Al's caliber," Hardiman said.

"He truly knows where technology is going."

Hardiman said that Berkeley "brings a rare combination of technology, corporate and investment banking experience to the leadership of the world's fastest-growing major stock market."


Berkeley said he took the job because he wanted to "give something back to the industry that has been very good to [me]."

He said his salary at Nasdaq has not yet been determined.

I= "I'm taking a pay cut any way you cut it," Berkeley said.

Praise for Alex. Brown

His appointment is a coup for Alex. Brown, a major player in taking technology companies public.

Firms it has taken public include Microsoft Corp. and Oracle Systems Corp., which are traded on Nasdaq.


"I think it is flattering to the organization that a couple of leaders in the industry have come out of their firm," said James S. Riepe, managing director of T. Rowe Price Associates Inc. and an NASD governor.

Berkeley will have plenty of issues to tackle when he starts his new job next month.

Nasdaq and its parent have been under fire since 1994, when the Justice Department began investigating a group of large brokerage firms that buy and sell Nasdaq stocks.

A private antitrust suit against most large market makers, including Alex. Brown, is pending.

The suit alleges that the brokerage companies conspired to keep the spreads between the buy and sell prices artificially wide to increase their profits.

When asked why Berkeley was selected, in light of the suit, Hardiman said: "There clearly have been no findings of any nature in that case. I think it would have been a mistake to exclude people who have been affiliated from those firms."


The Securities and Exchange Commission is also investigating how the NASD polices its own market and whether Nasdaq practices have favored larger investors over smaller ones.

The NASD reacted by creating both a regulatory body headed by Mary Schapiro, the former chairman of the Commodities Future Trading Commission, and Berkeley's position.

?3 The tasks were previously overseen by Hardiman.

Berkeley lists his goals

Berkeley said his goal is to level the playing field between individual investors and professional brokers.

He said his basic philosophies are simple: "The interest of the investor comes before the interest of the broker dealer."


He said he wants to enhance Nasdaq's site on the World Wide Web so investors can have access to such corporate documents as quarterly and annual reports.

He also wants to provide investors with the ability to find out quickly which brokerage firms are making markets in stocks.

As far as investors and brokerage firms that break Nasdaq rules, Berkeley said they should be "thrown out of the business."

"I don't have any great sense that this is a crooked market," he said.

After receiving an MBA from the Wharton School at the University of Pennsylvania in 1968, Berkeley joined the U.S. Air Force.

He joined Alex. Brown in 1972 as a research analyst and became one of the first members of the firm to become interested in software makers, said William Paternotte, who ran the research department for a time during the 1970s and today is a managing director with Alex. Brown.


Berkeley was also an early user of data bases in his own research, Paternotte said.

"Perhaps the most important contribution he has made here was to pioneer our foray into technology," Paternotte said.

"He carved out a specialization in software stocks."

Paternotte said there were a handful of companies that Berkeley helped bring to Alex. Brown, including such software notables as RTC Microsoft, Computer Associates International Inc. and Policy Management Systems Corp.

"They were big wins for us, and Al had a lot to do with our getting into that business," Paternotte said.

In 1985, Berkeley was the head of information services for Alex. Brown, and two years later he was named managing director and worked in the firm's merger and acquisitions department.


Berkeley took a leave of absence from Alex. Brown in 1989 and joined Safeguard Scientifics, where he served on its executive committee and chaired a number of its subsidiaries.

Pub Date: 5/10/96