Profile: Walking tall on Wall Street: Revenge was sweet for Primerica's Sanford Weill as he reclaimed the Shearson brokerage he had sold to American Express 13 years ago. Larry Black reports

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The Independent Online
To understand the new king of Wall Street, one has to appreciate the beauty of revenge.

Thirteen years ago, Sanford Weill, a Brooklyn-born son of Polish immigrants, cashed in his hard- earned chips. He sold Shearson, the brokerage firm he had cobbled together in the 1960s and 1970s, to the American Express financial services group, then run by the patrician from Georgia, James D Robinson III.

Weill then quit Amex to start to build a rival group, Primerica. Three years ago he tried to buy Shearson back from his former boss - only to be rejected.

Last week - and scarcely a month after Mr Robinson was ousted as the Amex chief executive - Weill signed a deal with Robinson's successor, Harvey Golub. He regained control of Shearson in what was the largest stockbroking merger in Wall Street's history. Together, Shearson and Primerica will rival Merrill Lynch in size.

Sandy Weill, 59, will tomorrow make his first official visit to Shearson's offices in seven years, but his exile from the firm he built has never been complete. His daughter still works there, as did his son. Until recently, his 90-year-old father, Mac, was employed as a part-time clerical worker in Shearson's Miami offices.

At Primerica, he surrounded himself with former Shearson executives; senior management at Smith Barney, Primerica's securities subsidiary and the arm that will absorb Shearson in coming months, is almost entirely made up of refugees from Robinson's reign at Amex. Among Shearson's 8,500 brokers, there remains a strong sense of loyalty to Weill - although some of them will now lose their jobs.

'I wouldn't exactly say it has been an obsession on Sandy's part,' said one senior Smith Barney official. 'But there's certainly an element of sweet revenge here.' Come July, when his restoration is complete, he will control a much larger Shearson for the same dollars 1bn ( pounds 695m) that Amex paid him in 1981.

Sandy Weill - the boiler-room broker, pyscho-boss, bottom-fisher - is also proving that Primerica is the financial services conglomerate that blue-chip American Express was supposed to have become under Robinson. Already America's biggest term-life insurer and consumer- finance company, Primerica is making big money in businesses Amex, Sears and other companies have been forced to abandon.

Weill reached the same deal with Mr Golub, another Brooklyn native whom he had hired - ironically, during his stint as Amex president - that Robinson could not bring himself to sign in 1990. Weill's dollars 1bn offer to Robinson had undoubtedly been low, but the talks were not helped by the fact that his four years with Robinson in the mid-1980s had been a clash of corporate personalities - the penny-pinching commission broker versus the Atlanta banker.

'From the start, it was like a Hollywood marriage,' Weill told an interviewer a few years ago.

'All anyone wanted to know was 'Will this kid from the streets of Brooklyn get along with the Southern aristocrat?' '

Weill used to insist that they 'could have made a great team'. But the answer was ultimately that they could not have done - although not because he disdains Old Money or the American corporate elite. Amex's board, after all, included such Establishment directors as former president Gerald Ford and Henry Kissinger - and Weill's job specification included playing in celebrity golf tournaments around the country. Weill's office at Primerica, on the 36th floor of a mid-town Manhattan skyscraper, is adorned with pictures of him posing with presidents and other famous people.

Friends say Weill loves the limelight. While he ran Shearson for Amex, for instance, he made a point of meeting once a year with William Schreyer, chairman of arch-rival Merrill Lynch, at '21', New York's most conspicuous lunch spot.

'We'd get a table where everyone could see us, and Sandy would love it that everyone was watching us,' said Mr Schreyer.

He is also the chairman of the board of Carnegie Hall, Manhattan's premier classical music venue. The recital hall there bears his name and that of his wife Joan, in recognition of their fund-raising efforts.

Wall Street made much of the differences between Weill and his boss when he finally left Amex in 1985. But in the end, associates say, the real reason Weill departed was that Mr Robinson - three years his junior - had the job that he wanted, and was not about to give it up.

Weill is proud of the fact that he has earned his own fortune and fame. On the wall of his office is a picture of the simple two-storey yellow house on Bay Street in Brooklyn where he grew up. He was able to go on from school to a top-flight military academy, and his father, a dressmaker, earned enough to put him through business school at Cornell University. He got a job on Wall Street immediately after graduation in 1955, albeit as a clerk, at Bear Stearns, where he went on to become a broker.

Five years later, he and three friends had saved enough to start their own hole-in-the-wall brokerage firm, known initially as Carter, Berlind, Potoma & Weill. There was a constantly changing rota of names as acquisitions were made and partners came and went. The brokerage houses they bought were in such bad shape that they were able to get them for almost nothing, and because their employees - who accounted for the vast bulk of their costs - were paid on commission, they needed to make only minimal capital commitments. But with each acquisition, Weill and his partners were betting the farm.

In 1973, aged 40, Weill became chief executive of the firm. Almost immediately, the partnership bought the troubled brokerage of Haydon Stone. The New York Stock Exchange, desperate to avoid market chaos, offered the buyers of Haydon an indemnity against potential losses of up to dollars 6m. The combined firm took off almost immediately, doubling in size when it acquired Shearson Hammill in 1974 and again in 1979 when it took over yet another troubled broker, Loeb Rhoades.

At each firm Weill ran, he plunged into the details, gaining a thorough understanding of the back- office operations. Few other firms have any idea of what it costs them to process each trade; Weill knows to the penny.

'I'm not smarter than anyone else,' he said when he sold Shearson Loeb Rhoades, by then Wall Street's second-ranking brokerage behind Merrill Lynch, to Amex, receiving dollars 30m for his personal stake. 'I just understand this business better than anyone else.'

Wall Street in the 1970s was polarised between investment banks and brokerages - either 'brains or brawn,' the saying went. Weill developed a deep suspicion of the plush overheads involved with investment banking, which persist to this day. Members of Smith Barney's relatively small corporate finance department - the elite in a corporation essentially built on financial telemarketing - are among the worst paid on Wall Street. In a good year they earn 80 per cent of what their peers earn; in a bad year, 20 per cent.

'It's always been better to invest with Sandy than to work for him,' said one senior Primerica official, complaining about the firm's economies and Weill's tendency to ride his employees. For his part, Weill says that it is no bad thing to demand performance - just as long as nobody 'cuts corners'.

At Shearson, which continues to lose money amid record profits elsewhere on Wall Street, there are plenty of savings to be made before anyone could accuse it of cutting corners. Amex has lost perhaps dollars 2bn on the firm in the past decade, out of many more billions that Mr Robinson lost trying to diversify into high- flying businesses such as global banking, platinum charge cards and leveraged buyouts.

By contrast, Primerica - the broking firm Weill built in the 1980s - is a model of low-road efficiency, rewarding its shareholders with a 20 per cent annual return and a share price that has quadrupled since 1988. With Shearson back under his control, Weill believes he can squeeze even more profits out of the financial services business. Merrill Lynch, watch out.

(Photograph omitted)

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