Lehman Brothers has placed two of its short-term agency traders, Brian Stocker and Patrick Scheideler, on administrative leave pending the conclusion of an internal investigation involving charges that the two improperly traded bonds with Randy Pitino, an agency broker at Euro Brokers, who was let go. The allegations and investigation were confirmed by several Lehman executives. Central to the allegations is the charge that Stocker and Scheideler improperly gave Pitino trading authority over a large block of notes which they had originally purchased and positioned. Pitino, reached at his home, confirmed that he has been dismissed, but said that the allegations that it was for anything illegal are "totally inaccurate." He says he has never heard of the two Lehman traders. He declined to name his supervisor at Euro Brokers, saying, "I don't think he's there any longer." A Lehman employee said the two traders were not reporting to their desks for the duration of the investigation. Stocker did not respond to a message left at his home; Scheideler was not able to be located for comment. Woody Jay, the head of government and agency bond trading at Lehman, said "I can't comment on this matter right now, on or off the record. It is a highly sensitive issue, being handled internally by compliance." The leaves at Lehman are said to have been enacted in the last week of September, although it could not be learned when the trading activity in question is alleged to have occurred.
The reasoning behind this highly unusual move was purportedly the desire to help Pitino--the nephew of current University of Louisville basketball coach Rick Pitino--who is said to have been coming off an internal suspension. An individual close to the situation says that Stocker and Scheideler were to have split any profits resulting from Pitino's trading. This soon became a moot point, however, as one individual who knows the three, says Pitino's trades were unprofitable. This person says that despite Stocker's and Scheideler's best efforts to "repair the situation" with a flurry of trades, the damage was too large to be able to conceal from Lehman's desk auditors.