Heads Roll at Lehman: Callan Loses CFO Post, Gregory Ousted as President
Lehman Brothers Holdings Inc. (LEH) said Thursday morning that it had ousted CFO Erin Callan and president Joseph Gregory, the latest market crisis shake-up to claim senior executives on Wall Street. Lehman has seen its market value battered amid speculation over its liquidity and mounting losses in recent weeks, even going so far as releasing earnings details ahead of a scheduled June 16 second quarter earnings report in an attempt to quell investor unrest. Callan has figured prominently in the media spotlight since assuming her role in December 2007, and will return to the firm's investment banking unit, Lehman said in a press statement; she will be succeeded by co-chief accounting officer Ian Lowitt. Gregory, a long-time Lehman exec, will be replaced by Herbert "Bart" McDade, head of the company's worldwide equities business. McDade has been with the firm since 1983. The move is the latest shake-up among a mortgage-bitten Wall Street, which has seen CEOs cast aside more than their fair share of senior executives in an attempt to restore investor confidence; Lehman CEO Richard Fulk, however, might want to see how weel that sort of strategy worked for former Bear Stearns & Cos. CEO James "Jimmy" Cayne. Fuld characterized the decision to remove Gregory as "one of the most difficult decisions either of us has ever had to make." He did not offer comments on Callan. Earlier this week, Lehman said that it expects to report a $2.8 billion loss for the second quarter as mortgage losses mount and hedge effectiveness has proved to be problematic. The Wall Street firm raised $6 billion in fresh capital, and sources suggested to HW that the company's new-found investors likely demanded that some heads roll as a result of most recent performance. Shares in Lehman were off nearly 3 percent to $23.06 in heavy trading Thursday morning, when this story was published. Disclosure: The author held no positions in LEH when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.