Chase Manhattan Corp. has settled complaints brought by executives of its disbanded municipal securities department that the bank reneged on promises related to bonuses and pay, a bank spokesman confirmed last week.
The spokesman said the dispute, which had been in arbitration before the National Association of Securities Dealers, has been settled. But he said the terms are being kept confidential.
Chase Manhattan shuttered its municipal operation, Chase Municipal Securities, in April 1991, saying municipal finance was "not of strategic significance."
But sources inside the firm said the pay dispute also played a role in convincing bank executives to jettison municipals. The source said an agreement was struck in late 1989 between the bank and 13 members of the municipal group, including its president, Joseph M. Giglio, now a managing director at Smith Barney, Harris Upham & Co.
The deal included a promise to split profits among the 13 members, based on a formula they expected would generate $2 million in bonuses, sources said. The dispute arose when the bank later offered only $800,000.
Mr. Giglio could not be reached for comment last week.