Analyst Richard Ciccarone Retiring from Buyside to Focus on Database, Newsletter

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CHICAGO — Richard Ciccarone — a prominent voice for buyside municipal research — will retire from his post as chief research officer at McDonnell Investment Management LLC to devote more time to expand his Merritt Research database and — he hopes — to carve out more leisure time in his day.

Ciccarone, 61, said it's with reluctance that he's retiring at the end of the year from the position but that he couldn't envision any other way to expand his side projects — including the MuniNetGuide.com website — and squeeze out more free time.

"Being close to the market is inbred into my mind tank," so it will be hard to step back from the buyside, he said in an interview reflecting on his career and future endeavors. "My intent is to now focus on other operations which have been a part of my history."

Ciccarone's insights are sought throughout the market place on key topics and he's not been shy about sharing them as long they don't run afoul of company rules. He was a vocal proponent in the push for greater and more timely issuer disclosure. More recently, he helped lead the discussion on the risks posed, and legal questions raised, about the sturdiness of the general obligation pledge by Detroit's Chapter 9 filing and other bankruptcies.

The Oak Brook, Ill.-based firm announced Ciccarone's impending retirement along with that of its chairman Dennis McDonnell, with whom Ciccarone has enjoyed a long collaboration, in a press release in October. But it's mostly been kept under wraps until recent days. McDonnell has served as chairman since the firm's founding in November 2001 and Ciccarone came with him from Van Kampen.

Jim Butler and Brad Mincke will serve as co-heads of the 11-member research department built by Ciccarone over the last decade. Butler joined the team in 2002 and Mincke in 2008.

"We at McDonnell wish both Dennis and Rich the very best as they begin their retirement and are profoundly grateful for all they have done to build the firm over the years," firm president Ed Treichel said. "We look forward to continuing in the tradition of excellence they have established, led by the seasoned team of professionals they helped put in place."

Ciccarone said he will miss the firm, which has shown a strong commitment to municipal research that he expects it to retain, but is also excited to dig in on his other ventures. Ciccarone serves as chief executive officer and majority owner of Merritt Research Services LLC which he helped launch in 1986 for Van Kampen, offering clients a vast database of research. The Iowa-based company first covered only the healthcare sector.

Back then, Van Kampen was a unit of Xerox Corp. "If you bought a subscription for $11,000 you got a Xerox computer," he recalled. "There was a real hunger for the data and it was able to do sophisticated searches."

The database was expanded to cover more than a dozen sectors including transportation, airports, public power, local and state governments, schools, water and sewer, and higher education.

While searches in the initial days could take all night to run, they now take seconds, Ciccarone said. Clients can compare credits easily by various metrics and measures. "Merritt always has been a tool to do my job," Ciccarone said. "It's made it much more efficient and effective and we want to expand the database and quality of information." The database tracks tens of thousands of credits. Troy Gerleman serves as chief operating officer.

Ciccarone also intends to use his time to expand the MuniNetGuide which he founded in 1996 as a municipal newsletter. He recently sold a 50% stake in the company to veteran municipal bankruptcy attorney and Chapman and Cutler LLP partner James Spiotto. They intend to expand its offerings with more data and more frequent prospective pieces and expect to tap Spiotto's expertise on distressed credits.

"We share the same goal for MuniNetGuide to serve as a town hall for insights and sharing information" on the municipal universe, Spiotto said.

"As a credit analyst, Rich has asked the right questions and sought clarity on issues that can otherwise be clouded or muddied," Spiotto said. "He has really stood for the traditions of the market" with analysis that helps preserve market stability and rewards credits that act prudently while disciplining those that veer.

Ciccarone said he intends through Merritt and MuniNetGuide to remain an active contributor in municipal discussions and hopes to continue to look ahead to foresee the issues of tomorrow.

Ciccarone's 36-year municipal career began in 1977. Out of college, where he majored in public administration and urban studies, he interviewed for job in Harris Bank's municipal credit department.

He moved from his native Ohio to take the job. His affection for the field and Chicago grew over the next six years at Harris and he decided to stick with both.

He sees the changing patterns of growth as a central issue.

"America, much like China is now, had been in a growth mode and growth was tied to its economic health," he said. "Looking over the next 50 years we will see slower growth" and a shift in priorities that could include a focus on debt capacity preservation for future generations.

He also believes scrutiny of credit quality is here to stay, whereas it had previously ebbed and flowed especially when triple-A bond insurance was prevalent. The challenges being played out to tax-exempt bonds and other debts in bankruptcy courts are the current unknown.

"The idea of a riskless investment for investors should go away completely," he said.

Ciccarone, a co-founder of the National Federation of Municipal Analysts, left Harris in 1983 when Dennis McDonnell recruited him to work at Van Kampen Merritt Inc. He later joined the Kemper Securities Inc. and its successor Everen Securities Inc. in 1989 and remained there until 1996 when McDonnell sought his return to Van Kampen Investments Inc. where he began co-head of fixed income.

Van Kampen parent Morgan Stanley in late 2001 sold the fixed-income separate account business to the newly-formed McDonnell Investment Management. Earlier that year, Ciccarone purchased Merritt from Van Kampen.

Ciccarone also sits on various boards and civic organizations including the Civic Federation of Chicago, helping shape research of local governments in and around Chicago and Illinois. He has also been active in his home suburb's government.

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