Later, it moved away from traditional investment banking (helping companies raise funds in the capital market and negotiating mergers and acquisitions) to almost exclusively proprietary trading (the buying and selling of stocks, bonds, options, etc. Shortly thereafter, Salomon purchased home mortgages from thrifts throughout the United States and packaged them into mortgage-backed securities, which it sold to local and international investors. ĭuring the 1980s, Salomon was noted for its innovation in the bond market, selling the first mortgage-backed security, a hitherto obscure species of financial instrument created by Ginnie Mae. Gutfreund became the CEO of the company following the reverse merger. It was the reverse merger that enabled Gutfreund to take the company public. In 1981, it was acquired by the commodity trading firm Phibro Corporation and became Salomon Inc. In 1978, John Gutfreund became a managing partner, and succeeded William Salomon as head of the company. Both of the organizations were able to place the bonds successfully. When the Municipal Action Committee (MAC) was established and bonds were created in its name, Salomon Brothers and Morgan Guaranty Trust organized syndicates for the $1 billion bond sale. In 1975, Salomon Brothers also aided the state’s efforts to save New York City from bankruptcy. In response, Morgan Stanley refused to act as co-manager, and Salomon Brothers and Merrill Lynch were awarded top billing as a result. Morgan Stanley demanded sole management, but IBM affirmed Salomon Brothers’ role as co-manager. In 1979, Salomon Brothers scored a major coup when IBM insisted that Morgan Stanley accept Salomon Brothers as co-manager on a $1-billion debt issue for a new generation of IBM computers. In 1975, Salomon Brothers was formally recognized by other top investment banks as a "bulge bracket" firm, meaning it was one of the leaders in investment banking. Top ranking and public financing: 1970-1979
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In 1967, Salomon Brothers sponsored Muriel Siebert, the first woman to obtain a trading license on the floor of the New York Stock Exchange. William Salomon, the son of Percy Salomon, became a managing partner and the head of the company in 1963. The company remained a partnership until the early 1980s. The founding Salomon Brothers are descendants of Haym Salomon, primary financier of the American Revolutionary War, Consul to France, and childhood friend to Robert Morris, Founding Father and Superintendent of Finance of the United States. History Founding įounded in 1910 by Arthur, Herbert, and Percy Salomon and a clerk, Ben Levy. In February 2022, it was announced that the Salomon Brothers brand will be revived by a group of former employees and execs and operate as full-service investment bank again. The bank was famed for its "cutthroat corporate culture that rewarded risk-taking with massive bonuses, punishing poor results with a swift boot." In Michael Lewis' 1989 book Liar's Poker, the insider descriptions of life at Salomon gave way to the popular view of banking in the 1980s and '90s as a money-focused and work-intense environment. It was also one of the top firms in futures and options (known as "derivatives") and in securitization in a range of asset classes including commercial real estate securities. At one time, it was the leading underwriter of corporate bonds and the largest dealer of Treasury Securities in the United States.
Salomon Brothers served many of the largest corporations in America. Its CEO and chairman at that time, John Gutfreund, was nicknamed "the King of Wall Street".
It was one of the five largest investment banking enterprises in the United States and the most profitable firm on Wall Street during the 1980s and 1990s. Salomon Brothers, Inc., was an American multinational bulge bracket investment bank headquartered in New York.
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