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When Bankers Started Playing With Other People’s Money
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When Bankers Started Playing With Other People’s Money

In 1970, the small firm of Donaldson, Lufkin & Jenrette held its IPO – and fundamentally reshaped the world of finance.

William D. Cohan
The Atlantic, 2017
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Editorial Rating

7

Qualities

  • Eye Opening
  • Overview
  • Background

Recommendation

Wall Street was once a bastion of fiscal prudence, collaborative decision making and personal accountability. That centuries-old culture changed in the space of two decades. By the late 1980s, Wall Street had earned a reputation as a “casino” in which brash traders could win outsize rewards for gambling with other people’s money. Author William D. Cohan, a former investment banker and author of Why Wall Street Matters and House of Cards, outlines how one New York Stock Exchange member’s 1969 filing for an initial public offering drove rule changes that revolutionized the way Wall Street conducts business. getAbstract recommends this article to anyone interested in how Wall Street became what it is today.

Take-Aways

  • Until 1970, the New York Stock Exchange (NYSE) limited its membership to privately held firms in which partners invested their own capital and maintained personal liability for losses.
  • When NYSE member Donaldson, Lufkin & Jenrette (DLJ) filed to go public in the spring of 1969 – ignoring NYSE rules – the exchange could have revoked DLJ’s membership.
  • Instead, the NYSE board of governors elected to amend its bylaws to permit membership by publicly held corporations.

About the Author

Former investment banker William D. Cohan is the author of Money and Power, House of Cards, The Last Tycoons and Why Wall Street Matters.

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