L.F. Rothschild

This article is about the defunct investment bank founded in 1899. For the UK-based investment bank founded in 1811, known as Rothschild, see N M Rothschild & Sons.
L.F. Rothschild
Defunct, Acquired
Industry Financial services
Fate Acquired in 1988 following Bankruptcy by Franklin Savings Association
Founded 1899
Founder Louis F. Rothschild (1869–1957)
Defunct 1988
Headquarters New York, New York, United States
Products Investment banking, Brokerage

L.F. Rothschild (later known as L.F. Rothschild, Unterberg, Towbin) was a merchant and investment banking firm based in the United States and founded in 1899. The firm collapsed following the 1987 stock market crash.

History

L.F. Rothschild & Co. was founded in 1899 by Louis F. Rothschild (1869–1957), not related to the European Rothschild family.[1] Together with partner Leonard Hochstadter, Rothschild took up the offices and business of Albert Loeb & Co. at 32 Broadway.[2] The firm's primary business was sales and trading of fixed income securities. The firm also had an arbitrage group as well as retail brokerage and wealth management operations.[3]

Following its merger with C.E. Unterberg, Towbin in 1977, the firm was known as L. F. Rothschild, Unterberg, Towbin and was led primarily by Thomas I. Unterberg and A. Robert Towbin.[4] The firm was known for its merchant banking investments, particularly in high-technology companies. In the early 1980s, the firm emerged as the leading underwriter of initial public offerings, surpassing the elite investment banks (at the time, including Lehman Brothers, Goldman Sachs and Morgan Stanley). Among the companies they took public were Intel, Cray Research and biotechnology company Cetus Corporation.[5]

In 1986, just ten years after merging with L.F. Rothschild, Towbin and Unterberg left the firm to join Shearson Lehman.[6] The split was attributed to their opposition to plans to expand the firm's bond sales and trading operations. However, in the negotiations with outside firms related to that expansion and capital infusion, at least one particularly attractive offer required that Unterberg and Towbin step down from management positions or leave the firm. Hard feelings between senior management that resulted by considering that offer were believed to be the causal factor behind their departure by most insiders. Ultimately, the firm's stock trading exposure during the stock market crash in 1987 led directly to its demise.

Unterberg would leave Lehman four years later, in 1990 to form Unterberg Harris.[5]

The firm suffered heavy losses in the 1987 stock market crash and was acquired by Kansas-based Franklin Savings Association in February 1988.[7] However, even with new capital, the firm's holding company, L. F. Rothschild Holdings Inc. filed for Chapter 11 bankruptcy protection in July 1989.[8] By the end of 1989, the firm had gone from a peak of 2,200 employees to 45.[9]

Notable alumni

Among the notable alumni of L.F. Rothschild are :

See also

References

  1. ↑ Davis, John H. (1994). The Guggenheims: An America Epic. SP Books. p. 82. ISBN 1561713511.
  2. ↑ Moody's Magazine, Volume 9. Moody Corp., 1910
  3. ↑ Williamson, John Peter. The Investment Banking Handbook. John Wiley and Sons, 1988
  4. ↑ Alexander, Charles P. "Four Financial Genies." Time (magazine), January 23, 1984.
  5. 1 2 MCGEEHAN, PATRICK. "Private Sector; Banker's Novel Late-Career Move." New York Times, November 11, 2001
  6. ↑ "Staff Shifts at L.F. Rothschild." New York Times, December 22, 1986
  7. ↑ Cole, Robert J. "Savings Group to Get L.F. Rothschild." New York Times, February 23, 1988
  8. ↑ Bartlett, Sarah. Rothschild Holdings Files For Chapter 11 Protection New York Times, July 1, 1989
  9. ↑ "COMPANY NEWS; Creditors Back Rothschild." Associated Press, December 29, 1989
  10. ↑ Fabrikant, Geraldine (November 2, 1988). "Business People; 2 Officials at Rothschild Leaving to Start Firm". New York Times.
  11. ↑ "Professionals". Whitehall Financial Advisors. Archived from the original on April 14, 2008. Retrieved April 16, 2008.

Further reading

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