Muriel Siebert, Suzanne Shank, and Napoleon Brandford, the partners in the busiest minority-owned municipal-bond underwriting firm in the nation, lashed out at a federal lawsuit filed by Miami securities dealer Howard Gary, calling the case "ludicrous," "crazy," "scurrilous," and "baseless," and vowing to sue Gary or his lawyer for harming their reputation.
In the complaint, Gary, head of Howard Gary & Co., makes accusations that could damage their firm, Siebert Brandford Shank & Co., the trio claimed in an interview with The Bond Buyer in New York on Thursday. Brandford and Shank are named in the suit by way of their previous employment with Calvin Grigsby, a co-defendant in the federal corruption trial in which former Miami-Dade County Commissioner James Burke was found guilty of bribery in October 1999. Grigsby was exonerated.
Gary's lawsuit names Shank as being personally involved in the bribery scheme, but she and Brandford both maintained they had no knowledge of Grigsby's activities with the county. In fact, Brandford said for the first time that he, Shank, and Grigsby -- the three major rainmakers at Grigsby, Brandford & Co. -- rarely spoke to each other during the three years before the duo left the firm, after a "falling out" between the two named partners.
"It was really three firms in one. Suzanne had her clients, Calvin had his clients, and I had my clients," Brandford said.
Shank and Brandford were both questioned by federal investigators prior to Grigsby's trial, but neither were ever indicted, cited as unindicted co-conspirators, or even called to testify in the courtroom. Brandford said he asked for and received a grant of immunity before speaking to the prosecutors; Shank said she does not recall whether she was immunized.
Both said they were unable to answer most of the prosecutors' questions, which focused on the details of a $180 million refinancing and an associated swap transaction by Miami-Dade County in July 1996 at the heart of the case.
Grigsby and Gary were part of the underwriting syndicate when allegations of bribery to obtain business surfaced. Gary names Grigsby a defendant in the suit and claims he never received any of the $2.5 million in fees and commissions that the county paid for underwriting services.
Brandford and Shank say Grigsby would have been responsible for handling the profits from that transaction, because he generated the deal.
Grigsby resigned as head of Grigsby, Brandford in September 1996, just before he was indicted. Brandford and Shank later resigned from the firm as well, and formed Siebert Brandford Shank, first as a division of Siebert's discount brokerage, Muriel Siebert & Co., then as a standalone partnership.
Gary claims that these changes were a ploy to shift Grigsby, Brandford's assets, first to Siebert's firm, and subsequently to the new Siebert Brandford Shank.
All three of the principals sharply denied that Siebert Brandford Shank had any formal link to Grigsby, Brandford, beyond hiring many of its staffers and buying some of the firm's office leases and computer equipment, so that the newly hired bankers would not have to move.
Although Brandford and Shank sought to continue doing business with their existing clients, the new firm had to start from scratch in its effort to win underwriting appointments from issuers, and in some cases the bankers had to wait up to three years before they could do business with the clients they had had at Grigsby, Brandford.
"My clients were my clients," said Brandford, adding that it is not uncommon for clients to remain with the same broker when the broker moves to another company." Because Calvin's firm was a viable entity, we decided never to call on any of his accounts."
Shortly after Grigsby resigned, he formed a new company called Grigsby & Associates, which remains in business in California. Grigsby's attorney, Larry Stumpf with Akerman Senterfitt in Miami, said he was reviewing the lawsuit and could not comment at that time.
Siebert, a well-known discount broker and former New York State banking superintendent, said she simply hired Brandford, Shank, and more than 30 other employees of their former firm, and they acted as a "division" for municipal finance within Siebert's company, until Siebert Brandford Shank & Co. could obtain its broker-dealer license in May 1997.
National Association of Securities Dealers records show that Brandford and Shank both reported terminating their involvement with Grigsby, Brandford & Co. in October 1996.
Shank and Brandford have been broker-owners of Siebert Brandford Shank since July 1997. Both own a 25.5% interest in the company, and Siebert owns 49%.
Siebert, often called the first lady of finance with her own public company, now called Siebert Financial Corp., said she approached Brandford and Shank about leaving Grigsby, Brandford to launch the new firm because she knew what bad publicity could do to a firm in the highly competitive underwriting business.
She extensively checked Brandford and Shank's backgrounds and decided their expertise would help her business grow, she said. Brandford, Shank, and Siebert said that key clients saw no connection between Brandford and Shank, and Grigsby's legal problems.
"When we founded this company, I was asked if I knew what I was doing," Siebert said. "I have studied them and I have confidence in them."
Now Siebert has a problem with Howard Gary. She says her reputation is on the line and that might not sit well with potential investors.
Since the story about the lawsuit was first published in The Bond Buyer on Sept. 5, Siebert said her firm has received half-a-dozen phone calls from clients who were provided with copies of the article.
"I'm starting to see a diminution in the value of my business," said Siebert, who is considering a counter-suit against Gary. "I'm getting mad. I'm ready to take on that man and I don't usually lose."
Daniel Jacobson, vice chairman of Siebert Financial Corp., said the company has documents disproving all of Gary's allegations. He predicted the suit will go no further unless more evidence supports the complaint.
