Word: hutton
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...news has been filled with tales of business schemes and scandals, of corporate intrigue and downright crime. The offenses make up a catalog of chicanery: cheating on Government defense contracts, check-writing fraud, bogussecurities dealing, tax dodges, insider trading and money laundering. Among the culprits: General Electric, E.F. Hutton, Bank of Boston and General Dynamics. Once powerful and respected executives, including Jake Butcher, the Tennessee banker, and Paul Thayer, the former LTV chairman, are now facing the humbling prospect of spending several years in prison...
...gentle treatment that E.F. Hutton got last month was especially controversial. Hutton pleaded guilty to a fraud that bilked some 400 banks out of at least $8 million between 1980 and 1982. In its settlement with the Government, Hutton agreed to pay a fine and court costs totaling $2.75 million and to repay banks the money they lost. No individuals, however, were prosecuted, even though the Justice Department admitted last week that two people were primarily responsible for the scheme "in a criminal sense." The department defended this act of amnesty by arguing that it wanted a fast settlement...
...remains unclear why the Hutton employees carried out the fraud. One possible reason is that Hutton managers are paid bonuses tied to the company's profits. But management experts doubt that greed is the full explanation. They point out that middle-level executives in many companies are constantly under stress to meet tough earnings targets. Says John Fleming, a professor at the University of Southern California Graduate School of Business Administration: "For middle managers, there is so much pressure to get a certain degree of performance that they sometimes feel they almost have to do something illegal to meet...
...individuals were named in last week's charges or identified by the company, even though the Hutton branch managers benefited because they were given bonuses equal to 10% of their branch profits. That immediately raised charges of Justice Department favoritism toward Big Business. Meese lamely attempted to explain his decision not to go after any Hutton employees, saying it was necessary to give immunity "to push the investigation along." He added, "It didn't seem fair to subsequently charge other individuals for doing identical acts...
...Hutton's Fomon last week stressed that no customer or client lost any money as a result of the illegal transactions. Even so, a brokerage house that gathered considerable eminence with its "When E.F. Hutton talks, people listen" advertising campaigns had swiftly lost some prestige...