James Tithe is manager of a large branch office of a major Midwestern brokerage firm, Brock
Mason Farre Titmouse. He now manages 40 brokers in his office. Mr. Tithe used to work for
E. F Hutton as a broker and assistant manager, but when that firm merged with Shearson-
Lehman/American Express, he disliked his new manager and left for Brock Mason. He knew the new firm to be aggressive and interested primarily in limited partnerships and fully margined common stock. He liked the new challenge. At Hutton his clients had been predominantly interested in unit investment trusts and municipal bonds, which he found boring and routine forms of investment. He also knew that commissions are higher on the array of products he was hired to sell at Brock Mason.

Although bored at Hutton, James had been comfortable with the complete discretion the firm gave him to recommend a range of investments to his clients. He had been free to consult at length with his clients, and then free to sell what seemed most appropriate in light of their objectives. Hutton of course skillfully taught its brokers to be salespersons, to avoid lengthy phone calls, and to flatter clients who prided themselves on making their own decisions; but the firm also did not discourage the broker from recommending a wide variety of products including U.S. government bills, notes, and bonds, which averaged only a $75 commission on a $10,000 bond. This same array of conventional investment possibilities with small commissions is still available to him and to his brokers at Brock Mason, but the firm has an explicit strategy of trying to sell limited partnerships first and fully margined common stock second. The reason for this strategy at the brokerage house is that commissions on a $10,000 investment in a limited partnership run from $600 to $1,000, and commissions on a