Brion Randall Story

DALLAS -- When her husband died of a brain tumor in May 1999, Maria Walker, then 33 years old, was left with a two-year-old daughter, no job and few marketable skills.

[Maria Walker]

But there was hope. The bull market of the 1990s was in full stampede. And Ms. Walker's money was in the hands of her late husband's friend, a Merrill Lynch & Co. broker named Brion Randall. Mr. Randall had promised his pal that he would take care of the widow.

The broker invited her to his office on the top floor of a glass tower in Dallas. He told her that the stock market would take care of her, just as it was taking care of his other clients. Through the magic of high-tech stocks Ms. Walker had never heard of -- Ciena Corp., Xilinx Inc. and ADC Telecommunications Inc. -- her inheritance soared by 50% in less than a year, exceeding half a million dollars. While the market roared, she racked up monthly Visa bills that averaged more than $4,000. "You rock!" she told Mr. Randall again and again.

Then stock prices imploded and so did their friendship.  In the search for what went wrong in the stock boom-gone-bust, debates have focused on greedy executives, corrupt accountants and lax regulators. But the bubble never would have inflated without ordinary Americans -- like Mr. Randall and some of his clients: Ms. Walker, divorce lawyer Robert E. Holmes Jr., and contractor James Lundy Jr. and his son, J.R.

In the 1990s, the number of Americans owning stock swelled by 30 million to more than 80 million, a mania unseen since the 1920s. The new national passion suffused the circle of investors who revolved around Mr. Randall, 40. The native Texan was a bored banker who joined Merrill Lynch in 1995, just as the boom in tech and telecom stocks was gathering force. He persuaded friends and family to join him on the ride to riches.

His clients cheered as their accounts ballooned. They went on shopping sprees and planned for early retirements. But the bull market's end brought recriminations. Many investors aren't much worse off today than before the bubble. Yet everything has changed. They're bitter and vindictive about losing the future they thought was in their grasp. And they're grappling with where to lay the blame.

"He kept selling us more. And the more he gave us, the more we wanted. Then boom, crash," says Mr. Holmes of his former broker.

At least 10 former clients -- including Mr. Holmes and Ms. Walker -- have filed formal complaints against Merrill, alleging that Mr. Randall broke various rules in handling their accounts. He denies these charges. Merrill has so far settled four of the cases, paying about $1.5 million to the investors.

The firm fired Mr. Randall earlier this year, and Mr. Randall plans to file an against Merrill. A Merrill spokesman declines to comment on Mr. Randall's case, except to say, "We take all very seriously and, consistent with our policy, review each complaint thoroughly and take what we believe to be the appropriate action."

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THE STORY begins in 1995. The Dow Jones Industrial Average was surging past 5000 and the Nasdaq was breaking 1000. The initial public offering of Netscape Communications Corp. shot from $28 to a close of $58.25 on its first day. Americans who had considered Wall Street a spectator sport decided to join the action.

Rob Holmes wasn't one of them, at first. Eight years earlier, he'd given a few thousand dollars to a who insisted that the lawyer couldn't lose. Then came the Crash of '87.

[Robert E. Holmes Jr.]Mr. Holmes, 50, cashed out his shrunken account and spent it. At the time he was a bachelor with a taste for "nice cars and a nice time," and few worries about the future. But by 1995, he was starting his own law firm in Dallas and shopping for a retirement plan when Mr. Randall called. [Brion Randall]"He was pushy in his way, really aggressive, saying, 'I can do this, I can do that,' " Mr. Holmes recalls. Mr. Randall got the law firm's business, including Mr. Holmes's own $70,000 retirement account.

The Merrill broker was new to the stock market himself. He had grown up in Richardson, a thriving Dallas suburb where his father, an executive at a real-estate development company, had helped build Telecom Corridor, a stretch of office buildings occupied by Cisco, MCI, Nortel and other tech giants.

Mr. Randall had been a bank vice president when he decided he wanted bigger challenges and a chance to make a better life for his wife, Amy, and their young son. He joined Merrill in April 1995, completed a two-year training program in 13 months, and established himself as a whiz at assembling comprehensive financial plans. The selection of individual stocks played only a small part in these plans, he says.

Mr. Randall worked in a tidy cubicle surrounded by other Merrill brokers. Customers met an athletic man, unfailingly upbeat, who compared his philosophy of diversified investing to a highway. "I'm going to put you in five lanes," he would say. "If one lane is stopped, the others are moving."

A few of Mr. Randall's investors had Alcoholics Anonymous in common. He had been a recovering alcoholic since 1989. His wife, Ms. Walker and her husband were all recovering alcoholics. After AA meetings, Mr. Randall would occasionally pick up the tab for dinner. "Everybody would be howling" at his stories and jokes, Ms. Walker says.

* * *

ONE DAY IN 1996, Mr. Randall parked his black Nissan Maxima at an office building on Black Gold Drive in Dallas.

J.R. Lundy

He'd come to pick up a $1,000 check from his friend and newest client, 25-year-old construction-company employee J.R. Lundy. "I told him, 'Dude, I'm not worth your time,' " Mr. Lundy recalls. Mr. Randall not only took the check and the account, he took Mr. Lundy to lunch.

Mr. Randall wanted help landing a more promising client -- Mr. Lundy's father, James Lundy Jr. The elder Mr. Lundy owned a drywall and millwork firm that was flourishing thanks to a tech-driven construction surge.

James Lundy wasn't an easy sell, though. He had left high school after 11th grade and followed his father and grandfather into construction work. To the extent he discussed investing with his family, it was about how Wall Street was rigged against the little guy. The elder Mr. Lundy declined to be interviewed for this story.

His son had no such fear of the market. He was comfortable with the Internet and had come to see it as an equalizer, a powerful tool to put detailed financial information in the hands of regular people. When he received a bonus at work, he called Mr. Randall and said he was ready to start investing. Soon after that, he introduced the broker to his father. At 45, the elder Mr. Lundy opened his first brokerage account.

Some experts, meanwhile, were growing uneasy. At the end of 1996, Federal Reserve Chairman Alan Greenspan famously questioned whether "irrational exuberance" was Stocks briefly swooned, but rebounded almost immediately. In 1997 and in 1998, the bull market stumbled under pressure from the Asia crisis, the Russian debt default, and the collapse of a big hedge fund. Each time, the bull roared back. At the end of 1998, the Dow Jones Industrial Average was near 9200 and the Nasdaq was near 2200.

MR. RANDALL HAD BEEN with Merrill three years when he took a call from an assistant to Dwight Emanuelson Jr., a senior Merrill broker in Dallas.

Mr. Randall knew of him from the daily "goalpost" listings on his office bulletin board. They listed individual brokers' "production," or how much they generated in commissions and fees. Mr. Emanuelson always seemed to be at the top of the list.

Mr. Emanuelson had noticed Mr. Randall, too. The younger broker was winning new clients and awards, including a statue of a cowboy riding a bull; it had been given him by then-Merrill.

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