NEW YORK -- Michael Vranos, head of mortgage trading at Kidder, Peabody & Co., has resigned and Kidder's mortgage-backed group has largely been dispersed.

BlackRock Financial Management has taken over management of Kidder's $3 bilion portfolio of mortgage-backed securities.

About 40 people from Kidder's mortgage group started working this week at PaineWebber Group Inc., which is in the midst of completing a buyout of Kidder Peabody from parent General Electric Co.

A few people from Kidder's group, including traders and sales people, have joined UBS Securities. Officials at UBS declined to comment.

Mr. Vranos has been talking to potential investors about running some type of fund investing in mortgage-backed securities, professionals in the mortgage business say.

The dispersal of Kidder's mortgage unit closes a chapter on the largest and most aggressive group in mortgage-backed securities.

Kidder's large inventory of mortgage derivatives -- a long-time profit center and, many say, the engine of the company's growth in the last four years -- turned into an albatross when interest rates started rising in February of this year.

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