Coelho Joins Investment Banking Firm

Tony Coelho, the former House majority whip from Merced who resigned in June following ethical questions about his financial dealings, has been named a managing director of Wertheim Schroder & Co., the Wall Street securities and investment banking firm announced Monday.

Coelho, 47, who has no securities or investment banking experience, will work primarily on developing and enhancing Wertheim’s relationships with corporate, institutional and wealthy individual clients, the firm said.

“What he can do is relate to people and monitor relationships,” James A. Harmon, Wertheim’s chairman and chief executive, said in a telephone interview. “Most investment bankers don’t do that very well; they are only interested in the next transaction. Most do not build long-term relationships.”

As one of 40 managing directors at Wertheim, Coelho will be a shareholder of the privately held firm, generally regarded as among Wall Street’s top 20 investment banking houses. Coelho will start Monday and will work out of the firm’s New York office, commuting weekly from his home in Alexandria, Va.

Coelho, a 10-year congressman who was the No. 3-ranking House Democrat and front runner for House majority leader until the ethics probe prompted his resignation, is still under criminal investigation by the Justice Department, although the probe is still far from being completed, sources said Monday.

Doesn’t See a Problem

Coelho’s problems stemmed in part from his purchase of a $100,000 high-yield junk bond underwritten by Drexel Burnham Lambert with the help of a $50,000 loan from Columbia Savings & Loan Assn. of Beverly Hills. The congressman failed to disclose the loan as required by law and was later involved in a lobbying effort on behalf of Drexel.

But Coelho, who has said he expects to be vindicated, said in a telephone interview that ethics questions would not pose a problem in his new job.

“That didn’t stop anybody from making job offers,” he said, noting approaches from law, lobbying, public relations and investment banking firms, as well as from private businesses that wanted to make him chief executive.

Wertheim’s Harmon also said ethics would not taint Coelho. “We’re not concerned about it, and we are a firm of among the highest ethics,” he said, noting that Wertheim has not been implicated by the Securities and Exchange Commission or stock exchanges in insider trading or other offenses.

“We do not see anything Tony’s done that would cast negatively on his ethics,” Harmon said.

Coelho said he doesn’t expect to do any lobbying work as part of his new duties, although he will tap his many contacts to help increase Wertheim’s client base.

“I wanted to leave this past chapter, and not have the new chapter in my life be dependent upon Capitol Hill,” Coelho said. “I took this seriously as a major career move.”

Coelho refused to disclose his salary, believed to be well into the six-figure range, except to joke that “it’s a lot more than a congressional salary.”

Added a close friend of the former congressman: “One of the great joys of Tony’s new life is that he only has to tell his wife and the IRS what he’s making these days.”

Times staff writer Ronald J. Ostrow in Washington contributed to this story.