Drexel's `defrauded' clients keep coming back. Drexel Burnham Lambert has been charged by the SEC with defrauding its customers. But many of the broker's clients remain loyal.

Maybe they are gluttons for punishment. Maybe they are just plain loyal. Or maybe they think no one else on Wall Street can get the job done. Whatever the case, almost all the companies that the Securities and Exchange Commission alleged last month were defrauded by Drexel Burnham Lambert Inc. are still doing business with Drexel.

In fact, nine of those 11 firms are either in the process of doing deals with Drexel or have completed them recently. In addition, according to a senior Drexel official, many of the companies named in the SEC's charges of insider trading and fraud against Drexel are giving depositions supporting the brokerage house.

``Drexel can deliver the money at the best price,'' explains Michael Lipper, head of Lipper Analytical Securities Corporation, a Wall Street analytical firm. Adds William Dunk, who heads his own management consulting firm in New York, ``These are businessmen who have needs and I suspect the only place to get them satisfied is at Drexel.''

Among Drexel's loyal clients is Chicago-based Stone Container Corporation. The SEC has charged Drexel and its junk bond chief, Michael Milken, with unfairly manipulating the price of Stone Container stock.

But these charges haven't stopped the paper container manufacturer. Last year, Stone spun off its forest products division, which is currently refinancing $125 million in debt through Drexel and is also doing a $140 million joint venture with the company. ``They [Drexel] are innocent until proven guilty,'' says Roger Brookstone, senior vice-president and chief financial officer for Stone. Mr. Brookstone says Drexel is ``as good if not better than others we use for those services.''

Another client, Wickes Companies, based in Los Angeles, is in the process of a management buy-out, using Drexel as dealer-manager. According to the SEC, Drexel bought shares in National Gypsum after finding out that Wickes was to buy the company.

``These are allegations at this point,'' says Michael Sitrick, senior vice-president of communications. He points out that Drexel was successful at raising all the funds Wickes needed after the retailer emerged from bankruptcy in January 1985. What if the SEC proves its case? ``That would be distressing to us,'' Mr. Sitrick replies.

Still other current Drexel deals involving companies named in the SEC charges include:

Raising $925 million for Maxxam Group's acquisition of Kaisertech.

Involvement in a new venture with Merv Adelson, chairman of the board of Lorimar Telepictures.

Advising Lorimar on Warner Communication's tender offer for the telepictures company.

Recently completed deals include providing investment banker services to Kohlberg Kravis Roberts' $750 million acquisition of Duracell and to Ted Turner to help raise $153 million for his Cable News Network.

In addition, in September, Drexel raised $75 million in mortgage financing for Golden Nugget; in June, it raised $1.4 billion for Occidental Petroleum - one of the largest equity offerings of the year; and, in July the company raised $500 million for Viacom to retire bank debt.

The only former Drexel client not doing business with the broker anymore is Harris Graphics. This, however, is because Harris was purchased by AM International, a graphic information systems manufacturer, which is an inactive Drexel client.

Many of these companies will not comment on their relationship with Drexel, or the broker's difficulties with the SEC. The SEC declined comment as well.

Drexel officials question whether clients would continue doing business with them if they thought the company was defrauding them. Brookstone of Stone Container says he does not feel defrauded. ``We were unaware of anything that happened and not convinced that something did happen,'' he says.

Mr. Dunk credits Drexel's extensive advertising campaign with helping to keep clients in the corral. Drexel television ads feature short vignettes of companies that it has aided by helping sell high-yield ``junk'' bonds.

Dunk says Drexel has done a better job of selling itself to the public than Kidder, Peabody & Co., which had several executives convicted of insider trading. Instead of fighting the charges as Drexel has done, General Electric, Kidder's parent company, removed the brokerage company's top management and settled with the government.

Since the SEC brought the charges, Drexel has placed about $2.5 billion in new securities. Says one Drexel employee, ``A lot of firms would like the business we're turning away.''

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