ITG chair to step down after activist pressure, SEC fine

By Michael Flaherty and John McCrank

NEW YORK (Reuters) - Investment Technology Group (NYSE: ITG), which recently paid a record fine related to its "dark pool" trading venue, said on Monday the chair of its board, as well as a board director, would step down as the brokerage transitions to new leadership.

The moves come amid rising pressure from two activist funds, which have been agitating for changes at the brokerage. Voce Capital and Philadelphia Financial Management of San Francisco disclosed on Thursday that their collective ownership in the company increased to 8.6 percent from 6.3 percent. The filing said the funds intend to speak with the company's management team and board of directors.

On Monday, ITG said Maureen O'Hara, who joined ITG's board in 2003 and has served as chair since 2007, will retire on Jan. 15, 2016, the same day that incoming Chief Executive Officer Frank Troise starts at the firm.

Troise most recently headed JP Morgan Execution Services, a global multi-asset electronic execution group within the investment bank (NYSE: JPM).

Earlier this year, Voce and Philadelphia Financial Management, acting as a group, ramped up pressure on ITG and nominated a slate of three directors for the board ahead of its annual meeting. ITG and the activists reached an agreement in April, with the company adding a dissident director to the board - former E*Trade Financial Corp (NASDAQ: ETFC) executive Jarrett Lilien. The company also said at the time that it agreed to review its capital allocation processes.

In August, ITG said it would pay $20.3 million to the U.S. Securities and Exchange Commission to settle charges it ran a secret trading desk that profited from confidential customer information within its private stock-trading venue, or "dark pool."

Voce Capital declined to comment on Monday. Philadelphia Financial Management did not immediately return a call seeking comment.

After the SEC charges, ITG fired its CEO, Bob Gasser, replacing him in the interim with Lilien.

"I have enjoyed my more than 12 years of service with the company, and along with my fellow directors have worked hard to bring ITG through a challenging year," O'Hara said in a statement. "I have been contemplating retirement for some time, but wanted to do so only when the company was well-positioned for future success."

Chris Dodds, a director of ITG's board since 2008, will also retire, effective Dec. 31, ITG said.

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