John Muir & Co., the ailing brokerage firm, announced today that it was "pursuing serious negotiations with a major New York Stock Exchange member firm with a view toward the orderly transfer of all customer accounts within a few days."
Muir general partner Raymond L. Dirks and other executives were unavailable, but a top broker said that the firm negotiating with Muir was Thomson & McKinnon Auchincloss Kohlmeyer Inc. The firm was also reportedly interviewing key salesman at Muir, but Thomson & McKinnon officials could not be reached for comment.
Thomson & McKinnon was one of a number of firms asked by the NYSE to consider taking over the business after Muir told the exchange late last week that it was having troubles.
Under Dirks, Muir had become one of the leading underwriters of new issues and brought out 43 new stock offerings in just 18 months.
But recently, a number of those issues have soured after only a short time on the market. There have been several highly publicized suits which have accused Muir of issuing misleading stock prospectus. This is considered fraud under the federal securities laws.
The Securities and Exchange Commission has been investigating Muir's operations for some months and that investigation has reportedly intensified in recent weeks.
According to an exchange spokesman, Dirks blamed his firm's problems on the publicity from the various lawsuits. He claimed that key salesmen were abandoning the firm causing production to grind to a near halt.
But others familiar with Muir have claimed that the firm amassed a huge inventory of unsold stock which has jeopardized the capital position it is required by law to maintain.
One problem at Muir is that the firm became the only market for a number of its new underwritings, according to several sources. As a result, the firm was forced to buy back stock from favored clients who could not find other buyers.
A top Muir broker claimed that Muir's books were in chaos and that even Dirks himself did not know the firm's true financial condition.
Meanwhile, other firms that underwrite new issues were predicting the troubles at Muir would put a damper on the recently booming business.
According to the publication, "Going Public," 237 companies sold new issues of common stock in 1980, up from 81 in 1979. But in the first six months of 1981, there were 259 new public issues of common stock..
Howard B. Sirota, a Wall Street attorney who specializes in new issues, said his clients and others were following the Muir affair closely.
"Many underwriters of speculative new issues are holding their breath awaiting to learn what effect the Muir collapse will have on their own deals," Sirota said.