Since undergoing a procedure in September to relieve a tremor in her left hand that made eating and pouring drinks difficult, she has grown her hair back in a short, platinum-blonde pixie cut.

While the firm’s capital-markets and asset-management units thrived -- assets under management climbed in recent years to surpass $1.4 billion, SEC filings show -- the municipal bond business struggled.

Municipal Woes

Lebenthal hired experienced municipal bond traders and salesmen from UBS Group AG and Citigroup Inc. but didn’t build a banking business. It was lead manager on only two deals, a $26.5 million bond for Prince George’s County, Maryland, in 2009, and a $3.8 million issue for the town of Colonie, New York, in 2010, according to data compiled by Bloomberg.

Lebenthal and her father brought different styles to the business. While the older Lebenthal’s office was with his traders, she preferred to sit separately behind her grandmother’s desk, which she moved into the firm’s Manhattan office. Employees liked her, but she rarely ventured onto the floor, according to two former Lebenthal employees who asked not to be identified.

With underwriting opportunities diminishing and the amount of municipal debt dropping to a multi-year low, the firm fired 15 employees in 2014 and ceased underwriting U.S. municipal-bond offerings and selling to institutions. Instead, the company said at the time, it would focus on wealthy clients.

Wealth Advice

Lebenthal started its wealth-advisory unit in October 2013. It was led by three outsiders: former Neuberger Berman Inc. CEO Jeffrey Lane; Frank Campanale, who ran Smith Barney Consulting Group; and Andrew Grillo, a former Smith Barney regional director.

In interviews at the time, Lebenthal said she hoped the wealth unit would garner at least $25 billion in assets under management within five years. She promised Grillo a budget of $120,000 a month for marketing activities to promote the business and recruit advisers, according to an arbitration suit Grillo filed last year against Lebenthal with the Financial Industry Regulatory Authority.

But the wealth-advisory business began eating into the firm’s resources, with profits from other divisions funding its losses, a person familiar with the unit’s performance said. Lebenthal soon pushed Grillo aside and assumed control, according to the complaint.