Ashton Technology Group (fka ASTN)

[sarals]

THE TRUTH ABOUT FRED'S BACKGROUND

To:Capitalizer who started this subject
From: Candle stick Monday, May 7, 2001 5:32 PM
Respond to of 3821

THE TRUTH ABOUT FRED'S BACKGROUND
looks pretty damn good to me, read on.....

New York Times - Sunday, June 1, 1986 - Page 1 of Business Section

HOMETOWN BOYS MAKE GOOD . . .

The Rittereisers, raised in Yorkville, now use their street smarts downtown.

by Priscilla Ann Smith

Ritterize (RIT ter-ize) An attempt to rescue a brokerage house from scandal in what appears to be a hard-hitting, competitive, straight shooter – often named Rittereiser – to take command.

Last June, when E.F. Hutton & Company was reeling from the worst scandal in its history, its beleaguered chairman went outside the firm to hire a president who would, he hoped, pull the company back together.

Robert Rittereiser, at the age of 47, seemed to be the perfect elixir for a suffering Hutton. Already known around Wall Street as a straight shooter and Mr. Clean, he was Merrill Lynch's chief administrative officer and financial officer, top operations man, and some believed, a contender for the president's job. He was known as for his "direct, aggressive manner of handling problems," the sort of executive whose approach to challenges is "Let's do it, let's not be afraid," said William G. Morton, chairman of the Boston Stock Exchange.

As it turned out, Bob Rittereiser went to work digging Hutton out of its morass, just as his older brother, Fredric W. Rittereiser, was tapped for a rescue mission of another sort. The 49-year-old ex-cop, who has held a host of jobs in the brokerage business, took the assignment of Vice Chairman of First Jersey Securities last fall. His major task: to improve the tarnished image of the big, fast-growing firm that has been hurt by repeated charges of stock manipulation made against it and its chairman and founder, Robert Brennan, by the Securities and Exchange Commission.

Mr. Rittereiser's presence is already being felt there. In the latest version of First Jersey's television commercials, for example, Mr. Rittereiser and the firm's president, Jack Dell, are shown getting into a helicopter with Mr. Brennan – a break with previous commercials that show only Mr. Brennan.

"Robert Brennan was First Jersey and now Fred Rittereiser will be First Jersey," says Scott Emrich, publisher of United Markets Guide, which charts over-the-counter stocks, a market the First Jersey dominates. Mr. Brennan himself says that Mr. Rittereiser's presence will help him play a "less significant" role in First Jersey and to concentrate on other investments, which include racetracks, race horses and real estate.

Thus, within a few months of each other, the brothers took on two of Wall Street's toughest jobs. Finding siblings in such high-level positions would be curious enough in the old blue-blood families that have long filled Wall Street's top ranks. But for a blue collar family from Manhattan's Yorkville section, where stickball and not racquetball was the sport of choice and education came from the street and not a parlor of prep school, the Ritterisers phenomenon is an aberration – even in a nation that treasures its Horatio Alger tales.

And there is yet a third brother, Thomas, 46, who also earns more than $500,000 as a brokerage executive. As a first vice president at Cantor Fitzgerald Securities Corporation, he is not, however, in a hot seat as his two brothers are.

That pair has already left its mark on wall Street. They "are superb executives," says Kenneth R. Leibler, president of the American Stock Exchange, echoing the views of many on Wall Street, "They are sensitive to the major forces in our industry, particularly technology, and the fact that they are so successful and in the same family is truly remarkable."

The head of that family, Fredric Rittereiser, their 77-year old father, says quite simply that his sons' success "scares me."

The Rittereiser boys, and their younger sister, Liz, were raised in a blue collar work ethic. There father was a truck driver, their mother, Elizabeth, a housewife. The three boys juggles part-time work and played ball in the streets, turning down college scholarships to get jobs that paid steady wages. Until they married in their early 20's, they handed over half of their earnings to their mother. Only Bob graduated from a four year college, and he did that in seven years, by working days and going to school at nights. Fred had a two-year City College "police science" course before going to work as a New York City policeman.

"You see working class families where everybody is successful, where there are a lot of kids who are all overachievers," says Paul D'Arby, senior consultant psychologist for Rohrer, Holder Heplagle, Inc. which psychologically screens people for executive jobs. But, he adds, they often do not fit into corporate roles or meet corporate requirements.

The Rittereiser brothers, he said, appear to have had "a good mother and a good home. But they also may have gotten something special from their father. He sounds like a free spirit and a risk taker who may have caused their mother a few grey hairs but taught the children to look beyond the ordinary working class boundaries and be willing to go far from home to bring the bread in."

Adds First jersey's Mr. Brennan: "I know the brothers and they are remarkable; the whole family is remarkable. But when you know the father, you know that when you plant beans, you get beans."

Still, the Rittereisers seem conscious of their lack of credentials on Wall Street. "I couldn't join the political clubs and I wouldn't have joined them," Bob says. "There is no question I was chosen on merits. My mother believed the world was a meritocracy. Added Fred with characteristic bluntness "There was the old boy network and I never got in. But my knowledge of telecommunications allowed me to penetrate management."

The street smarts didn't hurt either. "I fear that higher education makes a man too civilized to face what he has to face," says Fred. "Growing up like we did, I can feel a hoodlum, smell him."

If the Rittereisers were barred at first from the powerful clubs and networks that dominate Wall Street, they formed one of their own. In 1958, Bob took a lowly job as a margin clerk at Merrill Lynch, and even before his 27 year career there took off, he laid the groundwork for his brothers' careers.

"Bob was doing well at Merrill Lynch and he brought his brothers both into the firm," said their father. Five years after Bob started at Merrill, Fred joined as an assistant trader in the over-the-counter department. And five years after that, Tom started as an operations clerk but later moved into bond trading. In fact, the family network was "so strong that the job Tom left to go to Merrill – at Emory Air Freight – was one that his father, who was a truck driver there, had gotten him. At Emory, Tom worked up to operations manager at Kennedy Airport and "when I left, my father was working for me," he said.

During his years at Merrill, Bob moved steadily – and aggressively – through the ranks. But by the time Robert Ponson called last summer asking for help at Hutton, Mr. Rittereiser appeared more than ready to jump ship. "Nineteen eighty four was a difficult year,"he said. Among other things, he watched his mentor, Roger E. Birk, chairman of Merrill Lynch & Company, take early retirement. Mr. Birk had been instrumental in many of Mr. Rittereiser's career moves at Merrill, including his assignment to save Goodbody & Company, a larger brokerage house that nearly collapsed when Merrill took it over in 1970.

Goodbody was Bob Rittereiser's first experience with crisis management — and within 18 months, he said he helped dissolve the firm and make whole its former customers. But Hutton was a much tougher challenge. As he put it when he arrived: There was an atmosphere at Hutton "where the ball could go through the third baseman's legs and then the left fielder's legs, and the center fielder could sat ‘It's not my problem.'"

Now, he says, his major challenge is to restore morale, a task that he says is made more difficult by all the investigations: "We must be the most thoroughly investigated firm in history," he said.

Hutton's problems seem to have resulted from independent regional offices, where some officers were apparently inflating the cash flow of their units by [indiscernible] bank accounts and making illegal profits off [indiscernible]. Top management said it was unaware of what was going on.

One of the first things Mr. Rittereiser sought to remedy he says, was Hutton's loose structure. He has also tried to realign Hutton's financial operations, including establishing a new internal cash management system and appointing a new chief financial officer.

Financially, Hutton seems to be on solid ground now. Although its earnings last year dropped 17 percent to $43.7 million, largely as the result of a writeoff for a possible loan loss, they rose sharply in this year's first quarter. And as Mr. Rittereiser reorganizes the firm, he is keeping it close to basics: It does not plan to convert itself into a financial cafeteria as many of its Wall Street competitors have, offering customers everything from credit cards to home mortgage loans. Instead, Bob Rittereiser says, Hutton will continue to offer a number of financial products that will all relate in some way to investments.

Although his job is far from done, Mr. Rittereiser, whose salary exceeds $800,000 plus stock options, appears to be taking charge smoothly and ruffling surprisingly few feathers. "It's hard to believe that someone from outside Hutton could move in so smoothly," said Michael Castellano. a senior vice president at Hutton, who suddenly found himself reporting to a new chief financial officer brought in by Bob Rittereiser. Added Robert [indiscernible - Forpon?], Hutton's chairman, I lucked out. It is much more than I ever anticipated."

Fred Rittereiser, for his part, might have the more complicated of the two brothers jobs. There has been a steady stream of negative articles on Mr. Brennan and First Jersey as a result of press and Securities and Exchange Commission investigations into transactions of the company. "First Jersey is becoming too big a company to have this kind of press," says Mr. Emrich.

The S.E.C. basically charged that First Jersey had violated securities laws, in effect, through the manipulation of prices of various stocks. Mr. Brennan has denied those charges, but in 1984, without admitting or denying the allegations, he agreed to an injunction against certain future securities law violations.

In some instances, Mr. Brennan's private investments have been in companies whose stock was later sold, all or in part, to First Jersey customers – generating big profits for him. Mr. Brennan has contended that these transactions are legal because he had disclosed them in public filings with the S.E.C.

Last month, after another probe, several lower level officers of First Jersey were charged with obstruction of justice and perjury. And the S.E.C. is continuing investigations into other First Jersey activities.

Despite its problems, First Jersey continues to grow, it is one of the nations biggest mass marketers of stocks, particularly small capital, so-called growth stocks. According to Fred Rittereiser, it now has $85 million in assets and $45 million in net capital. With 1,200 sales representatives in 38 offices nationwide and between 550,000 and 600,000 retail clients, it adds new clients at the pace of 5,000 a month, he said. In 1980, he said, there were fewer than 100 account executives and fewer than 50,000 clients and "12 or so offices." Net capital was below $5 million.

By his own admission, First Jersey's Mr. Rittereiser, who said he now earns more than $500,000 a year, has little retail marketing experience. He was tapped for the First Jersey job after serving as president of Instinet,, which operates a computer network for institution-to-institution stock trades. His earlier experience was in over-the-counter stock trading, where he had a reputation of being shrewd and clean.In fact, when he was trading at G.A. Sexton & Company, he was named to one of the first committees set up by the National Association of Securities Dealers to look into some questionable First Jersey transactions in the late 1960's. Results of the investigation were inconclusive, Mr. Rittereiser says, and were later turned over to the S.E.C., which continued investigation.

How does a Rittereiser-run First Jersey differ from a Brennan-run First Jersey? In addition to beefing up its research department – it has 10 people now instead of two – Fred Rittereiser is trying to lead the firm further into investment banking, which would give First Jersey a major source of income not dependent on retail customers and provide a new area of potential growth.

Though First Jersey has brought public a number of new issues, underwritings to generate added capital for existing companies would be a new source of income for the firm, says Mr. Rittereiser. He cites one recent transaction that he devised, involving [indiscernible – Imatron, Inc. or Imedtron, Inc.???], which he says is the model for "five or six other" deals he is planning.

First Jersey became involved with [Imatron??], a medical equipment company whose stock is traded over the counter, in several ways. It purchase about 20 percent, or more than 4 Million, of the company's shares, for sale to its customers. First Jersey also arranged to become underwriter for [Imatron??] to raise funds in the future, probably through private placement of equity units, which might include warrants or various forms of stock. For now, First Jersey's newly expanded research department has put out a 12-page report on [Imatron??] that recommends purchase of its shares.

The April 11 research report to customers does not mention First Jersey;'s underwriting arrangement nor its 4 million share purchase of Imatron's stock. That, says Mr. Rittereiser, is covered in the standard boilerplate disclaimer that is prepared in small type at the bottom of the research report's first page.

Many Big Board firms, as a matter of policy, include such specific information in their research reports, but legally, according to a National Association of Securities Dealers attorney, Mr. Rittereiser may be right – the boilerplate may protect a firm against any failure to make a material disclosure. First Jersey is not regulated by the New York Stock Exchange; instead, it falls under the N.A.S.D., an industry-supported regulatory organization. It is also regulated by the S.E.C.

With so much limelight on First jersey, how are Mr. Rittereiser and Mr. Brennan getting along these days? "I understand him," Fred Rittereiser says of his boss, pointing out that Mr. Brennan grew up as a street kid in Newark. But, he continued, Mr. Brennan "will have to prove himself on the playing field." Then he pauses, "I never trust anyone that I haven't known a very long time."

END OF ARTICLE

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