Venerable Wall Street Brokerage Fires Another Trader
DAVID E. KALISH
Apr. 23, 1994
NEW YORK (AP) _ Kidder, Peabody & Co. said late Friday it fired another securities trader for concealing losses, the third time in a week the venerable brokerage firm acknowledged it dismissed an executive for improper actions.
Kidder terminated trader Neil Margolin on Thursday for putting wrong values on a type of derivative security known as a swap. Derivative securities are complex contracts based on, or derived from, underlying stocks and bonds.
Margolin, a vice president in Kidder's derivatives department, joined the firm in June 1986. He could not immediately be reached for comment.
Kidder spokeswoman Helen Keehner said Margolin's dismissal wasn't related to the much-publicized ouster last weekend of Joseph Jett, Kidder's former head of bond trading. He was accused of a cheating scheme that led to the brokerage to report $350 million in profits that didn't exist in 1993.
Kidder's parent, General Electric Co., took a pretax charge of that amount against its first-quarter earnings, which were released Wednesday.
Keehner said the losses resulting from Margolin's actions were less than $10 million, before taxes. The brokerage's normal operating reserves will cover the losses, Keehner said. No customers were hurt as a result of the trades, which were for the firm's own purposes.
Unlike Jett, Margolin's improper transactions didn't involve government securities, Keehner said.
Keehner and Kidder's general counsel, John Liftin, said they did not know how long Margolin's improper actions had gone on or when they were discovered.
But Liftin, reached at home Friday night, said the discovery of the irregularities didn't result from an on-going investigation by Kidder into Jett's dismissal and supervision of his actions.
In another trader dismissal, Kidder sources confirmed Thursday the firm fired bond-derivatives executive Clifford Kaplan early this year after determining he simultaneously worked for another investment banking firm.
In addition to the apparent conflict of interest, Kaplan late last year was working on a derivatives deal that cost Kidder $1.7 million. The loss also figured in his termination, the sources said.