Hutton Announces Resignations of Top Officers at Subsidiary
NEW YORK (AP) _ The resignations of the top two officers of E.F. Hutton Trust Co. were announced Thursday, a week after Delaware’s banking commissioner said he would not take regulatory action against the firm.
E.F. Hutton Group Inc., the parent company, said the appointment of a new leader for the Delaware-based trust company represented another step in the company’s reorganization to strengthen operations and was not connected to allegations of mismanagement of personal trust and pension funds.
Delaware officials previously said they had found nothing to warrant taking action against the Hutton unit.
Without elaborating, the company announced the resignations of Jay Abbes, who was vice chairman and chief executive officer of the trust company, and William Hitchcock, who was president.
Kenneth Simon, a 27-year Hutton veteran, was named to head the trust unit, which is based in Wilmington, Del. Simon’s title will be determined later by the unit’s board of directors.
The Wall Street Journal had reported last month that Delaware banking authorities were looking into complaints by a former employee that investment decisions on some trust accounts managed by the Hutton unit were made to increase commissions for Hutton’s brokerage business, raising questions about whose interests trust managers were serving.
Hutton had called the complaint ″irresponsible accusations by a disgruntled former employee″ trying to embarrass the company.
Banking Commissioner John Malarkey said a week ago that a routine examination found nothing unusual and that no action was planned against Hutton.
Asked if the resignations were tied to the complaints, Hutton Group spokesman Robert Sharkey said, ″not whatsoever. It had nothing to do with the examination.″
Since 1981, Simon was senior vice president and northeast administrative officer for E.F. Hutton & Co., the broker-dealer arm of Hutton.
Simon, 52, earlier served as manager of Hutton’s Boston branch, senior vice president in charge of operations in New York, regional vice president in charge of the New England region and branch manager in San Jose, Calif. He joined the firm as an account executive in 1959 in San Francisco.
″Mr. Simon is an outstanding executive with a successful and varied career at Hutton. His experience and leadership ability will strengthen the company in many areas,″ said Jerome Miller, senior executive vice president of E.F. Hutton Group. Miller is in charge of Hutton operations that serve individual investors.
Hutton has been under scrutiny since its brokerage unit pleaded guilty a year ago to 2,000 federal counts of mail and wire fraud for a cash-management operation that provided the firm with interest-free use of billions of dollars by overdrawing its bank accounts. As a result of the case, the parent company is in the midst of a major reorganization of its management and operations.