Timeline of Events In the Kidder Trading Scandal With AM-Kidder-Jett, Bjt
Aug. 04, 1994
NEW YORK (AP) _ Major developments in the bond trading scandal at Kidder, Peabody & Co.:
-April 17: Kidder fires head government bond trader Joseph Jett for allegedly concocting $350 million in phantom trading profits in a scheme to mask $100 million in losses and inflate his bonus. Kidder also suspends six other fixed-income employees. General Electric Co., Kidder's parent, undertakes probe into the scheme.
-April 20: Kidder files arbitration claim with the New York Stock Exchange seeking part of Jett's $9 million 1993 compensation linked to the false bond- trading profits.
-April 21: Kidder discloses it fired Clifford Kaplan, a bond-derivatives executive, early this year after determining he simultaneously worked for another investment banking firm. The dismissal, while not directly related to the Jett trades, raises further questions about supervision of Kidder trading activities.
-April 21: Kidder fires another securities trader, Neil Margolin, for concealing losses by putting wrong values on complex derivative securities known as swaps.
-June 23: Seeking to cleanse Kidder's image, GE ousts Kidder's chairman and chief executive, Michael Carpenter, and replaces him with GE's chief financial officer and a top executive at GE Capital Services.
-July 14: Michael Keehner, Kidder's former brokerage chief, quits. The brokerage had put him on a ''special assignment'' as part of the management overhaul a month earlier.
-July 22: Edward Cerullo, Jett's supervisor and a 15-year Kidder veteran, quits as head of the firm's fixed income division.
-July 25: Cerullo breaks silence to counter accusations he failed to adequately supervise Jett. He says through a spokesman he was unaware of the trades Jett allegedly engaged in.
-July 27: Source discloses Jett told federal prosecutors Cerullo ordered him to conduct the phony trades he's accused of concocting alone.
-Aug. 4: GE report blames Jett as the major culprit in trading scandal. Kidder also describes a lack of supervision over Jett, saying his superiors could have detected the fraud if they had scrutinized such basic details as trading dates. Kidder also fires Melvin Mullin, a former Jett supervisor and the fourth top-level Kidder figure to lose his job in the scandal.