Financial History Issue 129 (Spring 2019) | Page 37
By that time, Leslie was still chairman
of the board and Harry A. Jacobs Jr.
was still president, but he had also been
named chief executive officer of Bache
Halsey Stuart. The chairman of Shields
Model Roland was Macrae Sykes, and
the president and chief executive officer
was H. Virgil Sherrill. The new firm was
called Bache Halsey-Stuart Shields Inc.
and became a subsidiary of the Bache
Group Inc. Leslie was chairman of the new
parent company. Jacobs became chair-
man and chief executive officer of Bache
Halsey-Stuart Shields. Virgil Sherrill was
named president.
The late 1970s continued to present
challenges to the newly merged firm,
but for reasons of association. During
the 1970s, the firm entered into business
with Nelson Bunker Hunt and W. Herbert
Hunt, who were the sons of H.L. Hunt, an
oil billionaire and futures speculator from
Dallas, Texas. In 1977, the Hunt brothers
entered into futures contracts for soy-
beans, which brought them under regula-
tion of the Commodity Futures Trading
Commission. In 1979, the Hunts bought
silver futures contracts with financing
received from financial institutions like
Citibank, the First National of Dallas and
the First National of Chicago. Bache &
Co. also financed the Hunts’ financial ven-
tures. During this time, Bache became the
takeover target by financiers like Tsai, its
former member, and Samuel Belzberg. The
Hunts bought Bache stock to fight off the
takeover attempts, while Bache borrowed
money from banks and loaned the Hunts
millions of dollars to buy silver futures.
Between 1979 and 1980, however, the
price of silver began to rise dramatically.
The Commodity Exchange Inc. stepped in
to stop the sale of futures contracts, and
the price of silver dropped. The Hunts
could not meet their margin calls, leading
to a “Silver Crisis.” The SEC suspended
trading in Bache stock. Eventually, the
Hunts were bailed out with a $1.1 bil-
lion loan from a consortium of 13 banks,
but they were subjected to many law-
suits and a CFTC investigation, and they
were eventually barred from trading on
the commodity exchanges. They also filed
for bankruptcy. The associations between
Bache and the Hunts also almost led to
the bankruptcy of Bache, had not the loan
enabled the Hunts to pay back Bache for
the money they had borrowed to speculate
in the commodities market.
Prudential Insurance
Company of America (1981)
Soon after, in 1981, Prudential Insurance
Company of America, the largest insurer
and the top private money manager in the
United States, bought the Bache Group
Inc. Bache Halsey Stuart Shields Inc.
became a subsidiary of the insurance com-
pany. The New York Times reported that it
was a “surprise deal.” The acquisition of
Bache allowed Prudential to “sell money
market funds, mutual, tax shelters, real
estate partnerships, as well as stocks and
bonds, all hedges against inflation.”
The firm’s chairman and chief execu-
tive officer was George L. Ball, the former
president of E.F. Hutton & Co. The head
of the parent company was Robert Beck,
a Bronx native who began working at
Prudential in 1951 as an insurance agent.
(Beck was the son of a supervisor of tele-
phone operators and an Army officer. He
graduated from the Bronx High School
of Science and served in the US Army
during World War II before graduating
from Syracuse University.) In 1982, Bache
Halsey Stuart Shields Inc. was renamed
Prudential-Bache Securities.
Prudential-Bache Securities
(f. 1982, New York)
Prudential Securities, Inc.
(1991, New York)
When Beck retired in 1986, he was suc-
ceeded by Robert C. Winters, another long-
time member of Prudential, who had been
with the firm since 1953. During his tenure,
Prudential-Bache experienced financial
setbacks due to changes in tax laws that
undermined Prudential’s financial prod-
ucts and other difficulties. In 1990, Pruden-
tial-Bache decided to refocus its efforts in
retail brokerage. After Ball resigned in 1991,
Hardwick Simmons, who had previously
been the president of Shearson’s Private
Client Group, became the chairman and
chief executive officer of Prudential Securi-
ties. During Simmons’s tenure, however,
Prudential-Bache was renamed Prudential
Securities, Inc. With that change, the Bache
name was lost to history.
Postscript
During Simmon’s tenure, Prudential
Securities came under investigation by
the Securities and Exchange Commission
and faced many lawsuits for products, spe-
cifically limited partnerships, the firm had
sold in the 1980s. The firm was censured in
1992 and fined in 1996 in a multi-state set-
tlement. During that time, Robert Winters
retired as the head of the parent company
and was succeeded by Arthur Ryan, who
was a former member of Chase Manhat-
tan and Control Data Corporation.
In 2001, Prudential Insurance Co. of
America demutualized and went public.
That year, the firm was renamed Pru-
dential Financial Inc. In 2002, it sold
its brokerage unit to Wachovia Securi-
ties and refocused on “insurance, invest-
ments, and international insurance and
investments.” In 2011, however, the Jeffer-
ies Group bought the Bache name from
Prudential and renamed its commodities
division Jefferies Bache. In 2015, the Jef-
feries Group sold its Bache commodities
unit and financial derivatives accounts to
Société Générale.
Susie J. Pak is an Associate Professor in
the Department of History at St. John’s
University (New York). A graduate of
Dartmouth College and Cornell Uni-
versity, she is the author of Gentlemen
Bankers: The World of J.P. Morgan
(Harvard University Press), a Trustee of
the Business History Conference, co-chair
of the Columbia University Economic
History Seminar and a member of the
editorial advisory board of the Business
History Review. She is also a member
of the Financial History editorial board.
About Where Are They Now? The “Where
Are They Now?” Series traces the origins
and histories of 207 of the underwriters of
the 1956 Ford Motor Company IPO. The
research for this series has been generously
funded by Charles Royce of The Royce
Funds. The Museum’s “Where Are They
Now?” blog can be found at: wherearethey-
nowblog.blogspot.com.
www.MoAF.org | Spring 2019 | FINANCIAL HISTORY 35