CHICAGO -- Illinois officials yesterday filled a syndicate slot for an upcoming bond issue made vacant Tuesday when Rodman & Renshaw Inc. was dropped from the deal because of sexual harassment complaints.
The state picked Chicago-based LaSalle National Capital Markets to fill the co-manager position on the upcoming general obligation college saver bond issue, James Montana, chief legal counsel to Gov. Jim Edgar, said yesterday.
Rodman was eliminated as an underwriter for the $150 million issue shortly after the underwriting team was announced on Tuesday. Montana has said that decision was made after the state learned of several sexual harassment complaints filed against the firm. He said the decision was also prompted by recent turmoil at the firm involving a possible takeover.
Kurt Karmin, Rodman's chairman, declined yesterday afternoon to comment on the state's decision to replace his firm with LaSalle. However, earlier in the day before the announcement, a spokeswoman for Rodman said firm officials were preparing an appeal asking the state to reconsider.
Greg Quinlivan, Rodman's general counsel and executive vice president, on Tuesday charged that the state was not treating Rodman the same as other firms picked as underwriters. He said that those firms might also have sexual harassment complaints pending against them.
After the state named LaSalle, Karmin refused to comment on whether an appeal was still in the works.
When told of the possible appeal, Montana said he would look at whatever Rodman would send him, but only "in connection with future business." Montana has said the state's decision to drop Rodman does not constitute a judgment by the state on the merits of the complaints, but reflects the state's preference to have the complaints resolved before including Rodman in a deal.
Sexual harassment complaints have been filed against Rodman and several of its employees by three former female employees. One of the complaints is pending before the Equal Employment Opportunity Commission and one has moved to the U.S. District Court for the Northern District of Illinois. The Illinois Department of Human Rights is considering the third.
In addition, Rodman is in the midst of a due diligence process to examine possible mergers or acquisitions of the firm.
Jonathan Gartner, a vice president at LaSalle, said the firm was "very appreciative" to be included in the general obligation transaction.
"The fact that we have the second largest branch banking network in Illinois I think worked to our advantage," Gartner said.
He said to his knowledge that there are no sexual harassment complaints pending against LaSalle, adding that the firm "vigorously" enforces its policies against harassment.
The college saver bonds are scheduled to be priced in early October in a deal led by Prudential Securities and First Chicago Capital Markets.
Under a new state law that went into effect July 1, senior underwriters and bond counsel firms will be asked to certify that they have written policies against sexual harassment.
Other firms whose officials have said they have written policies are First Chicago and Lehman Brothers, the senior manager for an upcoming Build Illinois sales tax revenue bond issue, as well as bond counsel firms selected for the state's GO and Build Illinois bond issues. Officials at Prudential, the bookrunner for the college saver issue, did not return phone calls.
