Solomon Brothers
Founded in 1910, Solomon Brothers was a Banque of investment of Wall Street. It remained a privately held company, managed by its associates until the beginning of the year 1980, when it was acquired by the raw material trader Phibro Corporation . Nevertheless, Phibro-Solomon quickly became Solomon Inc. and the activities of raw material trade were sold. Finally, in 1997, Solomon was acquired by Travelers Group, was become since Citigroup.
The apogee of Solomon took place in the years 1980 . Whereas a spectacular downward movement of the Interest rate starts, which will last more than 20 years, the bank becomes the principal speaker on the American national debt. The profits carried out are quickly considerable. It innovates considerably on almost all the markets of interest rate: inter alia, it arranges the first Swap of interest rate multi-currencies to receive a certain publicity (in 1981, between the the World Bank and IBM) and invents the securitization of mortgage claims ( mortgage backed securities ). The trading on own account on the financial markets becomes largely dominating in its activity and its results, far in front of its traditional functions of bank of investment.
Its traders bond was them-even called Big Swinging Dicks and created a whole mythology of the risk, in particular while being devoted during the idle periods to parts, for considerable sums, of lying poker on serial numbers of banknotes. They inspired in particular the novel of Tom Wolfe to rough-hew It vanities and the autobiographical book of Michael Lewis Liar' S Poker .
In 1991, Solomon was taken in red-handed of handling of an adjudication of Treasury bonds American. The inflicted fine was considerable and several of its leaders were prohibited life from following a financial occupation. Its principal shareholder, Warren Buffett installed a new team of management. Weakened, the firm continued nevertheless, for minor facts, to feed the heading of the accounting scandals until its transfer with Travelers in 1997. The new shareholder, unfavorable to the culture of the risk which Solomon had developed, quickly closed the main part of the activities of trading on own account. Solomon was amalgamated with the broker general public Smith-Barney and is now nothing any more but one mark of division Global Markets of Citigroup.
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