Wall Street's other black eye: brokers who deal for drugs
Insider trading has given Wall Street quite an image problem. Now evidence of another nasty habit has surfaced: drugs. Trading cocaine for stock tips was just one of the allegations made last week in a highly publicized federal crackdown on drug dealing. Fifteen Wall Street employees were nabbed. Most of the accused worked at Brooks, Weinger, Robbins & Leeds, a major underwriter of penny stocks.
Cocaine became ``a regular medium of exchange,'' at Brooks, said Robert M. Stutman, head of the United States Drug Enforcement Agency's New York office.
The government alleges Brooks used cocaine to pay for $10,000 worth of stock in a company it was underwriting. Also, one broker used the firm's messenger service to deliver a herion sample. Another was rehired because he was a trusted source of cocaine.
A stimulant, cocaine can give a false feeling of self-confidence and energy - qualities considered attractive in fast-paced jobs, such as those on Wall Street. It's not unusual to see drugs and money exchange hands in parks and side streets of lower Manhattan.
Separate from the federal case, New York police report that over 100 drug arrests, mostly of low-level employees, were made in this part of the city in April.
No one knows precisely how insidious the drug problem on Wall Street is. Drug-related theft and stock manipulaton are believed to cost brokerages millions of dollars. Observers note that abuse in the Brooks case is unusually blatant in that the co-owner of the firm is accused of dealing, and allegedly condoned it by others.
As awareness of the problem grows, major brokerage houses are instituting drug testing programs. For example, Kidder Peabody & Co. and Goldman Sachs & Co. give urinanalysis tests to new hires in New York. This month, Citicorp began testing all new employees, too. But once hired, most firms do not recheck employees unless their actions on the job show a need for it.