Ex-VP Sues Keefe Bruyette over Scuttled IPO

NEW YORK - Just as the former chief executive of Keefe, Bruyette & Woods Inc. pleaded not guilty last week to charges of insider trading, the firm was hit with a $1.4 million lawsuit over the initial public offering it scuttled when the allegations first came to light.The suit, filed Thursday by Teresa Dooner, a former senior analyst and vice president in the bank's research department, alleged misrepresentation and breach of contract in connection with the offering, as well as sexual harassment.

Ms. Dooner, who claims she was led to believe she would make $4.3 million on her stake in the company but settled for an unspecified lesser amount after the deal was pulled, named the former chief executive, James McDermott, as a defendant.

Ms. Dooner said Keefe Bruyette's board withheld vital material information concerning Mr. McDermott's departure and its real effect on Keefe Bruyette's immediate future.

The 20-year employee also alleged that Keefe Bruyette research director David Berry used explicit sexual terms in conversation with her, upsetting her to the point where she was "spitting up blood," and that he eventually forced her to resign.

Keefe Bruyette officials and Mr. Berry could not immediately be reached to comment. An attorney for Mr. McDermott also was unavailable.

- Dow Jones


Citizens of R.I. Posts 5% Jump in Profits

PROVIDENCE, R.I. - Citizens Financial Group said Friday that its operating earnings rose 38%, to $70.2 million, for the quarter ended Dec. 31.Net income - which grew by 5%, to $53.4 million, from the same period the previous year - was affected by a one-time expense of $16.8 million from the Oct. 1 acquisition of State Street Bank's commercial banking business, Citizens said.

Profits were buoyed by a 23% increase in its commercial loan and lease portfolios and a 20% rise in its consumer loan portfolio. Deposits also grew, with checking accounts increasing by 13% and checking with interest accounts rising by 14% from the previous year.

Noninterest expenses for the quarter, which is the first in Citizen's fiscal year, rose 25%, to $168 million, including the charge from buying State Street.

In addition, the company, which is a wholly owned subsidiary of Royal Bank of Scotland PLC, said the State Street acquisition contributed $2.7 billion in assets, bringing its asset size to $23.2 billion by yearend.

- Laura Mandaro

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