New York Stock Exchange President Jerry Putnam was tossed out of a broker’s job in 1992 for doing a controversial trade with Wolfgang Flottl, a European financier under intense scrutiny in the spectacular collapse of Refco.
Putnam, a Prudential-Bache salesman at the time, executed a $650 million purchase of Japanese stock market futures for Flottl, the dashing, socialite son of Walter Flottl, who was the chief of Bawag – the Austrian bank in the middle of the Refco scandal.
The younger Flottl, who spends considerable time running in Manhattan and Hamptons’ social circles, is married to Anne Eisenhower, the granddaughter of the late U.S. president.
Flottl’s hedge fund trading activities from the 1990s have come under scrutiny given the disclosure last month that Bawag – the bank that loaned him nearly $2 billion – hid more than $1 billion in losses sustained by his fund, Ross Capital.
Some of the losses were stashed in accounts at Refco, according to Bawag, while others were funneled into shell companies in Anguilla.
Once considered one of the premier performers in the then-young hedge fund world, Flottl was derailed by bets on a turnaround in the slumping Japanese stock market and global bonds.
Refco creditors and regulators have been probing the murky corners of the hidden and complex longstanding relationship between the bankrupt trading firm and Bawag.
In addition to the disclosure that Bawag lent Refco CEO Phil Bennett $410 million the night before Refco’s balance sheet chicanery was announced, a lawsuit filed by firm creditors Tuesday charged that Bawag was hiding its ownership stake in the firm.
Late Tuesday, Bawag had its U.S. assets frozen by a bankruptcy court overseeing the Refco case.
In the case of his dealing with Putnam, Prudential’s risk managers did not approve Flottl’s massive trade, which was a bet on the Japanese stock market made overnight in Singapore, sources said.
The next day, Flottl’s fund did not have enough cash to make the almost $150 million margin payment Prudential required, and within the week, according to a deposition read to The Post, Putnam was dismissed and the relationship with Flottl’s fund ended.
Prudential-Bache launched an NASD arbitration against Putnam to recoup his signing bonus.
The firm claimed that Putnam did not have the authority to make a trade of that size; Putnam claimed that he had explicit authority to do so.
The claim was dropped in 1996, according to Securities and Exchange Commission filings.