Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, August 5, 1994 TAG: 9408050075
SECTION: BUSINESS PAGE: A5 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
But Kidder also fired Melvin Mullin, Jett's former supervisor, after concluding that false trading profits allegedly generated by Jett resulted from ``lax oversight, as well as poor judgments and missed opportunities.''
Jett, the head of Kidder's government bond unit, was fired in April after Kidder accused him of generating $350 million in phantom bond profits in a trading scheme aimed at hiding about $100 million in trading losses. Kidder charged that Jett also inflated his bonus as part of the scheme.
Dennis Dammerman, Kidder's chairman and chief executive, said the report ``made it clear that this scheme was the work of one employee, acting alone, using an elaborate scheme to conceal his real losses and the magnitude of his trading positions.''
An attorney for Jett, Kenneth Warner, vigorously disputed the findings, saying investigators for Kidder's parent, General Electric Co., did not interview Jett for the report.
``Had Jett's account of what really happened been considered, the conclusions of this report would necessarily have been dramatically different,'' Warner said in a statement.
In addition, Kidder demoted David Bernstein and Charles Fiumefreddo, two bond trading department employees who were temporarily reassigned in April when Jett was fired. Four other department employees were reprimanded and reinstated, the firm said.
Mullin is the latest high-level casualty from the trading problems at Kidder.
Last month, another Jett supervisor, Edward Cerullo, resigned as chief of Kidder's ``fixed-income'' division, which deals with bonds and similar investments. In addition, GE ousted Michael Carpenter, Kidder's chairman and chief executive, and replaced him with two top GE executives.
The GE-ordered inquiry into the trading scheme concluded that Jett knowingly manipulated Kidder's trading and accounting systems to generate false profits and said no one else at Kidder acted with him.
The inquiry was prepared by Gary Lynch, former enforcement chief at the Securities and Exchange Commission.
Jett, who has denied any wrongdoing, has told federal prosecutors it was Cerullo who devised the bond trading scheme and ordered him to carry it out, a source familiar with the investigation has said.
by CNB