A Saudi Financier's Squeeze Play

For Eldon C. Miller, Sept. 24, 2001, should have been a banner day. Although the rest of the financial world was still in shock over September 11 and the resulting market turmoil, things had rarely looked better for MJK Clearing Corp Inc., a major unit of his Minneapolis securities firm, Stockwalk Group Inc. MJK, which is engaged in the humdrum but vital task of handling trades for other brokerage firms, had just enjoyed its best week ever, buoyed by a surge in trading that followed the terrorist attacks. But Miller's rejoicing was short-lived.

When the amiable Minnesotan, now 62, returned to his office after a celebratory lunch with friends, he was faced with staggering news: The firm he had spent 20 years building into a regional powerhouse -- which handled $12 billion in assets for its 175,000 customers -- was flat broke. He felt helpless, out of control. It was all over. Within a day, the NASD prodded him to shut MJK's doors. And two days later, MJK and its affiliates were in bankruptcy court, being liquidated by the Securities Investor Protection Corp. (SIPC), which shields investor money when brokerage houses go bust.