Dillon, Read & Co.
Dillon, Read & Co. was a prominent American investment bank from the 1920s into the 1960s.
Dillon Read originated in 1832 as the Wall Street brokerage firm Carpenter & Vermilye. However, it is best known for its actions during the 1920s. During that time Clarence Dillon managed the rescue of faltering Goodyear Tire & Rubber Company, engineered the buyout (in 1925) and subsequent sale of Dodge Motors (in 1928) to Chrysler, launched the first post-war closed-end investment trust (in 1924), and led the largest ever stock offering (in 1926). By the end of the decade, Dillon Read was considered to be an investment banking powerhouse, alongside J.P. Morgan & Co. and Kuhn, Loeb & Co..
Dillon Read was purchased by Swiss Bank Corporation (SBC) in 1997 and merged with London investment bank S. G. Warburg & Co. to become Warburg Dillon Read. The merged entity in turn became part of UBS AG when the latter firm bought SBC.
The Dillon Read name was dropped by 2000 but recently re-emerged in the name of UBS's internal hedge fund division, Dillon Read Capital Management (DRCM). During its brief 18 month existence, DRCM launched a successful fund of $1.2 billion (which was over subscribed by 50%) for outside investors which returned 16.6% after fees. On May 3, 2007, UBS announced the closure of Dillon Read Capital Management due to "operational complexities." DRCM had run up a loss of $124M in the first quarter.[1] DRCM's strategies, which involved leveraged purchases of subprime and Alt-A mortgage bonds, eventually lost $3B - more than 60% of the fund's previous $4.7B value. The April 2008 report to the Swiss Federal Banking Commission (SFBC, in German: Eidgenössische Bankenkommission, EBK, in French: Commission fédérale des banques, CFB) stated that the "assets could not be sold given the illiquidity in the market."[2][3].
Works about Dillon Read
- Sobel, Robert (1991). The Life and Times of Dillon Read. New York: Truman Talley Books/Dutton. ISBN 0-525-24959-1.
- Geisst, Charles R (2001). The Last Partnerships: Inside the Great Wall Street Money Dynasties. New York: McGraw-Hill. ISBN 0-071-36999-6.
- WetFeet.com (2001). The WetFeet.com Insider Guide: Warburg Dillon Read. San Francisco, CA: WetFeet.com. ISBN 1-582-07078-4.
External links
- Home page of Dillon Read Capital Management
- Dillon Read & the Aristocracy of Stock Profits
- INVESTMENT BANKS (BROKERAGE) — Business History of Firms
- Report on UBS's Write-Downs of 18 April 2008 (PDF), summary of UBS' report to the Swiss Federal Banking Commission (SFBC), includes the role of Dillon Read Capital Management in UBS spectaculars losses and preceding failures
- Geschichte eines kompletten Versagens – UBS-Bericht zur Hypothekenkrise zeigt verhängnisvolle Fehlleistungen auf, NZZ article of 21 April 2008 summarizing the report
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