Fred Joseph

Frederick H. Joseph
Born	(1937-04-22) 22 April 1937 Dorchester, Massachusetts, U.S.
Died	27 November 2009(2009-11-27) (aged 72)
Occupation(s)	Investment banker, chief executive officer
Years active	1960s–2000s
Known for	President and CEO of Drexel Burnham Lambert

Frederick H. Joseph (April 22, 1937 – November 27, 2009) served as the president and chief executive officer of the investment banking firm Drexel Burnham Lambert throughout the 1980s.

Biography

Joseph was born in 1937 in Dorchester, Massachusetts into an orthodox Jewish household, with family origins tracing back to Russia and Lithuania. He earned his undergraduate degree from Harvard University in 1959 and completed his MBA at Harvard Business School in 1963. His entry into finance began at E. F. Hutton, where he worked in corporate finance under the guidance of John S.R. Shad. He then transitioned to Shearson, Hammill & Co., advancing to the role of chief operating officer by the early 1970s. Following Shearson's acquisition by Hayden, Stone & Co. in 1974, Joseph joined Drexel Burnham Lambert as co-head of their corporate finance division.

At that time, Drexel was considered a mid-level firm, and Joseph sought to elevate it to compete with leading investment banks such as Goldman Sachs. Although the junk bond division led by Michael Milken dominated the firm’s reputation, Joseph ascended to president in 1984 and assumed the CEO position in 1985. During his tenure, Drexel expanded to become the fifth-largest investment bank in the United States.

In 1988, Joseph was instrumental in negotiating a settlement between Drexel and federal regulators, which involved entering an Alford plea on six felony charges and paying a $650 million fine—the largest penalty enforced under securities laws dating back to the 1930s at that time. Subsequently, regulatory agencies imposed restrictions on his management roles: he was barred from holding executive positions by the New York Stock Exchange for three years starting in 1990 and received a lifetime ban from the Securities and Exchange Commission (SEC) in 1993 due to insufficient oversight of Milken’s activities. In 2009, Portfolio.com and CNBC ranked Joseph as the seventh worst CEO in American business history, citing his excessive dependence on Milken’s junk bond operations without preparing for potential crises.

After Drexel’s collapse, Joseph took leadership of Clovebrook Capital from 1994 through 1998 before joining ING Barings’ U.S. operations as head of corporate finance between 1998 and 2001. When efforts to purchase ING Barings’ American unit were unsuccessful, he co-founded Morgan Joseph & Company, an investment bank focusing on middle-market clients similar to those Drexel had served. Due to regulatory limitations, he held the position of co-head of corporate finance rather than CEO.

Joseph passed away on November 27, 2009, due to complications related to multiple myeloma. He is survived by five children and seven grandchildren.