Flaherty & Crumrine Incorporated

About Flaherty & Crumrine

Flaherty & Crumrine Incorporated specializes in the management of preferred and related securities.  It has focused on preferred and income securities portfolios for institutional clients and investment funds since its inception in 1983.

Flaherty & Crumrine is an independent investment adviser with a dedicated credit research team that performs comprehensive analysis of the risks faced by preferred and subordinated securities holders. Specializing helps in capitalizing on the relative inefficiencies in this market. With only a relatively small number of institutional portfolios and 8 public funds (the five Flaherty & Crumrine closed-end funds, a sub-advised mutual fund, a Canadian closed-end investment trust and a Canadian ETF), Flaherty & Crumrine is able to offer customized portfolio strategies to best meet that client’s particular investment objectives, risk tolerances, tax position and time horizon.

Investment Philosophy

Flaherty & Crumrine believes the best way to achieve consistently superior investment results is to manage credit risk and reinvestment risk, the two main pitfalls that come with focusing solely on high current income. In each case, potential problems can be averted at relatively little cost when they are recognized early. Its philosophy is simply that it is cheaper to “maintain” a portfolio on an ongoing basis than to “fix” it when it “breaks” due to a serious credit problem or an unfavorable redemption. However, proper maintenance requires serious analytical efforts. To do this, Flahety & Crumrine utilizes a combination of intensive credit research and quantitative analysis, along with some very pragmatic trading strategies. However, it does not believe in strategies which require heroic bets on individual credits or on the direction of interest rates.

Our People

R. Eric Chadwick, CFA

Portfolio Manager, President

Mr. Chadwick has managed preferred securities at Flaherty & Crumrine since 1999 and is a member of the firm’s portfolio management team. As one of the firm’s traders, he shares responsibility for implementing investment strategies. Mr. Chadwick is also involved in the development of tools for managing the portfolios and developing firm-wide systems. Together with Mr. Conwell and Mr. Stone, he serves on the firm’s board of directors and is a member of the executive management committee. He also serves as Chairman of the Board, Chief Executive Officer, and a Director of the Flaherty & Crumrine closed-end funds.

Prior to joining Flaherty & Crumrine in 1999, he worked at Koch Industries Inc. where he was responsible for managing sizable portfolios of both preferred securities and corporate bonds. He was also responsible for developing analytical tools used in the management of the portfolios, and providing fundamental research on a broad range of credits.

1/99 – Present

Flaherty & Crumrine Incorporated

1/97 – 12/98

Koch Industries, Inc.

Portfolio Manager/Financial Associate

Mr. Chadwick earned his M.B.A. from the UCLA Anderson School of Management and his B.S. in Economics from the University of Kansas.

Bradford S. Stone

Portfolio Manager, Executive Vice President,
Chief Financial Officer

Mr. Stone joined Flaherty & Crumrine in 2003 after a 20-year career on Wall Street. Based in Summit, New Jersey, he is a member of the firm’s portfolio management team. He is responsible for macroeconomic and quantitative research and analysis and directs our credit research group. Together with Mr. Chadwick and Mr. Conwell, he serves on the firm’s board of directors and is a member of the executive management committee. He also serves as Chief Financial Officer, Vice President and Treasurer of the U.S. Flaherty & Crumrine closed-end funds and oversees the financial reporting and tax operations for the Flaherty & Crumrine closed-end funds.

From 2001 until joining Flaherty & Crumrine, he was Director of U.S. Market Strategy at Barclays Capital in New York, where he advised clients on market strategies across U.S. treasuries, agencies, and interest rate derivative products. Prior to Barclays, he spent 14 years at Goldman Sachs, where he most recently held the position of Director — Interest Rate Product Strategy, Americas. He was a regular member of Institutional Investor’s All-America Fixed Income Research Team, earning the top ranking in Derivatives Strategy in 2001. He began his career at Salomon Brothers as an options trader and derivative salesperson.

5/03 – Present

Flaherty & Crumrine Incorporated

6/01 – 5/03

Barclays Capital
Director, U.S. Market Strategy

2/87 – 6/01

Goldman, Sachs & Company
Vice President, Interest Rate Strategy
Executive Director, Global Hedge Fund Sales

8/83 – 2/87

Salomon Brothers Inc.
Vice President, Government & Derivatives Sales
Associate, Options Trading Hedge Fund Sales

Mr. Stone earned his M.B.A. from Wharton Graduate School of Business and his A.B. in Economics from Dartmouth College.

Chad Conwell

Executive Vice President, Chief Legal Officer,
Chief Compliance Officer

Mr. Conwell joined Flaherty & Crumrine in 2005. Together with Mr. Chadwick and Mr. Stone, he serves on the firm’s board of directors and is a member of the executive management committee. He has responsibility in fund management, client servicing and marketing efforts. In addition, he is responsible for compliance and legal matters. Mr. Conwell also serves as Vice President, Secretary and Chief Compliance Officer of the Flaherty & Crumrine closed-end funds.

Previously, Mr. Conwell practiced at Paul, Hastings, Janofsky & Walker LLP, a global law firm, for more than six years in the areas of corporate finance and investment management regulation.

7/05 – Present

Flaherty & Crumrine Incorporated

9/98 – 6/05

Paul, Hastings, Janofsky & Walker, LLP

Attorney

Mr. Conwell earned his B.A. from the University of California at Berkeley and his J.D. from the Georgetown University Law Center.

Rick J. Seto, CFA

Managing Director, Vice President

Mr. Seto joined Flaherty & Crumrine in 2003 after spending eight years as an equity and fixed income analyst and eight years as a commercial bank lending officer. Mr. Seto is a member of the firm’s credit committee, where his focus is on global banks, REITs and industrials.

From 1999 until joining Flaherty & Crumrine, Mr. Seto was an Associate Equity Analyst at UBS Investment Bank, where he covered natural gas pipelines, local distribution companies, electric utilities, and master limited partnerships. Prior to UBS, he spent three years at Moody’s Investors Service as an Associate Analyst covering investment-grade Consumer Products and Retail companies. From 1991-1996, he was an AVP and commercial lending officer at NatWest Bank with primary account and cross-sell responsibilities for a portfolio of consumer products, consumer finance and retail companies. He was a member of the top-ranked Institutional Investor’s All-America Natural Gas Equity Research Team at UBS in 2003. He began his career at Heller Financial Inc. as a financial analyst in asset-based lending.

10/03 – Present

Flaherty & Crumrine Incorporated

10/99 – 10/03

UBS Investment Bank
Associate Analyst (Equity Research), Natural Gas & Electric Utilities, MLPs

10/96 – 10/99

Moody’s Investors Service
Associate Analyst, Investment Grade Consumer Products and Retail Companies

12/91 – 10/96

Fleet Bank, N.A. (formerly NatWest Bank, N.A.)
Assistant Vice President, Commercial Lending Officer
Assistant Treasurer, Diversified Industries and Corporate Finance Group
Financial Analyst, Asset-Based Lending

Mr. Seto completed a formal credit-training program at NatWest Bank, and earned his B.S. in Statistics and Econometrics from New York University.

Lisa Tucci, CFA

Managing Director

Ms. Tucci joined Flaherty & Crumrine in 2005. Ms. Tucci is a member of the firm’s credit committee, where her focus is on the utility, energy and banking industries.

Prior to joining Flaherty & Crumrine, she spent five years as an Associate Director of Equity Research at UBS Investment Bank, where she covered natural gas pipelines and natural gas and electric utilities. Ms. Tucci was a member of the top-ranked Institutional Investor’s All-America Natural Gas Equity Research Team at UBS in 2003 and earned an honorable mention herself the same year.

3/05 – Present

Flaherty & Crumrine Incorporated

11/00 – 3/05

UBS Investment Bank
Associate Director (Equity Research)
Natural Gas & Electric Utilities

Ms. Tucci earned a B.S. from State University at Albany, New York.

Gordon Russo

Managing Director

Mr. Russo has worked as a senior analyst covering investment grade and high yield corporate credits since 2000, primarily in the insurance and healthcare sectors. His prior experience includes manager of a team of analysts at an investment bank and as bank examiner for the U.S. Department of the Treasury. Mr. Russo began his career as a corporate accountant for a regional bank holding company.

12/12 – Present

Flaherty & Crumrine Incorporated

12/00 – 5/12

Dwight Asset Management
Senior Vice President
Insurance and healthcare

8/92 – 5/00

Sandler O’Neill and Partners, L.P.
Managing Director

11/89 – 8/92

U.S. Department of the Treasury
Office of Thrift Supervision
Bank Examiner / Supervisory Analyst

2/85 – 5/89

Bank of New England
Corporation Corporate Accountant

Mr. Russo earned his M.S.F. from Bentley College Graduate School and his B.A. from Rutgers College.

Roger W. Ko

Trader

Mr. Ko joined Flaherty & Crumrine in September 2013 to act as one of the firm’s traders. Prior to joining Flaherty and Crumrine, he worked for nine years as a trader at Deutsche Bank. From 2004-2010, he helped manage a proprietary trading portfolio comprised of preferred securities, corporate bonds, term loans, credit default swaps, and structured products. He helped to develop an integrated system to organize, track, and analyze a diverse and complex portfolio of securities. In 2010, he joined the credit correlation desk and most recently, he traded Aircraft ABS as the primary market maker for Deutsche.

9/13 – Present

Flaherty & Crumrine Incorporated

8/04 – 7/13

Deutsche Bank Securities, Inc.
Trader

Mr. Ko earned his J.D. from the University of Michigan Law School and his B.S. in Chemistry from Haverford College. He is a member of the New York State Bar.

James Chen, CFA

Senior Analyst

Mr. Chen joined Flaherty & Crumrine in 2007. He is involved in market research, systems development, and client servicing. 

Previously, he worked at Wedbush Morgan Securities in its equity research department while earning his M.B.A. degree. Prior to that, he spent 5 years in the software industry, first at an internet startup, Plumtree Software (now a part of Oracle Corporation), writing web portal applications and later at SPL Worldgroup (also now a part of Oracle Corporation) managing its web portal deployment.

4/07 – present

Flaherty & Crumrine Inc.

6/03 – 05/05

SPL Worldgroup
Sr. Web Developer

9/00 – 10/02

Plumtree Software
Integration Engineer

Mr. Chen earned his M.B.A. from the UCLA Anderson School of Management and his B.S. from the University of California at Berkeley.

History

Flaherty & Crumrine was founded in 1983, with “roots” in preferred securities going back to 1969. Co-founders Bob Flaherty and Don Crumrine worked for many years together at Scudder, Stevens & Clark where they managed preferred portfolios for corporate investors. They were innovators in the development of strategies for hedging the general interest rate exposure of preferred portfolios. Together Mr. Flaherty and Mr. Crumrine founded the firm to focus exclusively on managing preferred portfolios and associated securities and hedges; Robert Ettinger joined soon thereafter to support that effort. Messrs. Flaherty, Crumrine and Ettinger have retired but remain minority partners of the firm.

  • 1983 Flaherty & Crumrine founded

  • 1991 PFD (NYSE) closed-end fund inception

  • 1992 PFO (NYSE) closed-end fund inception

  • 1999 Eric Chadwick (Portfolio Manager and President) joined Flaherty & Crumrine

  • 2003 Jan: Bob Flaherty retired

  • 2003 Jan: FFC (NYSE) closed-end fund inception

  • 2003 May: Bradford Stone (Portfolio Manager, Executive Vice President and Chief Financial Officer) joined Flaherty & Crumrine

  • 2003 August: FLC (NYSE) closed-end fund inception

  • 2004 FFI-U (TSX) closed-end fund inception

  • 2005 Chad Conwell (Executive Vice President, Chief Legal Officer and Chief Compliance Officer) joined Flaherty & Crumrine

  • 2007 Guggenheim UIT series launched

  • 2011 Destra Flaherty & Crumrine Preferred and Income Fund (NASDAQ: DPIIX) inception

  • 2013 DFP (NYSE) closed-end fund inception

  • 2015 Don Crumrine and Bob Ettinger retired

  • 2018 Brompton Flaherty & Crumrine Investment Grade Preferred ETF (TSX: BPRF) inception