WHEN: Monday, August 6, 2012
WHERE: CNBC’s “Fast Money Halftime Report”
related investing news
Following is the unofficial transcript of a CNBC interview with Stifel Nicolaus CEO Ron Kruszewski on CNBC’s “Fast Money Halftime Report.” Following is a link to the video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000107365&play=1
All references must be sourced to CNBC.
SCOTT WAPNER: LET'S BRING IN ANOTHER EXECUTIVE WHO CAME TO KNIGHT'S RESCUE NOW, AND THAT’S RON KRUSZEWSKI. HE IS THE PRESIDENT AND CEO OF STIFEL NICOLAUS. MR. KRUSZEWSKI, WELCOME TO THE HALFTIME SHOW. GOOD TO HAVE YOU ON THIS BUSY DAY AND WHAT I KNOW IS A BUSY WEEKEND FOR YOU.
RON KRUSZEWSKI: GLAD TO BE HERE.
WAPNER: WHY DID YOU COME TO THE RESCUE OF ONE OF YOUR COMPETITORS?
KRUSZEWSKI: LOOK, KNIGHT IS A MARKET PARTICIPANT. AND THEY NEEDED THE HELP, AND WE'RE GLAD TO BE THERE.
WAPNER: BUT YOU CAN'T ESCAPE THE FACT THEY STILL ARE A COMPETITOR OF YOURS. DID YOU TRY AND DO OTHER THINGS AS I ASKED THIS GENTLEMAN, MR. BRADBURY HERE, DID YOU TRY AND GET A PIECE OF KNIGHT FOR YOURSELF RATHER THAN HAVE TO GO IN THIS CONSORTIUM, IF YOU WILL, OF INVESTORS?
KRUSZEWSKI: NO, NOT AT ALL. IT MADE MOST SENSE TO JOIN THE INDUSTRY PARTICIPANTS WHO INVESTED IN KNIGHT. AS CURT SAID, THIS WAS AN INDUSTRY SOLUTION NOT A GOVERNMENT BAILOUT. IT WAS THE RIGHT THING TO DO. WE WERE PLEASED TO BE INVOLVED.
WAPNER: THE ISSUE OF THE SHAREHOLDERS NOT GETTING A REAL SAY HERE IS CERTAINLY AN ISSUE. YOUR RESPONSE TO THAT IS WHAT?
KRUSZEWSKI: WELL, WHEN YOU HAD LIQUIDITY EVENTS, AND THIS WAS A LIQUIDITY EVENT. IT HAD TO BE DONE WITH SPEED. AND WHAT HAD TO BE DONE WAS THAT THE SHAREHOLDERS ARE – THE COMPANY IS FUNCTIONING TODAY, AND THAT'S GOOD FOR SHAREHOLDERS. AS TO THE NOT HAVING A SAY, THAT'S JUST HOW IT HAPPENS IN SITUATIONS LIKE THIS.
WAPNER: MR. BRADBURY SAID THAT TOM JOYCE HAS, AND I'M USING MY WORDS NOT NECESSARILY HIS EXACT WORDS, MR. JOYCE HAS THEIR FULL SUPPORT. HE THINKS THAT TOM JOYCE SHOULD CONTINUE TO RUN THIS COMPANY. ARE YOU IN AGREEMENT?
KRUSZEWSKI: ABSOLUTELY. TOM JOYCE IS A FIRST-CLASS CEO. WHAT HAPPENED HERE WAS A BLACK SWAN EVENT. I'M CERTAINLY NOT CONDONING IT. IT DID IMPACT INVESTOR CONFIDENCE. BUT RECOGNIZE THAT WHAT HAPPENED HERE WAS NOT THE MAIN TRADING SYSTEM. IT WAS AN ANCILLARY SYSTEM. IT COST A LOT OF MONEY. THAT COMPANY STEPPED UP, IT SETTLED THEIR LOSS TODAY. THERE WAS A $400 MILLION LOSS THAT WAS SETTLED TODAY. TOM JOYCE IS AN EXCELLENT MANAGER. HE HAS MY FULL SUPPORT.
WAPNER: BUT I MEAN IT IS A BLACK SWAN EVENT IN I GUESS YOU COULD SAY A FLOCK OF UGLY DUCKLINGS, RIGHT? IF YOU TAKE THE FACEBOOK IPO, AS I SAID THE BATS IPO, AND ALL OF THESE THINGS THAT HAVE HAPPENED OVER THE LAST COUPLE OF YEARS, SINCE REALLY THE FLASH CRASH AND THERE ARE PROBABLY EVENTS PRIOR TO THAT THAT WE DIDN'T MAKE THAT MUCH OF A DEAL ABOUT, WHAT DOES IT SAY ABOUT THE WAY WALL STREET IS RUN RIGHT NOW THAT YOU CAN HAVE A FIRM NEARLY GO BELLY UP BECAUSE OF A TECHNOLOGY GLITCH?
KRUSZEWSKI: LOOK, I THINK THAT TECHNOLOGY HAS BEEN A TREMENDOUS BOOM TO INVESTORS AND TO WALL STREET. BUT ON THE OTHER HAND, I THINK THAT THE RUSH FOR SPEED SOUNDS LIKE A DOUBLE THERE, BUT THE FACT THAT EVERYTHING HAS TO BE DONE SO FAST, WE NEED TO STEP BACK AND UNDERSTAND WHETHER OR NOT TECHNOLOGY, WHICH NEEDS TO BAT 1,000. WHEN IT BATS .999, THAT IMPACTS INVESTOR CONFIDENCE. I BELIEVE THAT WE NEED TO TAKE A STEP BACK AS AN INDUSTRY AND NOT HAVE THE RUSH FOR SPEED AND GET BACK TO A LITTLE BIT MORE STABILITY.
WAPNER: YOU HAVE INVESTMENT ADVISERS IN YOUR FIRM, SO YOU WOULD KNOW WHAT THE INVESTOR PSYCHE IS RIGHT NOW, IF YOU'RE TAKING THE PULSE OF THAT, HOW WOULD YOU DESCRIBE IT BASED ON THE EVENTS THAT WE'VE SEEN SINCE THE FLASH CRASH?
KRUSZEWSKI: I WOULD SAY THAT I THINK YOU HAVE YOUR FINGER ON SOMETHING. THERE IS NO QUESTION THAT THESE EVENTS IMPACT INVESTOR CONFIDENCE. AND WHEN I LOOK AT WHERE EQUITY MARKETS ARE COMPARED TO BONDS, AND I SEE THE $300 BILLION IN MUTUAL FUND OUTFLOWS SINCE MAY OF 2010, I AM CONCERNED, AND I THINK WE AS AN INDUSTRY NEED TO HAVE AS OUR NUMBER ONE PRIORITY THE REBUILDING OF INVESTOR TRUST AND CONFIDENCE. WHICH, BY THE WAY, IS THE FOUNDATION OF CAPITALISM.
WAPNER: SO HOW DO YOU FIX IT? WHAT'S THE ANSWER? MR. BRADBURY SITS ON THE BOARD OF SIFMA, HE SAYS MORE REGULATION IS NOT NEEDED. WHAT'S THE ANSWER?
KRUSZEWSKI: WELL, I ALSO SIT ON THE BOARD OF SIFMA WITH MY FRIEND CURT THERE AND I DO NOT BELIEVE THAT MORE REGULATION IS IN AND OF ITSELF THE ANSWER. THE BEST REGULATOR I KNOW IS THE FREE MARKET. THE FREE MARKET WORKED HERE. THERE WAS A LOSS. IT WAS SETTLED. CAPITALISM STEPPED IN AND DID THE RIGHT THING. SHAREHOLDERS LOST MONEY, BUT IT WORKED. AND I THINK THAT WE JUST NEED TO JUST NOT BE TRYING TO GET TRADES DONE IN MILLISECONDS.
WAPNER: MR. KRUSZEWSKI, I REALLY APPRECIATE YOU SPENDING SOME TIME WITH US. THANKS SO MUCH.
KRUSZEWSKI: THANK YOU.
WAPNER: RON KRUSZEWSKI, OF COURSE, THE CEO OF STIFEL.
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