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Edward Wedbush's roof leaks, but his wallet doesn't

He kept his investment firm going in the recession. He drives a 1992 Town Car and brings lunch from home. The office carpet is patched with duct tape. One worker calls him 'the cheapest man alive.'

November 16, 2010|By Walter Hamilton, Los Angeles Times

He built the largest stock brokerage in Los Angeles, and his name adorns one of the city's most distinctive high-rises. He's worth tens of millions of dollars.

So why can't Edward Wedbush manage to fix his roof?

The peeling shingles atop his one-story stucco house in Ladera Heights are covered in blue and black tarpaulin. The bandaged roof has been an eyesore for years in a neighborhood of carefully tended mid-century homes.

Neighbors say they've written letters, passed along bids from contractors and even lined up buyers for the home, all to no avail. The tarps remain. The 78-year-old Wedbush occasionally climbs onto the roof in bathrobe and slippers to rearrange them, neighbors say.

"It's not as though this guy is poor," said Ronni Cooper, president of the Ladera Heights Civic Assn. "There's no excuse for this."

Which is the real Wedbush: the successful financier or the guy in the bathrobe with the leaky roof? A look at his past, his management style and the state of the carpeting inside the gleaming Wedbush building on Wilshire Boulevard suggests the answer is: both.

His investment firm, Wedbush Inc., manages more than $15 billion in assets, employs 1,000 people and is valued at $300 million. His personal stake is worth more than $150 million.

Yet Wedbush has never let go of a compulsive frugality with roots in a Great Depression boyhood and his early days as an entrepreneur, when pinching pennies was the difference between survival and oblivion.

For Wedbush, cost control is much more than a slogan. It's a guiding principle, maybe even a way of life.

He refuses to issue company credit cards to his employees. He personally signs expense-reimbursement checks, just to remind subordinates that he's watching every dime they spend traveling or entertaining clients. He brings his lunch from home and drives a 1992 Lincoln Town Car.

Alfred E. Osborne Jr., a member of Wedbush Inc.'s board of directors, recalls seeing the company founder and chairman gathering up paper clips after a board meeting at the exclusive California Club.

"That's his consuming passion," said Peter Allman-Ward, who retired recently after 15 years as the firm's chief financial officer. "He probably gets more fun controlling costs than anything."

It isn't necessarily fun for the people who work for him. "He truly is the cheapest man alive," said one employee who spoke on condition of anonymity, citing a fear of retaliation.

Wedbush believes his vigilance is one of the reasons his privately held firm survived the global financial crisis while bigger-name rivals such as Bear Stearns & Co. and Lehman Bros. collapsed.

While others borrowed heavily to make risky investment bets, Wedbush Inc. stuck to its brokerage and investment banking businesses. The company is debt-free — almost unheard of in an industry notorious for its swashbuckling ways — and Wedbush says it turned a record profit in 2009.

"It's been well-illustrated that the guys that were quasi-frugal and the guys who paid attention to the business practices are the ones that are not only surviving but are thriving," Wedbush said in an interview. "And a lot of the others are gone."

The company headquarters overlooking the 110 Freeway in downtown L.A. reflects Wedbush's peculiar combination of shining success and reflexive stinginess.

From the outside, the black-and-gray skyscraper looks immaculate and stylish.

Inside, the carpets are stained from years of spilled coffee and pacing feet. Sections in the trading room became so ragged that some women caught their heels in the holes. The hazard was removed, but not by replacing the carpeting: The tears were patched with duct tape, a fix reminiscent of the tarpaulin on Wedbush's leaky roof.

Wedbush and a partner founded the company in 1955 as a regional mutual fund brokerage. The firm later branched into investment banking, primarily helping small companies go public. Wedbush's two sons, Eric and Gary, are senior executives.

In recent years, the company has tapped into the hottest new business on Wall Street — processing computerized stock trades for hedge funds and other aggressive traders.

In contrast with the mahogany-paneled walls and leather sofas that are standard office decor for Wall Street's elite, Wedbush's personal office is small and Spartan.

"This is a working office," he said. "What can I do here with an unbelievably good-looking couch?"

In his private bathroom next door, he keeps a small refrigerator for the meals his wife, Jean, cooks for him at home.

No expense is too small to track.

The company saved about $500 a month by eliminating a monthly pizza lunch for employees during the depths of the financial crisis in late 2008 — even though the company was doing well. Wedbush said the pizza was axed as a symbolic gesture and has since has been restored.

During the year-end holiday party season, Wedbush tells managers he will "pay for the meat" but nothing else, according to current and former employees.

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