GE Approves Shake-Up at Kidder Peabody
General Electric Co. has announced a management shuffle at its Kidder Peabody Group, the Wall Street investment house that has provided its share of problems since GE took control in 1986.
GE Capital, the company’s financial services division, stated that Michael A. Carpenter, an executive vice president of GE Capital, has been named president and chief executive of Kidder Peabody Group. Silas S. Cathcart, a former GE director brought in as an interim chief executive in 1987, will stay on as chairman.
Max C. Chapman Jr., a longtime Kidder employee who had been running the group from his position as president of Kidder, Peabody & Co., the broker-dealer unit, resigned to pursue other interests.
Kidder suffered a major blow to its reputation when it became embroiled in the Ivan F. Boesky insider trading scandal. The 124-year-old firm agreed in 1987 to pay $25.3 million to settle civil charges with the Securities and Exchange Commission.
The episode also prompted GE to make aggressive management changes at the firm in response to what it perceived as management weaknesses that led to Kidder’s involvement in the scandal.
The management shake-ups at Kidder are seen by many as highlighting the problems that can occur when smokestack companies try to bring new types of business into their corporate fold, as has happened frequently this decade.
GE management generally has gotten excellent marks for the handling of its expansion into financial services. But analysts say some clashes are inevitable.
“It’s tough for industrial companies to own Wall Street financial firms. They drive the creative people out. Creative people feel limited, suffocated,” said one analyst, who asked not to be named.