Lehman Brothers announced this morning that it had begun a shake up of its top management, following a tough period at the investment banking firm.
Effective immediately, Herbert (Bart) H. McDade III is the new president and chief operating officer, succeeding Joseph Gregory. McDade has been the global head of the firm's equities division since June 2005 and prior to that was the global head of the fixed-income division from 2002 to 2005. He has been with Lehman Brothers since 1983.
Also, Ian Lowitt is the firm's new chief financial officer, replacing Erin Callan. Lowitt had been Lehman's co-chief administrative officer, with global oversight for the firm's corporate real estate, expense and sourcing services, finance, operations, productivity, process improvement, risk management and technology. Prior to this position he was the CAO of Lehman Brothers Europe and joined Lehman in 1994.
Lehman Brother's stock surged on the news over the removal of the two key executives, reaching about $23.75 in mid-morning trading, up from an open of $21.35
A press release states Callan will remain with the firm, "rejoining the investment banking division in a senior capacity." However, it wasn't immediately clear what plans, if any, there are for Gregory.
"Joe has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a firm. This has been one of the most difficult decisions either of us has ever had to make," said Richard S. Fuld, Jr., Lehman Brothers' chairman and chief executive officer, in the release.
Fallout from the housing and subprime mortgage crises has led the firm to the brink of a Bear Stearns-like liquidation situation. Hoping to ease concerns about the firm's solvency, Lehman announced earlier this week it was raising $6 billion in fresh capital through a common stock sale, after disclosing it was anticipating a $3 billion loss in quarterly
The firm's securitization business has had its share of departures as well. In March, ASR reported that Nelson Soares, a longtime managing director at Lehman Brothers who led its U.S. securitization group has left the company. Soares was also active with the American Securitization Forum and was elected treasurer in a term that expires in 2010. In conjunction with his departure from Lehman, Soares resigned from his position as ASF treasurer.