Salomon Brothers
CEO 1992–1997) | |
Products | Sales and trading, Investment banking |
---|---|
Revenue | US$9.046 billion (1996)[1] |
US$617 million (1996)[1] | |
Total assets | US$194.881 billion (1996)[1] |
Number of employees | 7,100 (1996)[1] |
Salomon Brothers, Inc., was an American multinational
Salomon Brothers served many of the largest corporations in America. It was a leading underwriter of corporate bonds and one of the top firms in futures and options (known as "derivatives") and in securitization in a range of asset classes including commercial real estate securities.[7]
The bank was famed for its "cutthroat corporate culture that rewarded risk-taking with massive bonuses, punishing poor results with a swift boot."
In February 2022, it was announced that the Salomon Brothers brand will be revived by a group of former employees and execs and operate as full-service investment bank again.[10][11]
History
Founding
Founded in 1910 by Arthur, Herbert, and Percy Salomon and a clerk, Ben Levy. The founding Salomon Brothers are descendants of Haym Salomon, primary financier of the American Revolutionary War, Consul to France, and childhood friend to Robert Morris, Founding Father and Superintendent of Finance of the United States.[12] The company remained a partnership until the early 1980s. William Salomon, the son of Percy Salomon, became a managing partner and the head of the company in 1963.[13]
In 1967, Salomon Brothers sponsored Muriel Siebert, the first woman to obtain a trading license on the floor of the New York Stock Exchange.[14]
Top ranking and public financing: 1970-1979
In 1975, Salomon Brothers was formally recognized by other top investment banks as a "bulge bracket" firm, meaning it was one of the leaders in investment banking.[15] In 1979, Salomon Brothers scored a major coup when IBM insisted that Morgan Stanley accept Salomon Brothers as co-manager on a $1-billion debt issue for a new generation of IBM computers. Morgan Stanley demanded sole management, but IBM affirmed Salomon Brothers’ role as co-manager.[15] In response, Morgan Stanley refused to act as co-manager, and Salomon Brothers and Merrill Lynch were awarded top billing as a result.[16]
In 1975, Salomon Brothers also aided the state’s efforts to save New York City from bankruptcy. When the Municipal Action Committee (MAC) was established and bonds were created in its name, Salomon Brothers and Morgan Guaranty Trust organized syndicates for the $1 billion bond sale. Both of the organizations were able to place the bonds successfully.[16]
In 1978, John Gutfreund became a managing partner, and succeeded William Salomon as head of the company.[17][18]
Salomon Brothers during the 1980s
In 1981, it was acquired by the
During the 1980s, Salomon was noted for its innovation in the
The firm competed for the leveraged buyout of RJR Nabisco and the leveraged buyout of Revco stores (which ended in failure).[21][22]
In 1987, a New York Times report identified Salomon Brothers as in the top tier of firms along with Merrill Lynch, Morgan Stanley and Goldman Sachs.[23]
Salomon Brothers' success in the 1980s is documented in
Lewis describing the trading floor at Salomon:
Because the forty-first floor was the chosen home of the firm's most ambitious people, and because there were no rules governing the pursuit of profit and glory, the men who worked there, including the more bloodthirsty, had a hunted look about them. The place was governed by the simple understanding that the unbridled pursuit of perceived self interest was healthy. Eat or be eaten. The men of 41 worked with one eye cast over their shoulders to see whether someone was trying to do them in, for there was no telling what manner of man had levered himself to the rung below you and was now hungry for your job. The limit of acceptable conduct within Salomon Brothers was wide indeed. It said something about the ability of the free marketplace to mold people's behavior into a socially acceptable pattern. For this was capitalism at its most raw, and it was self-destructive...[24]
1990s treasury bonds crisis
In 1991,
The firm's top bond traders called themselves "Big Swinging Dicks," and were the inspiration for the book The Bonfire of the Vanities, by Tom Wolfe. The expression "Big Swinging Dick(s)" itself was used to refer to the Salomon bankers who dominated the game of extraordinary profit-making.[32][9]
Some members of the Salomon Brothers' bond arbitrage, such as John Meriwether, Myron Scholes and Eric Rosenfeld later became involved with Long-Term Capital Management, a hedge fund that collapsed in 1998.[33] The last years of Salomon Brothers, culminating in its involvement with Long-Term Capital Management, is chronicled in the 2007 book A Demon of Our Own Design.
Acquisition by Citigroup
Salomon (NYSE:SB) was acquired by
Although the Salomon name carried on as Salomon Smith Barney, the investment banking operations of Citigroup, the division was renamed on 7 April 2003 to "Citigroup Global Markets Inc."[37] As of 2020, Citigroup no longer owns the Salomon Brothers trademark, according to the records provided by the United States Patent and Trademark Office.[38][39]
Revival
In February 2022, it was announced that the Salomon Brothers brand will be revived by a group of former employees and execs. President R. Adam Smith said that the trademark had been acquired and they plan to operate as a full-service investment bank again.[10][11]
Notable employees
- financial journalist, author of The Big Short, worked as a bond salesman in London for Salomon Brothers in the late 1980s.[40]
- John Meriwether, American hedge fund manager, head of fixed-income trading and was promoted to vice-chairman in 1988.[40]
- Michael Bloomberg, former mayor of New York City (2002-2013), head of equity trading and systems development in the 1970s.[40]
- John Lipsky, acting managing director of the International Monetary Fund from May to July 2011, former director of European Economic and Market Analysis Group until 1992.[40]
- mortgage-backed securities, headed the mortgage bonds desk at Salomon and reached the post of vice chairman.[40]
- John Gutfreund, former chairman and CEO of Salomon Brothers who made the firm public.[40]
- Myron Scholes, economist who invented the Black–Scholes model, recipient of the Nobel Memorial Prize in Economic Sciences in 1997, former managing director of fixed-income derivatives.[40]
- Public Securities Association and Securities Industry Association, founding chairman of the Municipal Securities Rulemaking Board, member of the firm's executive committee.[41]
- Michael Corbat, CEO of Citigroup from 2012 to 2021, began his career in the mortgage department in 1983.
- Bill Browder British American Financier and political activist. Founder and CEO of Hermitage Capital Management
References
- ^ a b c d Travelers Group SEC Form 8-K Filing September 2007
- ^ "Warren Buffett's Wild Ride at Salomon (Fortune, 1997)". Fortune. Retrieved 2021-06-21.
- S2CID 53527583.
- ^ Tablang, Kristin. "'King of Wall Street' John Gutfreund's $120 Million Fifth Avenue Duplex Crowned New York's Priciest Home Listing". Forbes. Retrieved 2021-06-21.
- ^ Fox, Emily Jane (9 March 2016). ""King of Wall Street" John Gutfreund Dies at 86". Vanity Fair. Retrieved 2021-06-21.
- ISSN 0362-4331. Retrieved 2021-06-21.
- ISBN 978-0-07-136999-2.
- ^ Chen, Full Bio Follow Linkedin Follow Twitter James; CMT; Investing, Is the Former Director of; trader, trading content at Investopedia He is an expert; Adviser, Investment; Chen, global market strategist Learn about our editorial policies James. "Salomon Brothers". Investopedia. Retrieved 2021-06-21.
{{cite web}}
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has generic name (help) - ^ a b Gross, Daniel (2008-09-25). "The end of the BSD". Slate Magazine. Retrieved 2021-06-21.
- ^ a b "Salomon Brothers alumni are reviving the swashbuckling bank made famous by 'Liar's Poker'". Fortune. 2022-02-07. Retrieved 2022-03-04.
- ^ a b "Salomon Brothers Alumni Tap Storied Firm's Legacy in Revival". bloomberg.com. 2022-02-06. Retrieved 2022-03-04.
- ^ "The unknown, unheralded patriot". blogs.timesofisrael.com. Retrieved 2021-11-25.
- ^ Company Profiles – FundingUniverse 1992">"History of Salomon Inc. – FundingUniverse". Search Thousands of Company Profiles – FundingUniverse. November 23, 1992. Retrieved January 11, 2018.
- ^ Arnold, Laurence (2013-08-26). "Wall Street pioneer Muriel Siebert, first woman to buy a seat on the NYSE". The Seattle Times. Retrieved 2021-11-25.
- ^ ISBN 978-0-8021-9813-6.
- ^ ISBN 978-0-07-136999-2.
- ^ a b Lewis, Michael (1989). Liar's Poker: Rising Through the Wreckage on Wall Street. New York: W. W. Norton. p. 228.
- ^ a b "History of Salomon Inc. – FundingUniverse". www.fundinguniverse.com. Retrieved 2021-06-21.
- ^ Hojnicki, Carrie. "The Spectacular Rise And Fall of Salomon Brothers". Business Insider. Retrieved 11 November 2020.
- ^ Sterngold, James (January 10, 1988). "TOO FAR, TOO FAST; Salomon Brothers' John Gutfreund". The New York Times.
- ^ "History of the RJR Nabisco Takeover". The New York Times. December 2, 1988.
- ^ Eichenwald, Kurt (October 31, 1991). "Rite Aid Seeks to Buy Revco As Salomon Settles Lawsuit". The New York Times.
- ISSN 0362-4331. Retrieved 2021-12-12.
- ^ Lewis, pp. 69–70
- ^ Antilla, Susan (1993-12-15). "Ex-Salomon Trader Gets 4 Months". The New York Times. Retrieved 2023-12-24.
- ^ Ex-Salomon Chief's Costly Battle, The New York Times, August 19, 1994
- ^ "This is the moment America met Warren Buffett". finance.yahoo.com. 30 April 2019. Retrieved 2022-05-21.
- ^ "Citigroup purge costs Britain's great survivor his job". the Guardian. 2004-10-21. Retrieved 2022-05-21.
- ^ "SEC filing by SALOMON SMITH BARNEY HOLDINGS INC". sec.gov. 1999-08-12.
- ^ "Travelers to Buy Salomon Bros. for $9 Billion". Los Angeles Times. 1997-09-25. Retrieved 2021-12-12.
- ISSN 0099-9660. Retrieved 2021-12-12.
- )
- When Genius Failed: The Rise and Fall of Long-Term Capital Management
- ^ "A timeline of Salomon brothers". Business Insider. Retrieved 16 July 2018.
- ^ "Fema 403 - Chapter 5 - WTC 7" (PDF). Federal Emergency Management Agency. Retrieved 2021-12-25.
- ISSN 0362-4331. Retrieved 2021-12-25.
- ^ http://www.citigroup.com/citi/investor/data/k04cgm.pdf?ieNocache=32[bare URL PDF]
- ^ "Citigroup to Drop Salomon Name To Streamline Its Multiple Brands". The Wall Street Journal. 23 May 2001.
- ^ "Trademark Electronic Search System (TESS)". United States Patent and Trademark Office.
- ^ a b c d e f g Du, Lisa. "Salomon Brothers Alums: Where Are They Now?". Business Insider. Retrieved 2020-07-17.
- ISSN 0362-4331. Retrieved 2020-07-17.
Further reading
- Sobel, Robert (1986). Salomon Brothers, 1910–1985: Advancing to Leadership. New York: Salomon Brothers.
- Lowenstein, Roger (2000). ISBN 0-375-50317-X.
- Mayer, Martin (1993). Nightmare on Wall Street: Salomon Brothers and the Corruption of the Marketplace. Simon & Schuster. ISBN 9780671781873.
- Liar’s Poker: Rising Through the Wreckage on Wall Street by Michael Lewis. Penguin Books