Fall of the House of Lehman

Disclosure: I worked at Lehman (variously named during my tenure: Shearson-American Express, Shearson-Lehman Brothers, Shearson-Lehman-Hutton and, just before I left, plain old Lehman Brothers) from December 1983 (just prior to Lehman being acquired by Shearson in the Spring of 1984) until January or February of 1992.

I was "supposed" to have been fully vested in their in-house pension fund after five years of continuous service. It remains to be seen if there's any pension fund left now that the house has collapsed.

We (by which I mean Shearson American Express) acquired Lehman in a fire sale brought about by internal fighting at the old firm. The place was not on the verge of collapse financially, but it was on the verge of collapse politically. Finally, they sold themselves to us. It was an uncomfortable marriage from the outset. It had actually been pushed on us by our corporate parent, the American Express Company, who wanted to RAPIDLY pump up piddling little Shearson into a world-class brokerage powerhouse. However, there was baggage.

One suitcase of which was and is Richard J. Fuld. He was the head of trading at Lehman at the time of the acquisition. Lehman was a fixed-income behemoth when we bought them.

As the years went by the Lehmanites exercised their power and eventually forced out all of the top equity people and replaced them with their own, hand-picked, asskissers. My department was eventually handed over to two people wholly incompetent to head Equity Trading. Eventually Mr. Fuld became co-chief executive and, finally, the sole chief executive of the firm.

One of the reasons I left the firm was because of the wholescale movement of funds (there's no other way to describe it) which occured every New Year's Day when the Lehman Brothers "secret partnerships" would, without notice, dip into the profits of each department of the firm and skim untold millions of dollars off the departmental P&L statements and onto the books of the SPs. These partnerships had, I guess, been "grandfathered" in as part of the deal during the acquistion in '84.

When I found out what was happening I asked one of the vice-treasurers what was going on with my departments (suddenly missing) $600,000. This was her response.

"Oh... that's Mr. Fuld's."

"Kiss my fucking ass" I thought. "Oh." I said.

I made up my mind, on the spot, to seek employment elsewhere. I did NOT want to have to sit in a witness box in a Chancery Courtroom in Delaware someday and answer questions posed by the shareholders of American Express as to where their profits were going.

Maybe the whole thing was legal. Maybe not. I don't know. I got out.

That was 16 years ago.

Do I blame Dick Fuld for the collapse of Lehman (again)? Nah. I remember something that Peter Cohen once said to me. "You don't run big corporations... they run you."

I'm sure nobody is more shell-shocked today at Lehman Brothers than Dick Fuld.

But I still want my piddling-assed pension.