The new securities firm born of Wall Street's latest megamerger has announced what it will call itself: Shearson Lehman Hutton Inc. Those three names, long familiar to Wall Street and investors, suggest the diverse origins of the new company created when American Express' Shearson Lehman Bros. unit acquired troubled E.F. Hutton last year.
But they merely hint at the tangled history of mergers and combinations that has shaped those two firms. Indeed, if the firm had kept the names of its prominent predecessors from just the past two decades, it could be known as Shearson Hammill Cogan Berlind Weill Levitt Hayden Stone Lehman Kuhn Loeb Loeb Rhoades Hentz Lamson Faulkner Dawkins Sullivan Lerner Rheinholdt Gardner Hornblower Weeks Hemphill Noyes Spencer Trask & Hutton Inc., a majority-owned subsidiary of American Express Co.
In microcosm, that's a chronicle of Wall Street life from the late 1960s to the late 1980s: Mergers born of trouble, partnerships turned private corporations turned publicly owned companies, mergers born of deregulation, takeovers born of prosperity and mergers born of trouble once again. The first stage of this upheaval arose from problems of the Street's own making. A booming bull market in the 1960s nearly overwhelmed the capacity of many brokerage firms to handle orders. As they fought to cope with a paperwork crisis, the stock market turned down in 1969 and 1970, leaving several prominent investment houses on the brink of insolvency. Some went under, while others were rescued in mergers known at the time as "shotgun weddings."
Even many of the healthiest firms in an industry made up mostly of partnerships decided they couldn't function successfully without an infusion of capital. So in the early 1970s, firms began to transform themselves into corporations and sell shares of themselves to the public.
A new wave of mergers followed "May Day" -- May 1, 1975, when a long-standing schedule of fixed commission rates on securities transactions was abolished.
In time, deregulation came to be seen as an opportunity as well as a threat -- especially in the eyes of large corporations attracted by the prospects for a business that was now spoken of as "financial services."
In 1981, which was aptly described by journalist Tim Carrington in his book "The Year They Sold Wall Street," four big-name investment firms merged with or were acquired by outside businesses.
The blue-chip buyers included American Express (Shearson Loeb Rhoades), Prudential Insurance (Bache) and Sears, Roebuck (Dean Witter Reynolds). Salomon Brothers in effect incorporated, diversified and went public in a single stroke by merging with Phibro Corp.
Now the Oct. 19 market collapse has put the Street through another sudden turn. Six weeks after Black Monday, Shearson and Hutton announced their merger.