Robert E. Brennan hates to lose.
A hint of his intensity may come through in his familiar televised commercials, which show Brennan aboard his helicopter flying past the Grand Coulee Dam and other breathtaking views as he radiates optimism about the prospects of the stocks sold by his company, First Jersey Securities Inc.
But to appreciate his intensity at its fullest, you have to have followed his decade-long war with the enforcement arm of the Securities and Exchange Commission.
Brennan, a rags-to-riches entrepreneur, founded First Jersey in 1974 and has built it into a prominent brokerage house with offices in Falls Church and some three dozen other locations by specializing in the stocks of small, little-known companies such as International Thoroughbred Breeders, Medivix, Chefs International and Novo Corp. The stocks in these companies are sold over the counter at prices of several dollars a share or less.
"Our philosophy is simple. We don't buy stock for safety. . . " he once said in an interview. The small "growth companies" First Jersey champions offer a potential for profit far greater than large, higher-priced, well-known companies, Brennan says.
The SEC and Brennan signed a consent decree Tuesday that ends their war -- at least this phase of it -- and both sides described it in diametrically opposite terms. To SEC New York Regional Administrator Ira Lee Sorkin, the decree gives the enforcers what they had hoped to gain from a trial -- a court order against Brennan and the firm enjoining them from violating anti-fraud statutes. Brennan called it a victory. "They weren't able to prove a single allegation," he said.
Just as there were two opposite views of Tuesday's settlement, there were two opposite portraits of First Jersey throughout the 10-year war.
The SEC had charged Brennan and his firm with cheating customers by manipulating the trading of stock in small, obscure companies and by charging the customers "excessive" and "unreasonable prices," as the original SEC complaint against Brennan and First Jersey alleged five years ago.
The SEC's theory, presented during a 1980 administrative hearing on its charges, was that First Jersey salesmen regularly conducted orchestrated telephone sales campaigns for particular stocks -- trading that First Jersey was allegedly able to "dominate" because few, if any, other brokerage firms handled those stocks.
Over the years, a relative handful of former First Jersey salesmen and unhappy customers have supported the SEC's picture -- a few of them in testimony, most in off-the-record statements to reporters for The Washington Post and other publications. The salesmen described an alleged pattern of high-pressure sales techniques to get large numbers of customers to buy the same stock in the course of a few days.
The customers told similar stories: At the urging of their First Jersey broker, they bought a company's stock; not long thereafter, they sold it at a profit, but instead of pocketing their gains, they were allegedly pressured to reinvest the profits in other First Jersey-recommended stocks -- only to find themselves locked into losing positions.
Forbes magazine, in a July 16 article on First Jersey, charged that it had identified trading patterns in San Diego and Falls Church in which First Jersey was buying stock from customers here at one price and selling it at a markedly higher price to West Coast customers.
A completely contrary picture is presented by Brennan and, he says, by thousands of First Jersey customers who have submitted statements of support to the firm and by hundreds of salesmen who have done likewise.
There is no pattern selling; no manipulation; no high-pressure selling, nor any resistance by salesmen to customers' wishes, Brennan said. His firm has 500,000 customers and 1,200 employes, he said. Why aren't there more face-to-face accusers?
"You don't grow from where we did . . . if you don't have customers supporting you. We're not perfect, but we do respond in a reasonable, honest way. And the evidence of that is that First Jersey has never once been found to have violated a single securities law. . . .
"The bottom line is that the greatest regulator in the country isn't the SEC, it's competition. If you don't treat people right, they come after you. And if you're wrong, they're going to get you." And that hasn't happened, Brennan said.
There is no doubt that the SEC went after Brennan and he went after them.
Two years ago, in one milestone in their battle, 22,000 pages of transcripts from the SEC's First Jersey hearings were lost -- they disappeared from an SEC hearing room without a trace.
Brennan sued, saying the absence of the papers prevented him from conducting his defense. The SEC instituted a new action and Brennan went after the SEC on the same grounds. When U.S. District Judge John Sprizzo ruled in the SEC's favor on the lost files argument, Brennan named one of his race horses after the judge. That caused Sprizzo to remove himself from the case, turning it over to U.S. District Judge Milton Pollack, who signed the consent decree Tuesday.
The SEC's Sorkin says Brennan "ran out of delaying tactics." Brennan says the SEC ran out of charges. "They've dropped them. They're gone," he said. It was that kind of settlement.