Kidder also agreed to disband its arbitrage department.

He added that the arbitrage department, among the oldest on Wall Street, had been profitable for 17 years.

The result: heavy trading losses for arbitrage departments at big brokerage firms and for smaller, so-called boutique operations.

The plans come about a year after Smith Barney abandoned its arbitrage department, which lost $43 million in the 1987 stock market crash.

Smith Barney disbanded its arbitrage department after losing $43 million in the market crash last year.

Then came the stock market plunge on Oct. 13, which resulted in an estimated $30 million loss for the firm's arbitrage department.

At that time, Kidder decided not to create a formal arbitrage department, the spokesman said.

Rather, the charges involved trades conducted by its arbitrage department.

He added that First Boston's arbitrage department bought Beatrice stock heavily.

However, he also was involved in advising Kidder's arbitrage department, which tries to profit from investing in takeover stocks.