Boom in The Bust Market: Taking stock in bankruptcy

Market Taking stock in bankruptcy

Like Jim Lebenthal and Charles Schwab, Randy Smith owns a successful securities firm. But unlike those two familiar financial pitchmen, the head of Manhattan's R.D. Smith & Co. would never think of hawking his services on TV. Reason: R.D. Smith deals in stocks and bonds that would seem far too risky to the typical investor.

The two-year-old company is the undisputed leader in a peculiar new segment of the brokerage business that finds profits in the casualties of the American economy. Known in some corporate boardrooms as "vultures," the traders at R.D. Smith specialize in buying and selling low-priced stocks and...

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