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Stock Crash Prompted Hutton to Look for Partner, CEO Says

November 26, 1987|Associated Press

NEW YORK — E. F. Hutton Group's leader acknowledged publicly Wednesday that the Oct. 19 stock market crash and its aftermath compelled the troubled brokerage to seek a merger partner or cash infusion.

The statement by Robert Rittereiser, president and chief executive, marked the first explanation from management of why Hutton was abandoning independence since the firm disclosed Monday that it was up for sale.

Rittereiser made the statement in a memorandum to all employees and released it to the press.

"The board's decision to pursue an additional capital infusion or a strategic combination comes at a time when we have performed well overall and continue to grow in certain markets," Rittereiser said.

"However, the events of the last few weeks have altered the conditions under which we compete, including creating new long-term capital demands," he said. "Prudence requires that we pursue this course to assure our stockholders, employees and clients continued success. We expect this process to be conducted and concluded rapidly."

Shearson Lehman Bros., which approached Hutton a year ago about a possible merger, said Monday that it had been contacted by Hutton for new talks. Hutton has not identified any parties it is talking to.

Hutton, the nation's 10th-largest securities firm at the beginning of this year with about $1 billion in capital, is the first major brokerage to be forced to seek a buyer as a result of the stock market collapse last month.

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