Oppenheimer 60th Anniversary - 31

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did visit one of OSS' six data-processing facilities.
He watched, aghast, as a computer took seven
minutes to process one simple checkbook request.
Upon returning home, he told his wife, "I'm not
sure I can fix what they've broken." Still, Freedman
took the job the next day - perhaps because his
wife told him it was the first time she had heard
him say he couldn't accomplish something.
Freedman revamped OSS' data systems as well
as its human systems. He hired a team of managers and programmers, instituted concrete service
goals for managers, insisted that all staffers meet
daily to plan ways to improve the systems, and
required supervisors to submit detailed daily
reports. Freedman took a meticulous approach,
planning all projects thoroughly, complete with
timetables and budgets. "The major challenge was
making sure the administrative systems improved
on the service we gave the individual investor -
making that investor comfortable that his investment was being cared for," said Freedman.
By 1985 Freedman realized that in order to
offer high-quality service to advisors and shareholders, there was a need to upgrade the Company's entire data-processing infrastructure. This
step put into place the final piece of the foundation for what would become one of the industry's
leading service organizations. Indeed, in 1993
Dalbar recognized OSS as the industry's best
service provider.
Until the mid-1990s, Oppenheimer Management Corp.'s Denver operations were scattered
throughout the city. In 1996 the Company moved
its Denver offices to an expansive two-building
corporate campus in suburban Centennial, Colorado, improving not only the group's efficiency,
but also its camaraderie (see page 48).
Since that time the Denver complex has
continued to thrive, even as it has retained its
distinctly Western culture. Indeed, this odd couple
- the fast-paced Manhattan and the low-key
Colorado - have complemented each other in
ways that neither partner could have foreseen in
1975, and the combination has shaped the
OppenheimerFunds of today. n

"With this new corporate structure, we could more
easily bring in limited partners and look for deals.
It was a well-timed move, because the market was
changing rapidly." LEON LEVY
private-equity deals. And there were other problems
with the existing corporate structure as well. "There
was always the risk that the deal side of the business
might make enemies who would take out their anger
on Oppenheimer's brokerage business," wrote Leon
Levy in his memoir, The Mind of Wall Street. "To
pursue LBOs, we needed permanent capital. Finally,
the larger we grew, the more we became aware that
the partnership structure of Oppenheimer exposed
our general partners to unlimited liability."
The group decided that they should restructure
the Firm by creating a holding partnership, which
would hold stock in Oppenheimer Management
Corp. as well as Oppenheimer & Co.'s other operations. This arrangement would insulate each line
of business from the others, while protecting
partners and providing a source of investment
capital. The partner in this enterprise would have
to be willing to provide a loan in exchange for a piece
of Oppenheimer & Co.'s private-equity division.
Levy took the proposal to several European
investment houses that were looking to increase their
operations in the United States. Eventually the partners
were able to come to an agreement with British firm
Elektra Trust, and reconfigured the business into a
holding partnership.
This structure laid the groundwork for a new stage
of growth for Oppenheimer Management Corp.
"With this new corporate structure, we could more
easily bring in limited partners and look for deals,"
wrote Levy. "It was a well-timed move, because the
market was changing rapidly."

income-producing investments that could protect the
purchasing power of their cash. Assets in taxable
money market funds almost tripled in 1978, according to the Investment Company Institute, and
Oppenheimer Management Corp.'s money and
income funds received enormous inflows. In 1978,
just 19 years after Oppenheimer & Co. unveiled the
Oppenheimer Fund, OMC seized upon investors'
growing appetite for yield by introducing its first
high-yield bond fund.
Meanwhile, Don Spiro, Jim Swain, and Bob Galli
identified an opportunity to provide money market
funds for broker-dealers who did not have access to
in-house money funds. Their idea was to partner
with brokerage firms that wanted to establish "sweep"
accounts, where customers could hold cash generated
by sales of stocks or other investments. Trouble was,
these brokerage firms were direct competitors of
Oppenheimer Management Corp.'s sister brokerage
company, Oppenheimer & Co.

THE MODERN FUND
INDUSTRY TAKES SHAPE
By 1978, inflation was running at 7.62% - and it
continued to rise, reaching 13.58% in 1980. Consumers, once content to keep savings in deposit accounts,
increasingly turned to money market funds and other
The Oppenheimer Tax-Free
Bond Fund is launched.

The Centennial Daily Cash
Accumulation Fund is launched.

1976

1978

1979
Motorists form long lines at service stations during the gas crisis.

1975-1986

Restructure and Recession * 31

Oppenheimer 60th Anniversary

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