The chief executive of MF Global, one of the world’s biggest financial derivatives brokerages, bowed to investor demands to resign on Wednesday.
The move capped a disastrous year for the company during which it has lost more than 90 per cent of its market value.
Kevin Davis will be replaced by Bernard Dan, who led the Chicago Board of Trade for five years until it was taken over by the Chicago Mercantile Exchange last year.
Mr Dan joined the company in June as chief operating officer for North America and was promoted to global COO last month.
Mr Davis, who led the brokerage for a decade, leaves the company much weakened following its spin-off last year from Man Group, the London-listed hedge-fund manager.
In February, Evan Dooley, a wheat trader at the brokerage’s Memphis office, racked up $141m (€109m, £86m) of losses in unauthorised trading, in the largest trading scandal ever to hit agricultural commodity markets.
The incident prompted widespread concern about the company’s risk-management practices. Mr Davis initially blamed the problems on the lifting of control limits on traders, but later evaluation showed that the company’s computer system had not been configured properly.
Investors withdrew some $3.5bn from MF Global in the two months following the incident, according to research by JP Morgan.
Shareholder anger boiled over at the company’s annual meeting in July, with Greg Newton, one activist, saying Mr Davis “should be taken out and shot”. Although Mr Davis survived a vote, a group of shareholders were pushing for him to be ousted.
MF Global said Mr Davis’ severance package would be worth $7.5m.
“Investors will react positively to a changeover in management,” wrote Niamh Alexander, an analyst at Keefe, Bruyette and Woods, in a research note yesterday.
“Investors know Bernie Dan, whose former experience is very relevant to the MF leadership…some investors had hoped for a turnover in the leadership. Key here will be Mr Dan’s maintaining MF’s relationship with customers.”
Shares in MF Global, which had traded at more than $30 in January, were at $3.39 by midday in New York yesterday, having more than doubled in value on the day.
Addressing the issue of rebuilding performance within the company, Mr Dan said yesterday: “Most of these guys have known me from one of my former jobs, so I’m not an unknown quantity internally.
“My track record is one they respect. Over time they’ll get to know me and realise that we’re in this together to build value, and I’m pretty confident of my ability to not replace the role that Kevin was, but bring a different sort of perspective.”
The company also announced yesterday that it expected to report quarterly profits well below Wall Street expectations, citing lower trading volumes in August, a bad-debt expense relating to the collapse of Lehman Brothers, and severance costs.
For its second quarter the brokerage expects to report adjusted net profit of between 13 cents and 15 cents per share, behind average analyst forecasts of about 21 cents per share