Friday, December 5, 2008

Chapter 3-Facing Captain Queeg

This Monday was starting off bad enough without also having to suffer the wrath of Bobby Sonnenfeld, the firm’s lunatic senior partner, who takes exception to just about everything, especially anyone that shows up late to the morning conference. Bobby is Wall Street’s version of Captain Queeg; except he looks more like Al Pacino than he does Humphrey Bogart. And he’s always tan, as if he were a Sicilian by birth, instead of coming from Massapequa, Long Island.

When Wall Street went “dress casual”, Bobby shifted his day time wardrobe from Saville Row’s Anderson & Shephard double-breasted silk suits, Turnball & Asser monogrammed shirts, and Hermes ties, to Ralph Lauren blazers, razor sharp khaki slacks, and spit-shined Gucci loafers. He kept the T&A shirts, and wore them open-collared. He keeps his jet black hair slicked back, just like Michael Douglas in the role of Gordon Gekko. Slicked back is good for Bobby, it mitigates the need for him to comb it with his six fingered right hand, a deformity that helps to remind everyone how special he his. Not that anyone needs to be reminded; Bobby is infamous throughout Wall Street for having nine lives, aside from having two thumbs on the same hand.

Bobby had started as a muni bond salesman at Shearson Brothers when he was twenty one years old, and before he was twenty five, he was generating more commission revenue from institutional clients than the entire New York sales desk put together. He was as smooth as glass; he walked the walk and talked the talk. Whether closing on $20 million bond trades with hick portfolio managers running the State of Alabama pension fund, or glad-handling the head of AIG’s fixed income portfolio over lunch at the Four Seasons, Bobby was like a wing commander in a very elite squadron of Top Gun pilots. Before Bobby turned 42, he found himself running the fifth biggest brokerage in the United States. But he didn’t get there by being a cupcake. Only one other top firm on The Street had a salesman sitting in the CEO’s office; the rest were run by calculating investment bankers or ex-trading desk managers. But Bobby was a Master, and had earned a Masters of the Universe Degree in Shrewd and Savvy.

Bobby knows as much about sales, trading, and investment banking as Sandy Weil or Ace Greenberg, Wall Street’s most famous icons. In three years, Bobby had taken a retail brokerage firm with 10,000 high net worth clients and a nice share of the top institutional accounts, and transformed it into a global investment bank that was ranked #3 in the League Tables. But, into the fourth anniversary of steering the helm of one of the biggest ships riding the waves of the early ‘80’s bull market, Bobby had the dubious distinction of being the captain that went down with the ship in a capsizing that Wall Street hadn’t witnessed since the 1930’s.

Loose controls had plagued the rapid growth; his firm had gone from underwriting and brokering plain vanilla stocks and bonds, to having proprietary trading desks accommodating sophisticated hedge fund customers in exotic options, futures, and 26 different fixed income products. And the investment banking division was packaging and selling anything and everything, including stuff that glowed in the dark. In those days, and days to repeat themselves, due diligence meant taste-testing a bottle of vintage Latour while celebrating the day’s wins at Harry’s Restaurant, one of the favorite watering holes and steak joints on Greenwich Street, right next to the American Stock Exchange.

The torpedo that sunk Bobby came from his IB department, and boomeranged with a direct hit into the firm’s prop trading department. Three days after being the sole underwriter for the year’s biggest IPO for a major San Francisco biotech company, an analyst from a competing firm published a negative research report on the company. Amongst other things, the report raised questions about one of the drugs that had just come onto the market, and more important, the analyst highlighted the biotech’s aggressive accounting practice; a one-two punch that had the stock price bouncing off the ropes, in a south bound trajectory. The new issue whores, which are fast money hedge funds looking to flip hot IPO’s for a quick profit, were already bailing out, and like any good underwriter, Bobby’s firm was buying shares on the open market to stem the price decline. Four days into the company’s public debut; the stock was already down 20% from its offering price; that’s when the biotech company’s CFO took a swan dive off of the Golden Gate Bridge. The share price swooned immediately thereafter, and when word spread throughout the Street that Bobby’s prop desk had lost tens of millions buying up shares over the past week to try to keep the stock price stable, investors pulled their money out of Bobby’s firm faster than a falling chain of dominos. By the time the regulators had stepped in, the firm had suffered a classic run on the bank, leaving a skeleton of its former self.

Never one to be caught without a life preserver, Bobby was able to swim to a safe haven with a golden parachute tucked neatly into his jacket, while a court-appointed trustee was put in charge of salvaging the remains. He spent the next few years in relative obscurity, buying and selling commercial real estate from his 10,000 square foot “cottage” in Westhampton Beach, but hungered to return and re-claim his seat at the table, even if it meant starting from scratch.

Less than five years later, just when the junk bond market was beginning to percolate, and on course to become the hottest table in the casino, Bobby slipped quietly back into the game. He set up a small broker dealer with 6 bond salesmen and 2 clerks in a small office on Broad Street in lower Manhattan. Within two dozen months, the “shop” had become an elegant boutique with more than 100 institutional sales execs, traders, and research analysts, all housed within a two floor, 30,000 square foot complex on Madison Avenue and 42nd Street, and with another fifty employees spread out in satellite offices in Dallas, Los Angeles, and London. Last year’s profits from trading junk bonds, “converts”, and emerging market debt put his firm in the same league as the high yield desks at Goldman, Solomon Brothers, and Morgan Stanley. Word on the Street was that RTM was being scouted as a potential take over by at least two of the big banks that his boutique competed against.

But as I said, he didn’t get there by being a cupcake; he was infamous throughout the trading desks of Wall Street for lambasting salesman that didn’t meet their quotas, for smashing phones when a trader made a bad bet, and for putting fast money customers in the penalty box, a practice that typically takes place in the reverse manner; when a customer refuses to take calls from a broker who did something to piss him off. Piss Bobby off enough, even if you’re a customer, smoke won’t come out of his ears, but one of his eyeballs does shift to the bridge of his nose, making him look cross-eyed. It’s not a pretty picture.

On a really bad day, which could be four out of five in a challenging market, he’d interrupt the entire meeting and verbally blast whoever walked in late to the morning meeting. On the off-chance that he remembered to take his meds with his morning Bran Flakes, he’d pierce you with an intense, icy glare from his perch in the middle of the conference table at the front of the room. The frigid stare ricocheted off of everyone else in attendance, and caused the room temperature to drop from it’s already air conditioned 62 degrees, down to the mid 50’s. Even though I was one of five partners in the entire firm, and had quickly become his fair-haired boy, and despite the fact that I had never even been late before, I didn’t expect any leniency.

The way my day had already started, and was appearing to be headed, I was hoping that Bobby would set a real example, and that he’d literally harpoon me with one of the two deep sea fishing spears that was mounted along the conference room wall, right next to the 30 foot shark that Bobby supposedly snared while deep sea fishing off the coast of Ecuador.

I slipped in quietly through the door at the back of the 50 ft conference room, and with everyone’s back to me; I met Bobby’s eyes head on. I didn’t need a scene at the moment, so I immediately put up my two hands, as if to surrender and stop the pending assault, and mouthed “sorry” three times, while my head bowed to him deferentially. I caught a break; he just glanced, than nodded, and allowed the meeting to continue uninterrupted. I slid into the aisle seat in the second to last row, and looked up at the clock. The meeting would go on for another forty five minutes; it would take that long for the various department managers to deliver their morning reports, including market insights from the senior traders on the various desks, and research tidbits provided by our various analysts, which were to be relayed by our sales execs to their accounts; portfolio managers overseeing the management of hundreds of millions of dollars. In total, I’d have two hours to reflect on what had just happened, and what I was going to do before I had to return the Feeb’s call.

Jake Bronstein and Bank stationery. Jesus Fucking Christ.

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