Dean Witter Reynolds was an American
stock brokerage and securities firm catering to a variety of clients. Prior to the company's acquisition, it was among the largest firms in the securities industry with over 9,000 account executives (ranking third in the US in 1996) and was among the largest members of the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
. The company served over 3.2 million clients primarily in the U.S. Dean Witter provided debt and equity underwriting and brokerage as mutual funds and other saving and investment products for individual investors. The company's
asset management
Asset management is a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It may apply both to tangible assets (physical objects such as buildings ...
arm, Dean Witter InterCapital, with total assets of $90.0 billion prior to the acquisition, was one of the largest asset management operations in the U.S.
[Dean Witter, Discover Inc. - SEC Form 10-K Annual Report]
for Year Ended December 31, 1996
Dean Witter Reynolds was founded in 1978 as the merger of
Dean Witter & Co. and
Reynolds Securities
Reynolds Securities was a publicly traded brokerage firm. Founded in 1931 by Richard S. Reynolds, Jr., the firm merged with Dean Witter & Co. to form Dean Witter Reynolds Organization Inc. in 1978, which was then the biggest merger in the hist ...
(with Dean Witter acquiring Reynolds), which was then the biggest merger in the history of
Wall Street
Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. It runs between Broadway in the west to South Street and the East River in the east. The term "Wall Street" has become a metonym for t ...
.
The company was acquired by
Sears
Sears, Roebuck and Co. ( ), commonly known as Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald, with what began a ...
in 1981, and was renamed "Dean Witter, Discover & Co." in 1993 when Sears spun off the company. The company also owned
Discover Card
Discover is a credit card brand issued primarily in the United States. It was introduced by Sears in 1985. When launched, Discover did not charge an annual fee and offered a higher-than-normal credit limit, features that were disruptive to the e ...
.
In 1997, Dean Witter, Discover & Co. merged with investment banking house
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
to form "Morgan Stanley Dean Witter & Discover Co.".
The combined firm later dropped the "Discover Co." name in 1998 and further the "Dean Witter" name in 2001.
For many years, the company used the corporate slogan, "We measure success one investor at a time", which was later adopted by
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
.
Business overview
![Dean Witter logo 1993](https://upload.wikimedia.org/wikipedia/commons/e/ea/Dean_Witter_logo_1993.png)
Prior to its merger with Morgan Stanley, Dean Witter Reynolds was a diversified financial services organization that provided a broad range of investment and
consumer credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt), ...
and investment products and services. Dean Witter operated in two lines of business: securities (including investment banking) and credit services and its operations were primarily focused on the U.S.
The following is a summary of the financial results of Dean Witter prior to its merger with
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
:
Securities business
Dean Witter's traditional business was as a full-service securities brokerage. The company maintained a network of over 9,000 account executives. DWR was among the largest members of the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
and was a member of other major securities, futures, and options exchanges. Dean Witter offered a broad range of securities and savings products that were supported by the firm's
underwriting
Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabilit ...
and
research
Research is "creativity, creative and systematic work undertaken to increase the stock of knowledge". It involves the collection, organization and analysis of evidence to increase understanding of a topic, characterized by a particular att ...
activities as well as
order execution. Closely related to its securities business, Dean Witter provided investment consulting services to individual investors. The firm managed approximately $10.4 billion of assets in its consulting business as of the end of 1996.
Within its securities business, Dean Witter focused on three segments:
*
Equity Securities
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
- Dean Witter provided
order execution,
stock trading In finance, a trade is an exchange of a security (stocks, bonds, commodities, currencies, derivatives or any valuable financial instrument) for "cash", typically a short-dated promise to pay in the currency of the country where the 'exchange' is lo ...
and
equity research
Securities research is a discipline within the financial services industry. Securities research professionals are known most generally as "analysts", "research analysts", or "securities analysts"; all the foregoing terms are synonymous. Researc ...
services primarily to individual investors but also to
institutional clients. In many equity securities, Dean Witter acted as a
market maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that it ...
and as a
specialist on various exchanges. Dean Witter's research department provided economic analysis and commentary, market and quantitative research, as well as making recommendations with regard to broad individual companies and industry sectors.
*
Fixed Income Securities
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the pri ...
- Dean Witter provided trading and
order execution services for a broad range of fixed income securities, including
U.S. Treasury bonds,
mortgage-backed securities
A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...
,
corporate bond
A corporate bond is a bond issued by a corporation in order to raise financing for a variety of reasons such as to ongoing operations, M&A, or to expand business. The term is usually applied to longer-term debt instruments, with maturity of ...
s,
municipal bond
A municipal bond, commonly known as a muni, is a Bond (finance), bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal ...
s and
certificates of deposit
A certificate of deposit (CD) is a time deposit, a financial product commonly sold by banks, thrift institutions, and credit unions in the United States. CDs differ from savings accounts in that the CD has a specific, fixed term (often one, th ...
. The company was a
primary dealer
A primary dealer is a firm that buys government securities directly from a government, with the intention of reselling them to others, thus acting as a market maker of government securities. The government may regulate the behaviour and number of ...
in
U.S. Treasury bonds. The firm largely eschewed
proprietary trading
Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using depositors' money) in order to make ...
focusing its trading activity on establishing and maintaining an inventory of various securities.
*
Futures
Futures may mean:
Finance
*Futures contract, a tradable financial derivatives contract
*Futures exchange, a financial market where futures contracts are traded
* ''Futures'' (magazine), an American finance magazine
Music
* ''Futures'' (album), a ...
- Dean Witter also provided
order execution and
clearing services for the trading of
futures contract
In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...
s.
Investment banking
Dean Witter also operated as an
investment banking
Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...
firm, even before its merger with
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
. Like many of its peers, Dean Witter provides a range of advisory services to corporate clients including
mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
,
divestiture
In finance and economics, divestment or divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment. Divestiture is a ...
s,
leveraged buyout
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loan ...
s,
restructuring
Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons ...
s and
recapitalization
Recapitalization is a type of corporate reorganization involving substantial change in a company's capital structure. Recapitalization may be motivated by a number of reasons. Usually, the large part of equity is replaced with debt or vice versa. ...
s. The Company generally does not commit capital to merchant banking transactions.
However, the firm always maintained a strong connection between its investment banking business and its core business focused on individual investors. As a result, the investment banking division was involved in the research, development, and origination of investment products focused on individual investors including
limited partnership
A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited ...
s and other retail-oriented products.
The company's InterCapital subsidiary, with $90.0 billion of
assets under management as of December 31, 1996, was one of the largest
investment management
Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institut ...
businesses in the U.S.
Credit cards (Discover Card and Novus)
Dean Witter was also active in the issuance of credit cards through its
Discover Card
Discover is a credit card brand issued primarily in the United States. It was introduced by Sears in 1985. When launched, Discover did not charge an annual fee and offered a higher-than-normal credit limit, features that were disruptive to the e ...
business. Discover Card, which today operates is the company's most widely held proprietary general-purpose credit card and generated a majority of Credit Services' revenues and net income in 1996. Prior to its merger, Dean Witter's credit cards business accounted for 52% and 47% of the company's net income in 1995 and 1996, respectively.
In addition to the Discover Card, the company operated the NOVUS Network. In the mid-1990s, the NOVUS Network was the third-largest domestic
credit card network and consisted of merchant and cash locations that accept card brands that carry the NOVUS logo. In addition to the Discover Card, this the NOVUS network included Private Issue Card, the BRAVO Card and the National Alliance
For Species Survival SM Card.
History
Dean Witter Reynolds traced its origins to two firms: Dean Witter & Co. founded in 1924 and Reynolds & Co. (later Reynolds Securities) founded in 1931.
Dean Witter & Co. (1924–1978)
![Blyth Witter logo](https://upload.wikimedia.org/wikipedia/commons/2/2b/Blyth_Witter_logo.png)
Dean Witter & Company was founded by
Dean G. Witter
Dean Gooding Witter (August 2, 1887May 25, 1969) was an American businessman, stockbroker, and investor. With his brother Guy Witter and cousin Jean Witter, Dean Witter co-founded Dean Witter Reynolds#Dean Witter & Co. (1924-1978), Dean Witter & C ...
(together with his brother Guy Witter and cousin Jean Witter) as a retail brokerage firm in 1924.
With its original offices at 45 Montgomery Street in
San Francisco, California
San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
, Dean Witter would be among the largest brokerages on the West Coast. Among Witter's original partners were Guy and Jean, as well as cousin Ed Witter and Fritz Janney. Prior to founding his own firm, Witter partnered with
Charles R. Blyth to found
Blyth, Witter & Co., another San Francisco based brokerage in 1914. After Witter's departure, Blyth would continue on his own (his firm was ultimately acquired by
Paine Webber
PaineWebber & Co. was an American investment bank and stock brokerage firm that was acquired by the Swiss bank UBS in 2000. The company was founded in 1880 in Boston, Massachusetts, by William Alfred Paine and Wallace G. Webber. Operating with ...
in 1979) and the two firms would remain competitors for decades.
Witter's family had moved to Northern California from
Wausau, Wisconsin
Wausau ( ) is a city in and the county seat of Marathon County, Wisconsin, United States. The Wisconsin River divides the city into east and west. The city's suburbs include Schofield, Weston, Mosinee, Maine, Rib Mountain, Kronenwetter, and ...
, settling in
San Carlos, California
San Carlos (Spanish for "St. Charles") is a city in San Mateo County, California, United States. The population is 30,722 per the 2020 census.
History
Native Americans
Prior to the Spanish arrival in 1769, the land of San Carlos was occupi ...
in 1891. Before founding his own firms, Dean Witter had worked as a salesman for Louis Sloss & Company from his graduation from the
University of California, Berkeley
The University of California, Berkeley (UC Berkeley, Berkeley, Cal, or California) is a public land-grant research university in Berkeley, California. Established in 1868 as the University of California, it is the state's first land-grant u ...
in 1909 until 1914. Dean Witter would lead his company until his death in 1969.
In its early years, Dean Witter focused on dealing with municipal and corporate bonds. The company was highly successful in its first five years, purchasing a seat on the
San Francisco Stock Exchange
The San Francisco Stock and Bond Exchange was a regional stock exchange based in San Francisco, California, United States. Founded in 1882, in 1928 the exchange purchased and began using the name San Francisco Stock Exchange, while the old San Fran ...
in 1928 and then opening an office in New York and purchasing a seat on the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
in 1929. Although a relatively young company, Dean Witter survived
Wall Street Crash of 1929
The Wall Street Crash of 1929, also known as the Great Crash, was a major American stock market crash that occurred in the autumn of 1929. It started in September and ended late in October, when share prices on the New York Stock Exchange colla ...
and the
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
, posting profits every year during the 1930s and into the 1940s.
The company grew rapidly during the 1950s and 1960s, establishing itself as a major U.S. brokerage house and developing a reputation for innovation in the securities industry. In 1938, Dean Witter established its national research department, and in 1945, became the first retail securities firm to offer formal training for account executives. In 1953, the firm entered into an agreement to merge with
Harris, Hall & Co., a Chicago investment banking and securities firm spun out of
Harris Bank
BMO Harris Bank, N.A. is an American bank based in Chicago, Illinois. It is a member of the Federal Reserve System and operates branches in the states of Illinois, Indiana, Arizona, Missouri, Minnesota, Kansas, Florida, Wisconsin, and California ...
after the passage of the
Glass Steagall Act
Glass is a non-crystalline, often transparent, amorphous solid that has widespread practical, technological, and decorative use in, for example, window panes, tableware, and optics. Glass is most often formed by rapid cooling (quenching) of ...
. In the early 1950s, Harris, Hall was one of the 17 U.S. investment banking and securities firms named in the
Justice Department
A justice ministry, ministry of justice, or department of justice is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...
's antitrust investigation of Wall Street commonly known as the
Investment bankers case
''United States v. Morgan'', 118 F. Supp. 621 (S.D.N.Y. 1953), more commonly referred to as the Investment Bankers Case was a multi-year antitrust case brought by the United States Justice Department against seventeen of the most prominent Wall ...
. In 1962, Dean Witter became the first firm to use electronic data processing — a feat that paved the way for securities handling on
Wall Street
Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. It runs between Broadway in the west to South Street and the East River in the east. The term "Wall Street" has become a metonym for t ...
.
Following Witter's death in 1969, and the retirement of Guy Witter the following year, Jean Witter's son, William M. Witter, became CEO of Dean Witter & Co. After numerous brokerage firm acquisitions, Dean Witter went public in 1972. Dean Witter's initial public offering (shortly after the IPO of Reynolds Securities) was part of a rush of Wall Street firms to sell an interest in their privately held businesses to public investors, following Merrill Lynch's initial public offering in early 1971.
Reynolds Securities (1931–1978)
![Reynolds Securities logo](https://upload.wikimedia.org/wikipedia/commons/a/af/Reynolds_Securities_logo.png)
Reynolds & Co. was founded in 1931 in New York City by
Richard S. Reynolds Jr.
Richard is a male given name. It originates, via Old French, from Old Frankish and is a compound of the words descending from Proto-Germanic ''*rīk-'' 'ruler, leader, king' and ''*hardu-'' 'strong, brave, hardy', and it therefore means 'stron ...
, a 22-year-old tobacco heir, together with Charles H. Babcock and Thomas F. Staley. In particular, Thomas F. Staley was Reynolds’ cousin (the grandson of Major D. Reynolds, an older brother of R.J. Reynolds). In 1951, another senior partner, John D. Baker, joined the company. Reynolds' father
Richard S. Reynolds Sr. founded
U.S. Foil Company
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
, later
Reynolds Metals
Reynolds Group Holdings is a New Zealand based packaging company with roots in the former Reynolds Metals Company, which was the second-largest aluminum company in the United States, and the third-largest in the world. Reynolds Metals was acquire ...
(Reynolds wrap), and his great uncle was the founder of
R. J. Reynolds Tobacco Company
The R. J. Reynolds Tobacco Company (RJR) is an American tobacco manufacturing company based in Winston-Salem, North Carolina, and headquartered at the RJR Plaza Building. Founded by R. J. Reynolds in 1875, it is the second-largest tobacco comp ...
(RJR).
Like Dean Witter, the company survived the Depression, generating a profit each year. In 1934, Reynolds acquired F.A. Willard & Co. With the acquisition, Reynolds tripled its sales and shifted its emphasis toward underwritings.
[Dean Witter History]
(Archived). Retrieved, June 9, 2010
In 1958, Reynolds passed its leadership to the next generation with Thomas F. Staley departing and naming Robert M. Gardiner to head the firm. Under Gardiner, Reynolds embarks on a major expansion, acquiring 26 offices from A.M. Kidder & Co. Reynolds acquired another three offices and opened nine firms in new regions in the U.S. in the early 1960s.
Reynolds was incorporated in 1971 as Reynolds Securities in advance of an initial public offering. By early 1971, there was speculation that Merrill Lynch would sell shares to the public. Reynolds initial public offering (and shortly thereafter Dean Witter's IPO) was part of a rush of Wall Street firms to sell an interest in their privately held businesses to public investors, following Merrill Lynch's initial public offering.
''Time
Time is the continued sequence of existence and events that occurs in an apparently irreversible succession from the past, through the present, into the future. It is a component quantity of various measurements used to sequence events, to ...
'', April 26, 1971. In 1976, Reynolds implements REYCOM, the most sophisticated high-speed wire system in the industry. Meanwhile, the firm was continuing its expansion, acquiring its first international offices in
Lugano
Lugano (, , ; lmo, label=Ticinese dialect, Ticinese, Lugan ) is a city and municipality in Switzerland, part of the Lugano District in the canton of Ticino. It is the largest city of both Ticino and the Italian-speaking southern Switzerland. Luga ...
and
Lausanne, Switzerland
, neighboring_municipalities= Bottens, Bretigny-sur-Morrens, Chavannes-près-Renens, Cheseaux-sur-Lausanne, Crissier, Cugy, Écublens, Épalinges, Évian-les-Bains (FR-74), Froideville, Jouxtens-Mézery, Le Mont-sur-Lausanne, Lugrin (FR ...
.
A year later, Reynolds acquired Baker Weeks & Co. whose strength was securities research.
At the time of its merger with Dean Witter in 1978, Reynolds Securities had over 3,100 employees in 72 offices producing gross revenues of nearly $120 million.
The Dean Witter Reynolds merger and the Sears acquisition (1978–1993)
In 1978 Dean Witter and Reynolds merged to form Dean Witter Reynolds Organization Inc. (DWRO) in what was then the largest securities-industry merger in U.S. history. The resultant company, Dean Witter Reynolds, was the fifth-largest broker in the U.S. One year later Dean Witter Reynolds became the first securities firm to have offices in all 50
U.S. state
In the United States, a state is a constituent political entity, of which there are 50. Bound together in a political union, each state holds governmental jurisdiction over a separate and defined geographic territory where it shares its sover ...
s and
Washington, D.C.
)
, image_skyline =
, image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
After completion of the merger, Dean Witter Reynolds generated revenue of more than $520 million.
In 1981, Dean Witter Reynolds was acquired by
Sears, Roebuck and Company
Sears, Roebuck and Co. ( ), commonly known as Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald, with what began a ...
in a $600 million transaction. Sears' core retail business was facing several challenges, and the company decided to diversify into new businesses, including financial services. Sears, which was already in the financial services business through its ownership of the
Allstate Insurance Company announced a major acquisition initiative in financial services. In addition to the acquisition of Dean Witter, Sears also acquired Coldwell Banker, the real estate brokerage company in 1981. Sears intended for Dean Witter to form the foundation for a larger Sears Financial Services Network that would be available to customers through the company's retail stores.
Sears named
Philip J. Purcell
Philip J. Purcell (born 1943) is an American businessman. Purcell is a former chairman and CEO of Morgan Stanley, where he worked in the late 1990s and 2000s. He was previously chairman and CEO of Dean Witter, Discover and managed the firm unde ...
, a strategic planner at the Sears Chicago headquarters and former
McKinsey & Co. consultant, to head Dean Witter. Purcell moved to New York to run the operation from Dean Witter's office. At the time of the Sears acquisition, Dean Witter Reynolds had a retail
broker
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
force of over 4,500 account executives in over 300 locations with over 11,500 employees in total. For the year ended 1980, Dean Witter Reynolds generated over $700 million of revenue.
Under Sears ownership, in 1986, the firm launched the
Discover Card
Discover is a credit card brand issued primarily in the United States. It was introduced by Sears in 1985. When launched, Discover did not charge an annual fee and offered a higher-than-normal credit limit, features that were disruptive to the e ...
, a new
brand
A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create an ...
of
credit card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
outside the well established
Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
,
MasterCard and
American Express
American Express Company (Amex) is an American multinational corporation specialized in payment card services headquartered at 200 Vesey Street in the Battery Park City neighborhood of Lower Manhattan in New York City. The company was found ...
networks. Unlike other attempts at creating a credit card to rival
MasterCard and
VISA
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
, such as
Citibank
Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...
's
Choice card, the Discover Card quickly gained a large national consumer base. It carried no annual fee, which was uncommon at the time, and offered a typically higher credit limit than similar cards. Cardholders could earn a "cashback bonus", in which a percentage of the amount spent would be refunded to the account (originally 2%, now as high as 5%), depending on how much the card was used. Discover offered merchant fees significantly lower than those of other widely accepted credit cards. Eventually, Discover grew to become one of the largest credit card issuers in the U.S.
Dean Witter Discover (1993–1997)
![World Trade Center, New York City - aerial view (March 2001)](https://upload.wikimedia.org/wikipedia/commons/c/c5/World_Trade_Center%2C_New_York_City_-_aerial_view_%28March_2001%29.jpg)
Sears' financial services initiative proved highly successful as Discover grew through the late 1980s and early 1990s. Furthermore, the substantial investment in the Discover business also began to pay off, with the business becoming highly profitable. The early 1990s were also a period of rapid growth for Dean Witter Reynolds as its strategy of focusing on the distribution of proprietary
mutual funds
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...
through its extensive retail brokerage network began to bear fruit.
Dean Witter's core securities business and its Discover business generated combined revenue of $59 billion in 1992 and Sears announced that it would seek to monetize its investment. In February and March 1993, Sears sold 20% of the company in an
initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
, and the company was subsequently renamed Dean Witter, Discover & Co., with two primary operating subsidiaries: Dean Witter Reynolds and Discover Card. Later that year, the remaining 80% of shares were distributed to Sears' shareholders, giving Dean Witter complete independence from Sears.
Dean Witter's corporate headquarters were located in New York City's
2 World Trade Center
2 World Trade Center (2 WTC; also known as 200 Greenwich Street) is a planned skyscraper as part of the World Trade Center complex in Manhattan, New York City. It will replace the original 2 World Trade Center, which was completed in 1972 and ...
(i.e. South Tower), where the firm had occupied over since 1985. Dean Witter was one of many tenants whose offices were evacuated as a result of the
1993 World Trade Center bombing
The 1993 World Trade Center bombing was a terrorist attack on the World Trade Center in New York City, U.S., carried out on February 26, 1993, when a van bomb detonated below the North Tower of the complex. The urea nitrate–hydrogen gas en ...
, which took place during the firm's spinoff from Sears. Following, the firm's merger with Morgan Stanley, the firm's headquarters would be moved to
1585 Broadway
1585 Broadway, also the Morgan Stanley Building, is a 42-story office building on Times Square in the Theater District neighborhood of Manhattan in New York City. The building was designed by Gwathmey Siegel & Associates Architects and Emery R ...
on the edge of New York's
Time Square
Times Square is a major commercial intersection, tourist destination, entertainment hub, and neighborhood in Midtown Manhattan, New York City. It is formed by the junction of Broadway, Seventh Avenue, and 42nd Street. Together with adjacent D ...
. Morgan Stanley Dean Witter would still have a large presence at the World Trade Center on
September 11, 2001
The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commerc ...
.
Dean Witter was the first big brokerage company to get into the online trading business when it bought a small San Francisco-based outfit called Lombard Brokerage in 1996.
Merger with Morgan Stanley (1997–2009)
![Morgan Stanley Dean Witter](https://upload.wikimedia.org/wikipedia/commons/e/ec/Morgan_Stanley_Dean_Witter.png)
In 1997, Morgan Stanley Group, Inc. and Dean Witter Discover merged to form one of the largest global financial services firms: Morgan Stanley Dean Witter & Discover Co..
The combined firm later dropped the "Discover Co." name in 1998 and further the "Dean Witter" name in 2001.
Although Morgan Stanley was the more prominent partner, Dean Witter's focus on retail investors, mutual funds and credit cards which were seen by the stock market as generating more stable cash flows than Morgan Stanley's investment banking business had by the time of the merger made it the more valuable partner in terms of market capitalization. Dean Witter's CEO,
Philip Purcell, the main architect of the merger, became chairman and chief executive officer of the merged group. The merger marked the pairing of a storied investment banking firm with a retail brokerage (that had been owned by a retailer) that was often termed "white shoes and white socks".
"Will the Blue Bloods at Morgan Stanley Mix With the Just Plain Folks at Witter?"
''The New York Times'', February 8, 1997. In order to avoid tension during the integration of the two firms, Purcell and Morgan Stanley's CEO John Mack decided not to choose between the two brand names. Instead, they combined the names of the two firms and put the Morgan Stanley Dean Witter brand on almost all of its operations.
Eventually, to foster brand recognition and marketing, the Dean Witter name was dropped from the retail services division in 2001, leaving the current name Morgan Stanley.
''The New York Times'', January 30, 2001. In 2009, the Dean Witter retail operations were transferred to Morgan Stanley Smith Barney
Morgan Stanley Wealth Management is an American multinational financial services corporation specializing in retail brokerage. It is the wealth & asset management division of Morgan Stanley.
On January 13, 2009, Morgan Stanley and Citigroup an ...
, a joint venture with Citigroup.
Acquisition history
The following is an illustration of the company's major mergers and acquisitions and historical predecessors:
Notable alumni
* Garo H. Armen
*Lauren Bessette
Lauren may be a given name or surname.The name's meaning may be "laurel tree", "sweet of honor", or "wisdom". It is derived from the French name Laurence, a feminine version of Laurent, which is in turn derived from the Roman surname Laurentius.
...
, sister-in-law of John F. Kennedy Jr.
John Fitzgerald Kennedy Jr. (November 25, 1960 – July 16, 1999), often referred to as John-John or JFK Jr., was an American lawyer, journalist, and magazine publisher. He was a son of the 35th president of the United States, John F. Kenn ...
*Jean Chatzky
Jean Sherman Chatzky (born September 7, 1964) is an American journalist, a personal finance columnist, financial editor of NBC’s ''TODAY'' show, AARP’s personal finance ambassador, and the founder and CEO of the multimedia company HerMoney.
E ...
, research analyst
* George Davidsohn
*Chris Gardner
Christopher Paul Gardner (born February 9, 1954) is an American businessman and motivational speaker. During the early 1980s, Gardner struggled with homelessness while raising a toddler son. He became a stockbroker and eventually founded his ow ...
, whose autobiography was turned into the 2006 feature film ''The Pursuit of Happyness
''The Pursuit of Happyness'' is a 2006 American biographical drama film directed by Gabriele Muccino and starring Will Smith as Chris Gardner, a homeless salesman. Smith's son Jaden Smith co-stars, making his film debut as Gardner's son, Christo ...
'', interned at Dean Witter Reynolds
* Thomas J. Healey
*Catherine Meyer
Catherine Irene Jacqueline Meyer, Baroness Meyer, (née Laylle; born 26 January 1953) is a British Life Peer and a former business woman. She is the widow of Sir Christopher Meyer, the former British Ambassador to the United States. In 1999, s ...
*John Moore, Baron Moore of Lower Marsh
John Edward Michael Moore, Baron Moore of Lower Marsh, (26 November 1937 – 20 May 2019) was a British Conservative Party politician who was Member of Parliament for Croydon Central from February 1974 until 1992. During the Premiership of Mar ...
, stockbroker
A stockbroker is a regulated broker, broker-dealer, or registered investment adviser (in the United States) who may provide financial advisory and investment management services and execute transactions such as the purchase or sale of stocks an ...
*Gretchen Morgenson
Gretchen C. Morgenson (born January 2, 1956) is an American, Pulitzer Prize-winning journalist notable as longtime writer of the ''Market Watch'' column for the Sunday "Money & Business" section of ''The New York Times''. In November, 2017, sh ...
*Rick Rescorla
Cyril Richard Rescorla (May 27, 1939 – September 11, 2001) was a British-American soldier, police officer, educator and private security specialist. He served as a British Army paratrooper during the Cyprus Emergency and a commissioned officer ...
*Ronald P. Spogli
Ronald P. Spogli (born 1948) is an American venture capitalist and politician. He is the former United States Ambassador to Italy and to San Marino. He was confirmed by the U.S. Senate on June 30, 2005, after being nominated by President George W ...
, investment banker
*Thomas J. Wilson
Thomas J. Wilson (born 1958) is chairman, chief executive officer, and president of The Allstate Corporation. Wilson is also a member of the corporation's board of directors.
Early life
Wilson was born in St. Clair Shores, Michigan. He graduated ...
See also
*Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
*Morgan Stanley Smith Barney
Morgan Stanley Wealth Management is an American multinational financial services corporation specializing in retail brokerage. It is the wealth & asset management division of Morgan Stanley.
On January 13, 2009, Morgan Stanley and Citigroup an ...
* Discover Card
Discover is a credit card brand issued primarily in the United States. It was introduced by Sears in 1985. When launched, Discover did not charge an annual fee and offered a higher-than-normal credit limit, features that were disruptive to the e ...
References
A Brief Chronology of Sears
*Kador, John (2005). ''Charles Schwab: How One Company Beat Wall Street and Reinvented the Brokerage Industry''.
* Stone, Amey and Mike Brewster (2002). ''The King of Capital: Sandy Weill
Sandy may refer to:
People and fictional characters
*Sandy (given name), including a list of people and fictional characters
* Sandy (surname), a list of people
*Sandy (singer), Brazilian singer and actress Sandy Leah Lima (born 1983)
*(Sandy) A ...
and the Making of Citigroup''.
"Dean Witter Restructures"
''The New York Times'', January 30, 1989.
{{Authority control
Sears Holdings
Defunct financial services companies of the United States
Brokerage firms
Defunct companies based in New York City
Banks based in New York City
Companies based in Manhattan
Financial services companies established in 1924
Financial services companies disestablished in 1997
1997 mergers and acquisitions
Former investment banks of the United States
1924 establishments in New York (state)
1997 disestablishments in New York (state)
House of Morgan
Reynolds family