Dillon, Read & Co.

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Dillon, Read & Co. was a prominent American investment bank from the 1920s into the 1960s.

Dillon Read originated in 1832 as the Wall Street brokerage firm Carpenter & Vermilye. However, it is best known for its actions during the 1920s. During that time Clarence Dillon managed the rescue of faltering Goodyear Tire & Rubber Company, engineered the buyout (in 1925) and subsequent sale of Dodge Motors (in 1928) to Chrysler, launched the first post-war closed-end investment trust (in 1924), and led the largest ever stock offering (in 1926). By the end of the decade, Dillon Read was considered to be an investment banking powerhouse, alongside J.P. Morgan & Co. and Kuhn, Loeb & Co..

Dillon Read was purchased by Swiss Bank Corporation (SBC) in 1997 and merged with London investment bank S. G. Warburg & Co. to become Warburg Dillon Read. The merged entity in turn became part of UBS AG when the latter firm bought SBC.

The Dillon Read name was dropped by 2000 but recently re-emerged in the name of UBS's internal hedge fund division, Dillon Read Capital Management (DRCM). However, in May, 2007, UBS announced suddenly that it had decided to close the unit in the wake of $124 million of losses in one of its proprietary accounts, even as the rest of the DRCM businesses were profitable. UBS ultimately had significant losses in the fixed income department of its investment bank, which had nothing to do with DRCM. During it's brief 18 month existence, DRCM launched a successful fund of $1.2 billion (which was over subscribed by 50%) for outside investors which returned 16.6% after fees, making it one of the top multi-strategy funds for 2007. Moreover, Dillon Read had been profitable every month of operation for UBS, making $1.21 billion for the bank in 2006. This performance for 2006 was a record year of profitablity for the 185-year old Dillon Read brand. Given the positive track record, it was surprising to both investors and management when UBS decided to close the fund as Dillon Read had substantial profits in the rest of its proprietary business for the year and over $150 million of profits in its outside fund.

The April 2008 report to the Swiss Federal Banking Commission (SFBC, in German: Eidgenössische Bankenkommission, EBK, in French: Commission fédérale des banques, CFB) lists the failures that led to UBS' spectaculars losses outside of this unit.

[edit] Works about Dillon Read

Sobel, Robert (1991). The Life and Times of Dillon Read. New York: Truman Talley Books/Dutton. ISBN 0-525-24959-1.
Geisst, Charles R (2001). The Last Partnerships: Inside the Great Wall Street Money Dynasties. New York: McGraw-Hill. ISBN 0-071-36999-6.
WetFeet.com (2001). The WetFeet.com Insider Guide: Warburg Dillon Read. San Francisco, CA: WetFeet.com. ISBN 1-582-07078-4.