THE FALL OF THE HOUSE OF HUTTON

by Donna Sammons & John Feloni Carpenter ‧ RELEASE DATE: July 15, 1989

An engrossing and vividly documented account of the demise of a consequential brokerage house. Unlike Mark Stevens, who tells roughly the same story in Sudden Death (reviewed below), the authors zero in immediately on the check-kiting scheme that brought E.F. Hutton & Co. to the attention of law-enforcement agencies around yearend 1981. Their version is the better for this focus. The overdrafting, which led to guilty pleas on 2,000 counts of mail and wire fraud in mid-1985, was but the most dramatic outcome of the managerial malaise that gripped the firm during its last decade. Disclosure of the long-running swindle also helped precipitate the internecine battles that made Hutton easy prey for American Express Co.'s Shearson unit following the stock market's epic break in October of 1987. With the banking scam as a leitmotif, Carpenter (The Price Waterhouse Book of Personal Financial Planning) and Feloni (an erstwhile Hutton broker) offer a nicely paced, interpretive recap of the firm's final years as an independent entity. While they concentrate on the 1981-88 period, the authors provide a wealth of detail on the company's history and the personalities who made it the broker of choice for carriage-trade investors. Former SEC chief John Shad was a Hutton executive, for example, while actress Dina Merrill (daughter of founder Edward Francis) and Peter Ueberroth (ex-commisioner of major league baseball) served as directors. Villains of the piece include sometime CEO Robert Fomon, a hard-drinking, thrice-married womanizer who ran Hutton and its 17,000 odd employees like a personal fiefdom. His impetuous style contributed materially to the firm's growth during the 1970's--and its decline in the 1980's. Also culpable in the author's view were unduly acquiescent board members and Fomon's successor as CEO, Robert Rittereiser; a talented albeit indecisive recruit from Merrill Lynch, he never did adjust to Hutton's freewheeling corporate culture. Fomon, Rittereiser, and a handful of their upper-echelon associates pocketed millions in severance pay when Shearson absorbed Hutton, but thousands of subordinates were summarily laid off less than two weeks before Christmas. A cautionary tale well told, which underscores one of the financial community's grimmer jests, i.e., that Wall Street starts at a graveyard and ends in a river.

Pub Date: July 15, 1989

ISBN: N/A

Page Count: -

Publisher: Henry Holt

Review Posted Online: N/A

Kirkus Reviews Issue: June 15, 1989

Categories: NONFICTION