Investment Banking: BoA's shy east-coast partner
Following the announcement in February of a merger between Morgan Stanley and Dean Witter, investment bankers have been guessing about the shape of other such deals. Few would have predicted the strategic alliance unveiled in March between Bank of America, the US's third-largest commercial bank, and DE Shaw, a publicity-shy New York-based investment bank, run by computer scientists.
David Shaw, the firm's founder, chairman and chief executive, is a former computer science professor of Columbia University where he researched supercomputing in the mid-1980s. He joined Morgan Stanley in 1986 as one of the first generation of Wall Street rocket scientists using cutting-edge computer technology to earn proprietary trading profits. He left to set up his own firm, DE Shaw, in 1988, which he ran as a hedge fund for several years before branching out in late 1992 into customer dealing in equity-linked securities, convertible bonds and warrants. The firm now regularly appears as a co-manager in syndicates for Swiss franc and dollar equity-linked new issues by Japanese borrowers. Its London office is a leading market-maker in these equity derivatives.
DE Shaw has grown from six employees to over 500 bringing it into the top 25 securities firms in the US while managing to maintain a low profile.