Wall Street Woes Drive Oppenheimer Trust Co. To Become A Bank

Wall Street Woes Drive Oppenheimer Trust Co. To Become A Bank
www.njbiz.com

1/19/2009In the wake of a $56 million fraud investigation against its parent, a Florham Park financial services company is moving forward with its bid to become a bank and tap into a federal bailout program.

Oppenheimer Trust Co.’s application to become a bank and change its name to the Oppenheimer Bank and Trust Co. has been accepted by the New Jersey Department of Banking and Insurance, according to an announcement by the New Jersey Bankers Association.

Oppenheimer Trust also wants to sell a chunk of its stock to the federal government under the Troubled Assets Relief Program.
Oppenheimer Trust currently offers investment and other financial services to high-net-worth individuals and families, and not-for-profit and other organizations, according to the company Web site.

In November, following the meltdown of the volatile auction rate securities, or ARS, debt market, the Massachusetts Securities Division filed a fraud complaint against Oppenheimer’s New York parent, Oppenheimer & Co. Inc., and some top executives. Oppenheimer & Co. steered clients to risky ARS, resulting in losses of $56 million, even as the executives unloaded their own holdings, alleged the Massachusetts Securities Division.

Oppenheimer denied the charges, but said it was “reviewing the availability of the TARP program, and other programs recently announced by the federal government, to provide a solution to this serious issue for its clients.”

The New York parent also said that prior to the filing of the Massachusetts complaint, Oppenheimer Trust was preparing an application to the Federal Deposit Insurance Corp. for deposit insurance, and had filed an application to participate in the TARP stock purchase program.