Financial Markets

Highly recommended reading for any student of the financial markets. Richard Gasparino writes a riveting story. See Recommended Reading for the Amazon link.

King of the Club: Richard Grasso and the Survival of the New York Stock Exchange by Richard Gasparino.

Some quotes :

John Phelan was an imposing man. He rarely raised his voice but when he did, it was like a volcano . . a former Marine and long-time floor trader who had inherited a specialist firm from his father. Phelan had built a small fortune on his own and now was one of the  most powerful members on the Exchange.  When critics of the NYSE called it a monopoly, he countered it was a public trust that served the needs of all investors regardless of size . . .   Phelan had a dark side. Like most traders, he never showed emotion and rarely gave people any insight into the motives behind his acions. He was also a control freak. He needed to approve just about every major decision, every move . . He could be mean. “He could kill you by looking at you the wrong way”.

When asked to describe his difficult journey to the top of the NYSE, Grasso often characterised it as a horse race – one in which they “made me run around the track twice” before he took over as King of the Club.

Grasso became known for his wild stunts to bring publicity to the NYSE.  Once he was on the podium of the exchange with a mascot for mining company AngloGold, a real African lion.

Referred to by Grasso as the “empty suit”, William Donaldson succeeded John Phelan as NYSE chairman. Grasso bristled under his leadership and succesfully convinced the exchange Board that the job should be his.

New York State Republicans could barely muster an attorney general candidate against Eliot Spitzer in 2002, and when they did, Spitzer won in a landslide. He also won a bigger battle for recognition. Spitzer and his staff had now all but concluded that Citigroup’s former star analyst, Jack Grubman, would be their next opportunity.  . . . . . . .  Grubman mad a perfect villain. He was arrogant. He made a ton of money – as much as $20million a year during the 1990s. He bragged about the conflicted nature of his job; how he snared deals one minute and then posted research the next. But most appealing of all was the evidence of Grubman’s possible fradulent behavior. It was massive – particularly evidence invollving AT&T, one of the few stocks Grubman had hated in the telecom world. But in late 1999, Grubman abruptly changed his tune, upgrading AT&T shares just before the company was to select firms to underwrite a massive stock deal. Citigroup won the banking work. . . . . . Citigroup CO Sanford Weil, one of the most powerful men on Wall Street, who was leading one of the world’s biggest firms, had personally intervened in the ratings decision by giving Grubman a “nudge” to upgrde the shares. It wasn’t just the $45million in underwriting fees Citigroup received . .  AT&T CEO Michael Armstrong was on Citigroup’s board and Weil was on AT&T’s board . . . . Grubman said in an e:mail ” . . Armstrong didn’t know what hit him . . that he later downgraded the stock and that Sandy had “nuked” Reed.” As payback, Grubman said, Weill got Grubman’s twins into an exclusive Manhattan preschool, the 92nd Street Y. . . . Weill had made large donation from Citigroup to the school . . .