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January 1, 2003

Troubled Wainwright Looks For Capital

By Peter Chapman

H.C. Wainwright is out of the box.

The financially strapped investment bank pulled its markets from the Nasdaq montage in mid-November. The move caps a yearlong process of downsizing on the desk. In late 2001, Wainwright traded about 100 names and 170,000 shares per day, according to Nasdaq. In October of 2002, its last full month of trading, it traded 29 names and about 13,000 shares.

The New York-based boutique has been struggling to redefine itself for much of the past 18 months. Originally a retail-oriented shop based in Boston, it dropped its small accounts to emphasize block trades for institutions. It moved to New York and hired Frank Fusco from Josephthal & Co. to run sales and trading.

Fusco spent three years running the desk at Josephthal, departing at about the time that brokerage was absorbed by Canada's Fahnestock Viner. At Wainwright, Fusco oversees two sales traders, one junior trader and four research sales execs. The desk is acting strictly in an agency capacity, according to Fusco, routing out orders to ECNs and market makers.

Wainwright may not survive. The firm is in the "final stages" of negotiations to recapitalize itself, according to Fusco, but the financing is not assured. If the deal is sealed, Fusco expects to recommence trading in about 35 names.

The firm provides research and investment banking services for companies in four sectors: industrial technology; telecom equipment; consumer products; and medical devices.