Some Drexel Workers Express Relief at News of Probe Settlement

On Wall Street, they have been worried all year about a dead stock market that has been depressing salaries and costing lots of people their jobs, but at Drexel Burnham Lambert there was even more to worry about.

Ever since stock speculator Ivan F. Boesky pleaded guilty to insider trading in 1986, there was a steady drumbeat of bad publicity. A few prized customers began to drift away as investigators moved in, and for a time there was even fear that the federal investigation might even put the big investment bank out of business.

But Wednesday some people at Drexel saw the dark clouds parting, as Chief Executive Frederick H. Joseph went on the companywide intercom to tell the firm’s 10,500 employees of a settlement with the government that could put two tough years behind them.

“There was applause--for the first time ever at one of these meetings,” said an employee who was in the conference room at 5 p.m. EST when Joseph made the announcement. “This may not be the end, but it’s the beginning of the end. I was relieved.”

Said a broker in one of the firm’s California offices: “It was a strange sort of Christmas present the government’s giving us, but I’m grateful it’s going to be over.”

The investigation has naturally been a focus of conversation for a long time at Drexel, but in recent days, as a settlement or indictment seemed near, the question had become more urgent. “What you hear all the time is ‘What do you hear?’ ‘What do you hear?’ ” said a Drexel employee in New York.

Employees said they naturally were also wondering what effect the settlement will have on the business of the firm, whose spectacular rise in the early 1980s has been marred by publicity about the alleged securities violations. There were also suggestions Wednesday that the firm may remain deeply divided. Some executives, bitter about the settlement, may depart and others may be forced to leave.

But several insisted Wednesday that they believe the company can emerge from the settlement in solid condition, with most customers loyal and its credit rating intact.

One employee wondered how soon the public will forget Drexel’s problems, given the unusual publicity that has surrounded not only this investigation but the related probes into Wall Street corruption.

“A lot of people outside the business don’t know exactly what’s going on here,” the employee said. “I think some people think Ivan Boesky is the chairman of Drexel. So I’m not sure how long it will take for people to forget all this.”