Wall Street Official Says No Big Firms in Trouble
NEW YORK (AP) _ A top official of Wall Street’s main trade group said Wednesday that no large securities firms are experiencing dangerous problems in the wake of the stock market collapse.
″If there are (big firms in danger) I don’t know of them,″ said Edward I. O’Brien, president of the Securities Industry Association, in a telephone interview at midday.
O’Brien, who himself worked at a brokerage firm during the paperwork crisis in the late 1960s, when some large firms failed or were forced to merge, said, ″I don’t think anybody of any size is going out of business as a result of the events of the last two weeks.″
Later in the day Haas Securities Corp., a relatively small firm, said it had temporarily ceased doing securities business because it was not in compliance with New York Stock Exchange capital requirements.
Martha Cid, a spokeswoman for the NYSE, said the firm had about 12,000 customers. According to a stock exchange listing of its member firms, Haas has four offices in the Chicago area; two in New York, including its headquarters, and one in Houston.
O’Brien also noted that a few specialist firms operating on stock exchange floors have sought out merger partners in recent days.
O’Brien said the lessons of the 1960s, and legislation that was enacted in the aftermath of that crunch, had helped prevent a repeat of some of the same events.
The stock trading process, which was largely manual at the time, has been automated to minimize such administrative burdens as the cumbersome transfer of stock certificates with every transaction.
In addition, the Securities Investor Protection Corp., an organization roughly analogous to the Federal Deposit Insurance Corp. in banking, was created in the early 1970s to protect investors against losses in the event of a brokerage firm failure.
The recent market collapse has been ″not without its problems, of course,″ O’Brien said, citing losses on stocks owned by brokerage firms and increased expenses arising from long working hours to handle the paperwork load.
In the weeks ahead, he said, ″it would be important to have a return to normalcy in both trading volume and price movements,″ he said.
To date, he concluded, ″I think the industry has handled it very well.″
The market drop came just as the SIA was preparing to name its chairman for 1988. It postponed a luncheon scheduled for Wednesday to introduce the choice for the post, which is traditionally held by a different executive from the brokerage industry each year.
There have been reports in industry trade publications that the SIA was having some trouble lining up a candidate willing to take on the responsibility, given the recent market turmoil. However, O’Brien said a choice had been made. He declined to name the new chairman pending a formal announcement.