How a Defiant Stockbroker Virtually Single-Handedly Enabled All Members of The New York Stock Exchange to Sell Annuitiesy1
In 1971, Thomas C. Hofstetter, a stockbroker with Walston & Co., then one the country's largest brokerage firms, was vice chairman of The New York Stock Exchange's marketing committee. In thrashing about to find a way to increase the income of stockbrokers and their firms, his committee looked hungrily at the huge commissions that insurance agents got from selling life insurance products.
New York Stock Exchange rules, however, forbade members from engaging in any business not connected to securities.
In assessing what to do, if anything, Tom had the benefit of seeing what had happened to reformers who defied The New York Stock Exchange.
In one instance the reformers had benefited. Dan Lufkin and his partners had dared the members of The New York Stock Exchange to expel Donaldson, Lufkin & Jenrette if the firm sold shares in DLJ to the general public. Tom saw the majority give in. And he saw that Dan Lufkin and his partners had prospered accordingly.
But Tom also saw instances in which defiant reformers suffered even though they succeeded in accomplishing the reforms they proposed. John Cunningham and Lee Arning forced the Central Certificate System on Exchange members, most of whom opposed and feared virtually any automation. John had been asked to resign and Lee had been passed over for the executive vice presidency.
Tom had also seen Bob Haack force reorganization on the members of The New York Stock Exchange, a majority of whom preferred to leave the Exchange as it was. And he had seen that Bob Haack was conse-