Fred Joseph’s second coming

In 1990 the former Drexel Burnham Lambert CEO was barred from serving as a senior executive of a securities firm after regulators found that he failed to supervise Drexel junk bond kingpin Michael Milken, who went to prison for securities fraud. Now Joseph is mounting a comeback bid.

In 1990 the former Drexel Burnham Lambert CEO was barred from serving as a senior executive of a securities firm after regulators found that he failed to supervise Drexel junk bond kingpin Michael Milken, who went to prison for securities fraud. Now Joseph is mounting a comeback bid.

His firm, Morgan Joseph, was born in late 2001 when Joseph and a handful of other bankers bought out sleepy investment bank Morgan Lewis Githens & Ahn Inc. Joseph and his partners -- who include John Sorte, another Drexel alum, who oversaw the firm’s liquidation in the early 1990s -- raised $20 million in capital and hired bankers they’d worked with in the old days, many from Drexel. Last year they renamed the firm and focused it squarely on the thousands of middle-market corporate clients that were once fiercely pursued by firms like Drexel but are now increasingly ignored by big financial services supermarkets.

New Yorkbased Morgan Joseph boasts 100 employees and turns a profit. Sorte is president and CEO; Joseph lists no title on his business card but serves as a director and chief rainmaker. Ironically, the firm is now building in a familiar area: junk bonds, where it sees less competition than in equities.

Joseph isn’t ashamed of his past, but he’s not dwelling on it, either. “We’re proud of our Drexel heritage,” he says, stressing the firm’s many good years. “But this is not going to be Drexel revisited. Nobody’s put this much talent into the middle market in two decades. I don’t see any reason it won’t work.”

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