ST. LOUIS -- PaineWebber Group Inc. and its subsidiaries have paid more than $2.4 million to settle complaints against a former employee named in a lawsuit by Sen. Christopher S. Bond, securities industry records show.
Mr. Bond, a Republican from Missouri, accused broker William J. Reik Jr. of mishandling and losing $1.3 million in a blind trust that Mr. Reik managed from 1985 through early 1991.
The suit, filed Thursday in U.S. District Court in St. Louis, names PaineWebber Group, its PaineWebber Inc. brokerage unit, its Mitchell Hutchins Asset Management unit and Mr. Reik as defendants.
"During 1990, because of the wrongful actions set forth in the complaint, my investments were totally wiped out," Senator Bond said in a statement. "I have filed suit to recover what I have lost."
At least eight previous cases involving Mr. Reik were settled, according to filings with the National Association of Securities Dealers and the National Association of Securities Administrators.
In response to Mr. Bond's suit, PaineWebber said in a statement that it is "aware of the claim for the lawsuit and we intend to defend it vigorously." The company declined any further
Mr. Reik's West Palm Beach, Fla.-based attorney, Richard Martens, wasn't available for comment.
Mr. Reik was licensed to sell securities in May 1973 and worked for Lehman Brothers Inc. until June 1974, records show. He joined PaineWebber in July 1974 and left in March 1991. He was a managing director at Mitchell Hutchins, and managed Mr. Bond's blind trust during his last six years at the firm.
Mitchell Hutchins paid $1.5 million, the largest settlement, in 1991 to a customer who alleged that the broker had carried out "unsuitable trading."
PaineWebber and Mitchell Hutchins reached smaller settlements in the other seven cases. They include a $486,000 settlement that the asset-management firm reached in June 1991 in an arbitration case alleging misrepresentation and unsuitable and unauthorized trading.
In August 1990, PaineWebber paid $415,000 to settle a suit that charged Mr. Reik with breach of contract and negligence. It was settled before retrial after the first hearing in California ended in a hung jury.
Mr. Bond is an heir of the family that founded A.P. Green Industries Inc., a Mexico, Mo.-based company that currently manufactures industrial products and refractories.
He set up the blind trust in 1973, after being elected Missouri governor, to manage his inheritance and other assets to avoid potential conflicts of interest. He was elected to the Senate in 1986. Under the terms of the trust, Mr. Bond wasn't supposed to know which assets it held.
Among other things, Mr. Bond's suit alleges that the trust's portfolio was "overly concentrated" in three infrequently traded stocks, Neutrogena Corp., Tejon Ranch Co. and Frisch's Restaurants Inc., and that Mr. Reik manipulated the market in those issues. He also allegedly failed to follow instructions, the suit said.