The recent hiring of Brian Conroy to run equity trading at Fidelity Investments has brought cheers throughout the industry. Trading pros said Fidelity hired the right man to rebuild relationships with the Street and to fix any internal issues that might remain after a scandal rocked the firm.
"He's the singular right person for that position," said Tom Wright, head of Global Equities at Sanford C. Bernstein, who worked with Conroy at Goldman Sachs. "I can't think of a better choice."
Fidelity Investments, according to sources and published reports, has either fired or reassigned about a dozen equity traders on its desk. That came in response to an SEC investigation into the practice of its traders accepting excessive gifts from brokers. A Fidelity spokeswoman declined to comment, other than to say that the firm was pleased with the Conroy hire.
Conroy was described in glowing terms by all contacted by Traders Magazine. First, he has a solid knowledge of equities. He was a block trader at Goldman Sachs and later headed listed trading at J.P. Morgan. Scott DeSano, who previously oversaw Fidelity's equities desk and who has been "reassigned" within the firm, was a bond trader. Second, Conroy's leadership skills and character are as high as anyone's in the business, sources said.
Robert Gasser, a top executive with NYFIX who headed U.S. equities at J.P. Morgan when Conroy was hired, said the 41-year-old trader has proven himself time and again as a leader. Fidelity hired itself one of the top relationship managers on the Street, he said. "They hired a superb guy," Gasser said. He described Conroy as a team player who was easy to work with. "He's emotionally mature and can functionally take and give criticism."
Conroy further burnished his reputation at SAC Capital Management, according to sources. They said that he rebuilt the aggressive hedge fund's relationships with the Street. The role was not an easy one, as one source described. There were not only relationship problems with the Street, but SAC was in a growth mode and internal problems were springing up, so the giant hedge fund needed a head trader with great management and personal skills.
Fidelity hopes Conroy is ready for a repeat performance. The problems Fidelity had with the Street were numerous, according to one industry source. First, it pushed commission rates down and forced the rest of the industry to follow. Second, if a firm was not among its top half a dozen or so brokers, it was almost impossible to get a dinner meeting to further develop the relationship. At the same time, these so-called second-tier brokers were seeing loss ratios in the 40-percent range or higher because of the pounding they took on capital commitments. Consequently, Fidelity was not a profitable client for firms like these, the source said. "Unless you were one of the top eight brokers and doing a ton of business," the source said, "you couldn't make any money."
Having worked on the sellside and the buyside, Conroy has the experience to improve things, according to one brokerage exec. "He'll be a great mediator to the Street, and a great mouthpiece for Fidelity." Still, the question remains if Conroy will reorganize the structure of the desk, including its VWAP-trading mentality. To date, Fidelity has been a very decentralized organization. A sellside firm could have multiple sales traders covering the account. Each Fidelity trader could choose his or her coverage from the same brokerage firm. Walter Donovan, Conroy's boss, oversees all of equity trading, which has about 50 traders divided into two groups, according to one knowledgeable source. Conroy oversees the "sector" area, and these traders seek liquidity from the Street. There is a separate liaison group called "primary," headed by Beau Coash, a former high-yield bond trader at Lehman Brothers. This group interacts with portfolio managers and follows companies, the source said.
