Wall St. Firm Fires B-School Graduate

A 1987 Harvard Business School graduate was fired by the Wall street investment firm Kidder Peabody & Co. for allegedly participating in fradulent trading designed to inflate the company's profits and his bonus.

Joseph Jett, 36, was fired Sunday. The company said Jett was among its highest paid employees last year with $9 million in compensation based on his performance.

"$350 million in "phantom profits" were tallied in the last year as a result of the scam, the firm said.

The scam occurred in the trading of so-called stripped government bonds, a type of security.

Kidder said the scam involved "a large number of phantom trades" entered over more than a year.

The scam involved "forward contracts" that called for the exchange at a later of interest strips for bonds.

When the contracts came due, they were rolled over, generating fictitious profits.

Kidder officials emphasized that no customers lost money in the trades, and Kidder Chair and Chief Executive Michael Carpenter told a press conference called the case an isolated incident.

But the chair of Kidder's parent company, General Electric, acknowledged the episode as an embarrassment.

G.E. Chair Jack Welch called it a "reprehensible scheme which violates everything we believe in and stand for."

Kidder is continuing to investigate the matter and has notified the Securities and Exchange Commission as well as the New York Stock Exchange.

Jett, who had worked for Kidder for less than three years, has an unpublished phone number. He could not be reaches for comment.

To make up for the fraud caused by Jett, Kidder and G.E. will reduce its first-quarter earnings projections by $210 million.

This story was written with wire dispatches.