Fred Joseph
Encyclopedia
Frederick H. "Fred" Joseph (1937—2009) was the former president and chief executive officer
of the investment bank Drexel Burnham Lambert
during the 1980s.
The son of a Boston
cabdriver, Joseph graduated from Harvard University
in 1959 and received an MBA from Harvard Business School
in 1963. While at Harvard, Joseph won several boxing medals.
In 1963, Joseph began his career in finance in the corporate finance department of E. F. Hutton working for John S.R. Shad
. Following Shad's departure from Hutton, Joseph left the firm as well to join Shearson, Hammill & Co.
By the early 1970s, Joseph was the chief operating officer of the firm. However, in 1974, Shearson was acquired by Hayden, Stone & Co.
and Joseph left the firm to join Drexel Burnham Lambert
as co-head of corporate finance. Joseph had long wanted to get back into investment banking
. He boldly promised that in 10 years, Drexel would be as powerful as Goldman Sachs
. Although junk-bond chief Michael Milken
was the most powerful man in the firm, it was Joseph who was named president in 1984 and CEO in 1985.
In 1988, Joseph was responsible for negotiating Drexel's settlement with the federal government, in which the firm pled no contest
to six felony counts and paid $650 million in fines and penalties—at the time, the largest fine ever imposed under the 1930s securities laws. In 1993, the SEC barred Joseph from serving as president, chairman or CEO of a securities firm for life for failing to properly supervise Milken. In 2009, Portfolio.com and CNBC
named Joseph the seventh-worst CEO in American business history stating that "his poor management left the company without a crisis plan".
In 2001, Joseph resurfaced on Wall Street
, when he co-founded Morgan Joseph & Company, an investment banking firm that focuses on middle-market businesses. Although the firm carries his name and he was part-owner, he was only co-head of corporate finance as a result of the SEC's lifetime ban.
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of the investment bank Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
during the 1980s.
The son of a Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
cabdriver, Joseph graduated from Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
in 1959 and received an MBA from Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
in 1963. While at Harvard, Joseph won several boxing medals.
In 1963, Joseph began his career in finance in the corporate finance department of E. F. Hutton working for John S.R. Shad
John S.R. Shad
John S.R. Shad , served as chairman of U.S. Securities and Exchange Commission between 1981 and 1987. He also served as the ambassador to the Netherlands. He had two children, Leslie and Rees Shad, and was married to Patricia Shad...
. Following Shad's departure from Hutton, Joseph left the firm as well to join Shearson, Hammill & Co.
Shearson, Hammill & Co.
Shearson, Hammill & Co. was a Wall Street brokerage and investment banking firm founded in 1902 by Edward Shearson and Caleb Wild Hammill. The firm originally built its business as a stock broker as well as a broker of various commodities, particularly grain and cotton...
By the early 1970s, Joseph was the chief operating officer of the firm. However, in 1974, Shearson was acquired by Hayden, Stone & Co.
Hayden, Stone & Co.
Hayden, Stone & Co. was a major securities firm founded in 1892 by Charles Hayden and Galen L. Stone. The firm was acquired by Cogan, Berlind, Weill & Levitt in 1972 and was part of what ultimately would become Shearson/American Express in 1981.-History:...
and Joseph left the firm to join Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
as co-head of corporate finance. Joseph had long wanted to get back into investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
. He boldly promised that in 10 years, Drexel would be as powerful as Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
. Although junk-bond chief Michael Milken
Michael Milken
Michael Robert Milken is an American business magnate, financier, and philanthropist noted for his role in the development of the market for high-yield bonds during the 1970s and 1980s, for his 1990 guilty plea to felony charges for violating US securities laws, and for his funding of medical...
was the most powerful man in the firm, it was Joseph who was named president in 1984 and CEO in 1985.
In 1988, Joseph was responsible for negotiating Drexel's settlement with the federal government, in which the firm pled no contest
Nolo contendere
is a legal term that comes from the Latin for "I do not wish to contend." It is also referred to as a plea of no contest.In criminal trials, and in some common law jurisdictions, it is a plea where the defendant neither admits nor disputes a charge, serving as an alternative to a pleading of...
to six felony counts and paid $650 million in fines and penalties—at the time, the largest fine ever imposed under the 1930s securities laws. In 1993, the SEC barred Joseph from serving as president, chairman or CEO of a securities firm for life for failing to properly supervise Milken. In 2009, Portfolio.com and CNBC
CNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
named Joseph the seventh-worst CEO in American business history stating that "his poor management left the company without a crisis plan".
In 2001, Joseph resurfaced on Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
, when he co-founded Morgan Joseph & Company, an investment banking firm that focuses on middle-market businesses. Although the firm carries his name and he was part-owner, he was only co-head of corporate finance as a result of the SEC's lifetime ban.