The Devil's Casino_ Friendship, Betrayal - Vicky Ward [20]
firm, Peter J. Solomon Company, the first independent investment bank on Wall Street.
By 1990, Fuld, who had been a low-key partner in the old Lehman, was the most senior
person left in the newly merged entity. He was made a senior vice chairman and a board
member, and was placed on the planning group of the new firm. He was nominally in
charge of commercial paper, government, mortgage, and money market securities.
According to Robert "Bob" Shapiro, the senior trader on the LCPI desk, some of the
surviving Lehmanites sympathized with Fuld over his capitulation to the takeover.
"He was boxed in, and I think we all knew it. He had a lot of money at stake," says
Shapiro.
One person who did not agree with what Fuld had done, however, was his best friend,
Jim Boshart. Boshart was leaving out of loyalty to Lew, and he thought the firm had just
been murdered.
He thought Fuld should have made a similar stand, so they had some angry exchanges.
Their friendship never fully recovered.
Others agreed with Boshart. "They thought, quite frankly, that Dick had sold out," says
Moncreiffe. "No one thought much of what he'd done."
At first it did not occur to Moncreiffe that the merger would directly involve him. He had
expanded the government securities trading operation and then run the mortgage -backed
securities trading desk. But because he wasn't that close to Fuld, he thought he was "no
longer a key player" on the trading side by the time the Shearson American Express
takeover happened in 1984.
But suddenly, just before the deal was done, Moncreiffe and Pettit, the two most junior
Lehman partners (who were barely on any of the senior partners' radars) were asked to
sign noncompetes. To the dismay of the other partners, they refused. Why? They believed
that they needed to protect LCPI, the little unit that employed 454 people and might be
broken up unless they kept it together. LCPI drew its success from its loyalty and team
spirit. Pettit and Moncreiffe were not going to allow it to be dismembered in the takeover.
"We believed in truth, justice, and the American way," says Moncreiffe with a smile.
Initially Robinson had felt he didn't need noncompetes from Pettit and Moncreiffe, since
together they had only a thousand LBKL shares. Neither was on his list of 53 essential
partners. But then the American Express board noticed just how profitable LCPI had been
before the meltdown of the past six months, and there was a sudden panic.
Moncreiffe says, "Chris and I agreed that we would refuse to sign unless we could protect
every single person in LCPI--secretaries and back-office people included. We had to be
kept together; we had to be paid as a unit. It 's no good paying us extra to sign a
noncompete.
What we need is a viable business going forward. We insisted that we get a bonus pool
based on profits. We also secured a guarantees pool for the first year because of the
business disruption because of the takeover."
Moncreiffe says Cohen summoned him and Pettit to a meeting with his deputy, Jeff Lane,
and Herb Freiman (the executive in charge of all capital markets for Shearson), and asked
for their signatures. Moncreiffe says the meeting became "quite heated" as they "outlined
the incompatibilities that needed to be bridged."
After the meeting, Pettit called a conference at 6.30 P.M. Moncreiffe says Fuld was there,
but said very little.
"It was vintage Chris to do this. . . . [It] didn't matter that Dick was his boss, nor that Lew
was his boss . . . he was going to call this meeting."
Pettit later described the scene in a dramatic video that was taped for Bob Genirs's
farewell on April 1, 1993:
The leadership of that group [LCPI] had gathered--a small group of us--one afternoon in
great consternation in my office at 55 Water Street. And we were trying to figure out
what to do, and as we talked about our options, we realized, well, we didn't have a lot of
options. But the one we did have was possibly to draw a line in the sand, so to speak,
with Shearson.