Dean Witter Reynolds
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Dean Witter Reynolds was an American stock brokerage catering to the middle class. In 1997, it merged with the Morgan Stanley Group to form Morgan Stanley Dean Witter. The amalgamated firm became known as Morgan Stanley, though many former Dean Witter assets were transferred to Morgan Stanley Smith Barney.
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[edit] History
Dean Witter was a retail brokerage firm that began in San Francisco in 1924 founded by Dean G. Witter, who led the company until his death in 1969. In 1938, Dean Witter established its national research department, and by 1945, was one of the first retail securities firms to formally train account executives. In 1962, Dean Witter became the first firm to use electronic data processing — a feat that paved the way for securities handling on Wall Street.
After numerous brokerage firm acquisitions, Dean Witter went public. In 1978 Dean Witter merged with a large east coast brokerage, Reynolds & Co in what was then the largest securities industry merger in US history. One year later Dean Witter Reynolds became the first securities firm to have offices in all 50 U.S. states and Washington, D.C. It was later acquired by Sears, Roebuck and Company in 1981.
In 1986, the firm launched the Discover Card, a new brand of credit card outside the well established Visa and MasterCard, networks. Eventually Discover grew to become one of the largest credit card issuers in the US.
In 1993, 20% of the company was spun off from Sears to shareholders, and subsequently became Dean Witter, Discover and Company, later that year the remaining 80% of shares were distributed to Sears' shareholders giving the company complete independence from Sears. Dean Witter's corporate headquarters were in New York City's 2 World Trade Center (i.e. South Tower), and their offices were evacuated as a result of the 1993 World Trade Center bombing which took place while the spinoff transactions were going on.
The early 1990's were a period of rapid growth for the company as its strategy of focusing on the distribution of proprietary mutual funds through its extensive retail brokerage network began to bear fruit. Furthermore, the substantial investment in the Discover business also began to pay off, with the business becoming highly profitable.
In 1997, Morgan Stanley Group, Inc. and Dean Witter Discover merged to form one of the largest global financial services firms: Morgan Stanley Dean Witter. Eventually, to foster brand recognition and marketing, the Dean Witter name was dropped from the retail services division, leaving the current name Morgan Stanley. Although Morgan Stanley was the more illustrious partner, Dean Witter's focus on retail investors, mutual funds and credit cards which were seen by the stock market as generating more stable cash flows than Morgan Stanley's investment banking business, had by the time of the merger made it the more valuable partner in terms market capitalisation. Dean Witter's CEO, Philip Purcell, the main architect of the merger, became chairman and Chief Executive Officer of the merged group.
[edit] Trivia
- The entrepreneur Chris Gardner, whose autobiography was turned into the 2006 feature film The Pursuit of Happyness, interned at Dean Witter Reynolds and began his career there. The firm was featured in the film.
[edit] See also
[edit] References
- Sears Archives-Sears History - 1980s to today
- A Brief Chronology of Sears
- Morgan Stanley & Dean Witter To Merge February 5, 1996
- Focus On The Forbes 500s: Morgan Stanley DW November 21, 2000
- Kador, John (2005). Charles Schwab : How One Company Beat Wall Street and Reinvented the Brokerage Industry. ISBN 0-471-66058-2
- Stone, Amey and Mike Brewster (2002). The King of Capital: Sandy Weill and the Making of Citigroup. ISBN 0-471-21416-7
