CHICAGO - Indianapolis-based underwriter Traub & Co., plagued by competitive pressures and a shortage of capital, has opted to go out of business, president Donald Morrison 3d said yesterday.
Morrison, who helped create Traub 27 years ago, said the firm's sole office in Indianapolis likely will close by year's end.
The company entertained several buyout and merger offers, Morrison said, but decided "not to change the color of the firm."
"The bottom line is that once you sell your house, anybody can paint it any way they want," Morrison said. "That's not what we wanted. This is the way we wanted to finish up."
City Securities Corp., Traub's crosstown rival, should benefit from its competitor's demise. For the past two years, City Securities has led the state's underwriters in both senior- and co-manager work.
"One of our good, longtime competitors is no longer there," said James A. Merten, president of City Securities. "It is good for us, but I believe it is bad for the industry when you lose solid local firms."
Merten said light volume and the need to increase investment in technology are making life tough for the entire industry. He also said he was surprised Traub decided to liquidate rather than merge or sell.
Traub, which does all its deals within Indiana, has seen its share of the market plummet in recent years. It has senior-managed just one $300,000 issue this year and co-managed eight deals worth $107.7 million.
Last year, Traub ranked 28th among senior managers and fourth among co- managers in Indiana. The company's 1997 rankings are down to 53d and 17th, respectively.
The firm's national ranking has plunged dramatically this year to 440th among senior managers, from 247th in 1996. Traub slid to No. 248 among co- managers from 154th during the same period.
Municipal finance has been the firm's primary business, though it also does private placements. Traub has four public finance bankers.
Morrison said most of the firm's employees were "squared away" in terms of future employment. He said he and King Traub, chairman and co-founder, have received generous job offers elsewhere but have yet to accept one.
Chip Traub, former company vice president and son of King Traub, now works for David A. Noyes & Co., an Indianapolis brokerage house.
