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April 1, 2000

Cover Story: Back to the Future

By Peter Chapman

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A new team is ready for the major leagues on the equity-trading desk at First Union Securities in Baltimore. First Union is embarking on a transition from retail trading focused on value stocks, to institutional market making focused on mid-cap growth stocks.

On the way, the broker dealer unit of Charlotte's First Union Corp., the sixth largest bank in the U.S., hired and fired dozens of traders. The brokerage is also committing $150 million in capital and dropping market making in a third of the 465 stocks it had traded.

First Union Securities is no investment banking powerhouse but the 50-person trading team is being nudged in that direction by management, which is intent on joining the industry's elite.


First Union's desk now comprises eight listed principal traders, 12 OTC traders, 10 OTC agency traders and 20 sales traders. There is an additional support team of 50 pros.

At the helm is Mickey Misera, a 19-year veteran of Alex. Brown & Sons and its successor firm under Bankers Trust.

His mandate: to build an equity capital markets group so that First Union's banking clients think of First Union first when they need to issue stock. The new strategy will be officially launched this month. Misera, a managing director and head of equity capital markets, oversees research, sales and trading.

The desk traded about 12 million Nasdaq and 4.3 million listed shares each day in February, according to Thomson Financial's AutEx/Block Data. Volume has been steadily climbing since the start of 1999. Due mainly to earlier acquisitions, volume is up fourfold since 1997.

Today, the equity capital markets unit occupies two floors in a skyscraper in the heart of Baltimore's swank financial district. Neighbors on the block include Alex. Brown (now part of Deutsche Bank), as well as Legg Mason, Ferris Baker Watts and T.Rowe Price.

Misera hired pros he knew and trusted. He selected his former boss at Alex. Brown, Mike Murphy, to run the trading room. Murphy had left Alex. Brown in the late '80s, spending the next decade in New York as a buy-side trader.

Most recently, he headed trading at Kerns Capital Management in the Big Apple. Murphy's right hand man is Chris Holter, who runs Nasdaq trading. He had the same job at Alex. Brown. Both are managing directors.

Others in the top ranks of the trading team are Jim Whelan, listed principal trading, and Tom King, sales trading, both Alex. Brown alumni.

Gale Force

First Union is obviously not short of Alex. Brown pros. Indeed, the transformation taking place at First Union owes much of its momentum to a raid on BT Alex. Brown, the firm created when Bankers Trust bought Alex. Brown in 1997. About one third of BT Alex. Brown's trading team, 30 traders and sales pros, were nabbed last summer by First Union.

The defection was probably the largest mass exodus of trading talent since a renegade group of traders and bankers bolted for Thomas Weisel Partners from Montgomery Securities. That occurred in 1997 when Montgomery Securities was acquired by Nationsbanc.

Misera and Holter say they were both unhappy at BT Alex. Brown.