Shearson lehman smith barney9/22/2023 Curnin advised settling with the government to avoid years of bad publicity. In the spring of 1985, Curnin told Hutton's board that it faced two choices: plead guilty to a massive list of felonies or face a trial that would likely see three senior Hutton executives convicted and drive Hutton out of business. The memo-tantamount to a smoking gun-led Curnin to change tactics and begin negotiations for a plea agreement. However, in February 1985, Curnin discovered a memo from a Hutton regional vice president for the Washington, D.C., area which stated that his offices drew on "bogus deposits". Hutton retained Tom Curnin, a respected defense attorney who was inclined to fight the government. In 1984, the matter was forwarded to the United States Attorney for the Middle District of Pennsylvania, who opened a federal criminal probe. One of the banks involved, United Penn Bank (now part of Citizens Financial Group), asked the Federal Deposit Insurance Corporation to investigate. When Genesee officials learned that Hutton did not have enough money in the Pennsylvania bank accounts to cover the checks, they stopped honoring Hutton checks. They also discovered that the checks Hutton was using to make the deposits were drawn on two Pennsylvania banks. The scheme worked for almost three years until officials at the Genesee County Bank in Batavia, New York, discovered that the large deposits made by Hutton's four-person office there were far more than the office's banking requirements. Whenever something was amiss, Hutton questioned the bank's procedures. Ball sent the memo out across Hutton's network of regional sales managers, with the note, "A point well remembered-and acted on." Over the years, Hutton shuffled money in this manner between 400 banks (mostly small rural banks), gaining the use of an estimated $250 million a day without paying a penny in interest. Thomas Morley, who was in charge of getting the firm to better manage its cash, wrote a memo to Hutton's president, George Ball, saying that this practice netted one branch an extra $30,000 per month. In effect, Hutton was giving itself a free loan that also did not carry any interest. "Chaining" gave Hutton the use of money in both accounts until the checks cleared. This strategy, known as "chaining", is a form of check kiting. In 1980, several Hutton branches began writing checks which were greater than the cash they had on hand at the bank, then making a deposit in another bank equal to the amount it wrote at the first bank. The Hutton companies also managed many mutual funds and other investment vehicles, some of which were separately incorporated and/or registered, and participated actively in corporate mergers and public offerings of securities. Hutton Trust Company (now " Smith Barney Corporate Trust Company" and owned by Citigroup), E.F. Other subsidiaries of that Delaware-chartered holding company were E.F. Hutton Group Inc., listed on the New York Stock Exchange. had become the principal component of what grew into a group of companies owned by E.F. Despite the failure or takeover of many of its peers in the 1960s and 1970s, Hutton retained its independence under Fomon's leadership. In or around 1972, the firm hired Carole Brookins, making her one of the few women stockbrokers on the Chicago futures exchange floors at the time. Fomon was appointed Hutton's Chief Executive Officer. Hutton, an entrepreneur who later also became chairman of the General Foods Corporation and for years wrote a newspaper column, led the firm until his death in 1962. Morrie Cohen opened Hutton's first one-man office on Maui in December 1969. It also operated seasonal offices in Palm Beach, Florida (winter) and Saratoga Springs, New York (summer) to cater to its customers. The firm developed a nationwide retail brokerage network to market its debt and equity securities. Loeb joined the firm, ultimately rising to chairman. In 1924, famed Wall Street trader Gerald M. In 1906, two years after the firm was founded, its offices were destroyed in the San Francisco earthquake of 1906. EF Hutton was one of the first brokerages to open offices in California. was founded in San Francisco in 1904 by namesake Edward Francis Hutton and his brother, Franklyn Laws Hutton. Under their leadership, EF Hutton became one of the most respected financial firms in the United States and for several decades was the second largest brokerage firm in the country. Later, it was led by well known Wall Street trader Gerald M. EF Hutton was an American stock brokerage firm founded in 1904 by Edward Francis Hutton and his brother, Franklyn Laws Hutton.
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