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Rays buyer: financial whiz who loves baseball

By LOUIS HAU, SCOTT BARANCIK and MARC TOPKIN
Published January 30, 2004

[Times photo, 2001: Michael Rondou]
Regardless of how much of the team Stuart Sternberg buys, Vince Naimoli, right, will remain the managing partner.
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Buyer: financial whiz who loves baseball

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Much about deal, and what it means, is a mystery

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New investor? Great, as long as he won't move the team

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Gary Shelton: New blood could be boon for Rays
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As a kid, Stuart Sternberg traded baseball cards. Later in life, he made a fortune in the more arcane arena of options trading.

Now this experienced Wall Street hand is combining his financial savvy with his boyhood love of baseball by heading a group of investors poised to buy a big stake in the Tampa Bay Devil Rays.

The 44-year-old Sternberg grew up in Brooklyn, N.Y., as a New York Mets fan. He attended Brooklyn's Canarsie High School and St. John's University in Queens and eventually landed at the New York securities trading firm Spear, Leeds & Kellogg.

There he made his mark trading options, complex investments based on the value of another underlying security, such as stocks, bonds or foreign currencies. Options are popular among many investors because they can be used to bet on the direction of a security with relatively little money up front.

Sternberg ultimately rose through the ranks to become head of equity option trading operations. Paul Stevens, president of the Options Industry Council in Chicago, dealt regularly with Sternberg about 15 years ago when Stevens was an executive vice president at the American Stock Exchange and Sternberg ran Spear Leeds' Amex trading floor operations.

"He was a well-regarded partner at SLK," Stevens said. "He enjoyed a reputation for having a lot of integrity."

But Spear Leeds' integrity has been periodically called into question by market regulators. In November 2001, the Amex fined the now-73-year-old firm $1-million, the exchange's largest disciplinary fine, for failing to adequately supervise a former managing director who was found to have made illegal stock and option trades in the mid 1990s.

In July, the New York Stock Exchange and the Securities and Exchange Commission fined the firm $450,000 for inadequate supervision of two trading floor clerks who allegedly executed improper stock purchases. And in November, the National Association of Securities Dealers charged a senior partner at the firm with making fraudulent trades.

Still, Spear Leeds remains one of the largest operators of trading posts on the floors of the Amex and the New York Stock Exchange. That status made it an attractive takeover target for Wall Street powerhouse Goldman Sachs, which acquired Spear Leeds in October 2000 for about $5.6-billion in cash and stock.

For Sternberg, a senior executive and a major shareholder, it marked a huge payday, although specific details about his windfall weren't available Thursday. As a Goldman subsidiary, Spear Leeds continues to do business under its own name. Sternberg took an early retirement from the firm in 2002, when public records show he sold 320,320 shares of Goldman stock for $24.5-million.

Goldman has long had a reputation on Wall Street as a Democratic Party stronghold, counting among its former top executives Robert Rubin, treasury secretary under President Bill Clinton, and Jon Corzine, a U.S. senator from New Jersey. A registered Democrat, Sternberg shared the same political sympathies, with campaign records showing he has been a regular contributor to Sen. Charles Schumer, D-N.Y., and, more recently, the presidential campaigns of Sens. John Kerry, D-Mass., and John Edwards, D-N.C. Records also show Sternberg donated money in 1996 and 1998 to the unsuccessful re-election campaign of Schumer rival and then-Sen. Alfonse D'Amato, R-N.Y.

Sternberg's agreement to buy a 48 percent stake in the Devil Rays appears to be his first major foray into sports investing. But it wouldn't be the first unusual place he's decided to park his money. Last year, he bought 680,000 shares, or a 5.4 percent stake, in Ballantyne of Omaha Inc., a Nebraska maker of movie projectors, chicken fryers and lighting equipment.

Ballantyne chief financial officer Brad French said Sternberg has made it clear his interest in the company is as a passive investor and he is not interested in having a say in how Ballantyne is run.

"He's a gentleman who sees value in Ballantyne and that's what he must see in the Devil Rays," French said. "He's a smart guy and he's been around for a while."

Sternberg's other investments include 929,000 shares, or a 10.6 percent stake, in Mitcham Industries Inc., a Huntsville, Texas, company that sells and leases seismic equipment to identify oil and gas deposits.

John C. Hiatt Sr., chief administrative officer for the Chicago securities trading company Ronin Capital, co-chaired with Sternberg an options-market committee that was part of a SEC summit in 1999 on after-hours trading. Hiatt described Sternberg as "very easy to work with" and "a straightup guy."

To his mother, Beverly, Sternberg is a devoted father of four who calls her every day. Beverly and Sam Sternberg, Stuart's father, own a decorative pillow shop in Brooklyn.

What's her son's main hobby?

"He loves sports," she said.

- Times researcher Kitty Bennett contributed to this report. Louis Hau can be reached at hau@sptimes.com or 813 226-3404.

[Last modified January 30, 2004, 01:32:11]

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