The Rise and Fall of Salomon Brothers
The Rise and Fall of Salomon Brothers
Treasury Bond Scandal- 1991
Executive Summary
Salomon Brothers was at one time, the largest bulge bracket firm on Wall Street. Although it offered a number of financial services, it had established its name through the legacy of bond trading. Its bond trading department boasted of iconic traders of 1980’s era- John Meriwether and Myron Sholes. Salomon Brothers can be considered as the founder father of mortgaged back securities trading on the Wall Street, an area in which it was a near monopolist for a long time with not much competition from other firms. In 1981, Salomon Brothers which operated as partnership was taken over by Phibro Corporation and became known as Phibro-Salomon. With a lot of ups and downs in its fortune during the late 1980’s and early 1990’s, finally in 1997, it merged with Citigroup and became their Investment Banking arm called Salomon Smith Barney. Finally the existence of the name of “Salomon” ceased when Citigroup decided to drop the name in 2003 and branded its investment bank and underwriters as Citigroup Global Markets.
We chose to work on the topic “The Rise and Fall of Salomon Brothers” as this topic offers an insight into the development of a particular securities market- the Mortgaged backed securities, the dominance of the market player, the culture of the firm and finally the scandal which served as the turning point of fortunes of ‘once the market leader’ or metaphorically- the final nail in the coffin.
Background
Salomon Brothers was founded in New York City in 1910 when three brothers-Arthur, Herbert, and Percy Salomon broke away from their father Ferdinand's money-brokerage operation and went into business for themselves. The company was primarily a bond trading firm. The private company entered equities in the mid-1960s and between 1962 and 1964, Salomon more than tripled its underwriting business, from $276 million to $873 million. They entered investment banking in the early
Treasury Bond Scandal- 1991
Executive Summary
Salomon Brothers was at one time, the largest bulge bracket firm on Wall Street. Although it offered a number of financial services, it had established its name through the legacy of bond trading. Its bond trading department boasted of iconic traders of 1980’s era- John Meriwether and Myron Sholes. Salomon Brothers can be considered as the founder father of mortgaged back securities trading on the Wall Street, an area in which it was a near monopolist for a long time with not much competition from other firms. In 1981, Salomon Brothers which operated as partnership was taken over by Phibro Corporation and became known as Phibro-Salomon. With a lot of ups and downs in its fortune during the late 1980’s and early 1990’s, finally in 1997, it merged with Citigroup and became their Investment Banking arm called Salomon Smith Barney. Finally the existence of the name of “Salomon” ceased when Citigroup decided to drop the name in 2003 and branded its investment bank and underwriters as Citigroup Global Markets.
We chose to work on the topic “The Rise and Fall of Salomon Brothers” as this topic offers an insight into the development of a particular securities market- the Mortgaged backed securities, the dominance of the market player, the culture of the firm and finally the scandal which served as the turning point of fortunes of ‘once the market leader’ or metaphorically- the final nail in the coffin.
Background
Salomon Brothers was founded in New York City in 1910 when three brothers-Arthur, Herbert, and Percy Salomon broke away from their father Ferdinand's money-brokerage operation and went into business for themselves. The company was primarily a bond trading firm. The private company entered equities in the mid-1960s and between 1962 and 1964, Salomon more than tripled its underwriting business, from $276 million to $873 million. They entered investment banking in the early
References: http://www.fundinguniverse.com/company-histories/Salomon-Inc-Company-History.html http://en.wikipedia.org/wiki/Salomon_Brothers#Long_Term_Capital_Management http://www.time.com/time/magazine/article/0,9171,973726-2,00.html http://www.answers.com/topic/salomon-brothers Robert Sobel, Salomon Brothers 1910-85: Advancing to Leadership Michael Lewis, Liar’s Poker Salomon Brothers: “Apologies are Bullshit”- pdf