New broker swims against tough market

The equities markets, you may recall, resumed their free-fall last summer with news of accounting scandals and jitters about the national economy.

Pounded by losses that seemed never to end, many investors had two words: "Never again." So what were Lou DiMarco and Rick Krauss thinking in November when they opened 1st Wall Street Corp., an equities brokerage house in Reno? DiMarco, the firm's senior vice president, and Krauss acknowledge there are days when they, too, wonder what they were thinking when they struck out on their own in the midst of a grinding downturn.

But five months after 1st Wall Street Corp.

opened its doors, Krauss and DiMarco remain confident that they did the right thing, both for themselves and their customers.

And they're confident enough that they recently added a fourth member Mike Matteoni to their team.

Krauss and DiMarco each brought 18 years of experience, mostly with national brokerage operations, to 1st Wall Street.

From that experience, they learned plenty of things they didn't want to do with their own brokerage.

For one, they knew they didn't want their revenues to be dominated by commissions on the sale of securities.

The company does some work on a commission basis, DiMarco said, but it also works for compensation ranging from hourly rates to fees based on the assets under management.

Then, too, Krauss said he and DiMarco knew they didn't want to be limited to selling the investment products of only one or two big securities firms.

While 1st Wall Street Corp.

works under the umbrella of a securities company based in La Jolla, Calif., and clears its trades through Wedbush Morgan Securities, the Reno office is free to make independent choices.

"It's very liberating," said Krauss, who serves as vice president of the company.

"All we have to sell is our reputation."

No matter how liberating freedom from the strictures of a big company may be, DiMarco, Krauss and Matteoni still face the struggles of getting potential customers to listen to them.

Shell-shocked investors, convinced they made a mistake when they purchased stocks in the late 1990s, now worry that they'll make another mistake if they decide to sell, DiMarco said.

That worry comes on top of investors' ordinary reluctance to sell stocks either because they think the investment still is headed up or because they think there's still a chance to recoup losses.

"It's very easy to buy investments," said Krauss.

"It's very hard to sell them."

Adding to the challenge for a young firm such as 1st Wall Street is the belief among investors that big investment houses are a safe haven.

That belief, DiMarco said, comes despite disclosures that the big houses often put their investment-banking revenues ahead of the needs of individual investors during the 1990s boom.

To overcome that hurdle, 1st Wall Street's advertising encourages investors to use the young firm to get a second opinion on suggested trades.