Former Prudential and E.F. Hutton Exec. Weighing Problems at Current Firm.

Apparently unscathed by scandals at his former firms, 67 year old George Ball serves as Chairman of Sanders Morris Harris Group, Inc., a Houston based investment bank and wealth management firm.

Ball served as the No. 2 executive at E.F. Hutton & Co. Inc. from 1980 to 1982. Three years after he left, the now-defunct New York firm pleaded guilty to 2,000 counts of mail and wire fraud in a check-kiting scheme that occurred during Ball’s tenure.

Ball left Hutton to become chairman of Prudential Bache Securities. That firm thereafter became involved with what some have called “the biggest swindle in Wall Street History.” Regulators charged the company with defrauding hundreds of thousands of customers by misstating risks involved in investment partnerships. Prudential paid restitution and penalties totaling $2 billion – the costliest settlement ever for a brokerage firm – and was forced to resolve thousands of civil claims by investors for its role in these investments.

Nevertheless, Ball soon resurfaced as the chairman of Sanders Morris. Although that firm has struggled and is one of few U.S. brokerage firms where profits and its stock price fell last year, it has grown to more than 500 employees, including advisors and investment bankers.

In an industry where reputation is not necessarily an impediment, Mr. Ball has survived. “Ball was never tagged personally with any of the problems that befell Hutton or Prudential, and he has a lot of friends, so he’s still plenty viable in the business,” said Richard Lipstein, a principal of a New York based executive recruiting firm.

While Ball insists that others are responsible for the events which sunk his former firms, Sanders Morris has also found itself in trouble with regulators. Last year, the NASD warned that it plans to discipline the firm for a variety of violations, including improper commission payments to a hedge fund manager. A spokesman described the regulatory matter as “routine” – which is apparently true.

Sanders Morris also faces exposure to claims by investors unhappy with the performance of a 2005 private placement for a company at which two Sanders Morris managing directors served as directors. Sanders Morris has warned that the costs of defending itself in these regulatory and civil matters could be significant.

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