The Board of Directors of First Albany Companies Inc. -- parent company of First Albany Corp. -- announced yesterday they have dismissed vice chairman Mark S. Ferber, effective yesterday.

A source who spoke on the condition of anonymity said the board decided that recent reports surrounding Ferber's activities made it in the best interest of the firm to terminate his employment.

The announcement comes only five days after Ferber was dismissed as the financial adviser to the Massachusetts Water Resources Authority amid reports that he maintained private business relationships with authority underwriters that were inadequately disclosed.

Ferber and the entire staff of the Boston office of Lazard Freres & Co. moved to First Albany last February. Since that time, Ferber has served as the third member of a management team that also included the chairman of the board, George C. McNamee, and the president, Alan P. Goldberg.

The upper management team will now return to its original makeup of just McNamee and Goldberg.

The source said he did not believe the decision to terminate Ferber's employment would extend to any other members of the firm.

Last week, the board of directors of the MWRA said an inadequately disclosed relationship between Ferber, while a partner at Lazard Freres & Co., and Merrill Lynch & Co. raised questions about whether he was able to act as an independent adviser.

A contract written by Merrill Lynch managing director Douglas Hamilton and signed by Ferber stated that Merrill and Lazard would split fees on certain swap transactions.

The agreement also paid Lazard $800,000 a year on retainer for advice on the structure and marketing of those swaps.

The contract between the firms was in effect from the end of 1989 to the end of 1992, when Ferber left Lazard.

A clause in the contract also stated that neither Ferber nor Merrill Lynch was allowed to disclose the terms of the retainer to any outside party without consent.

While the contract was in place, Merrill was a senior manager of MWRA debt.

Last week, Joseph P. Malone, state treasurer of Massachusetts, said Lazard Freres and Merrill Lynch would be banned from participating in state financings until they explained why the terms of the contract were not made known to state officials who specifically asked in 1991 whether such a relationship existed.

A state disclosure form, signed in December 1991 by both firms, did not mention the swap agreement. A spokeswoman for the treasurer said yesterday that neither firm has responded to requests for an explanation although two deadlines have passed.

Ferber has been one of the most visible figures in Massachusetts finance since the early 1980s.

After graduating from Northwestern University Law School, he worked as staff chairman of the prestigious state Senate Ways and Means Committee.

In 1982, he left that post and joined the Boston office of Kidder, Peabody & Co. It was at Kidder that Ferber was named financial adviser for the water authority.

He has worked at Kidder, The First Boston Corp., Lazard Freres, and First Albany over an 11-year span.

Over the years, Ferber has represented as either a financial adviser or senior banker such prominent issuers as Boston, the District of Columbia, Michigan, Wisconsin, the Massachusetts Port Authority, the Indianapolis Bond Bank, and the MWRA.

He has been a close political ally and contributor to the campaigns of former Boston Mayor Raymond Flynn and Massachusetts Senate President William F. Bulger, D-Boston.

Ferber was not available for comment yesterday and his attorney, Wayne S. Budd, had no comment.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.