From our esteemed leader, Ace Iceberg, another corporate epistle arrives, this time on my computer screen:
“To: All general partners and cleaning staff
Subject: New Year’s resolution No. 566
“This is the first of many memos I intend to distribute over the firm’s internal e-mail. I have been persuaded it will be a huge cost-saver. Halmchinkel Maldroit Analretentive, the little genius that lives in my head, approached me in the rest room this morning and reported that our bottom line continues to sing like a skylark, and could improve only if we abandon the use of paper altogether. So here we are with me firmly in the 1990s, using a computer instead of a pad and pen, even though I was born in 1937.
“Why is this? I am of the opinion that dogs of all shapes and sizes can be taught new tricks. I am currently trying to teach our family cocker spaniel to answer the telephone when we are out after two rings. So far my success has been limited and the police have called me a couple of times to ask if I have breathing problems. However, I feel confident I will succeed in the end. It’s just a question of putting enough doggy biscuits in the bonus pool.
“On the subject of learning, I feel you should all be trained to understand the deeper consequences of what you are doing. I sat next to a lady at a New Year’s Eve party who kept prefixing the word bankers with “godamn ’em” and accused me of knowing squat-jack about kids with no socks in Tennessee. I have therefore decided to send all the best revenue generators on a course in ethics to make myself look good for several profiles being done of me in the Sunday newspapers.”
JJ Ingersoll, our head of global focus, enters. “Did you see it?” I nod and point to my screen. We have both been put on the eight-person course, which I find rather flattering. No-one else seems to.
When Rutger “Grizzly” Pauer-Bower was told, he said: “Essex? Isn’t that a county near Liverpool Street?” But when he found out what it really was, the smile faded, and he started shorting everything in sight, in an act of overwhelming Zeitgeist.
So here we all are in a five-star Siberian palace built by Stalinist purge victims and now owned by Russian gangsters. The Gorky Ritz Hilton is where the World Ethics and Tantric Society holds its annual seminar. I have a comfortable suite with a large balcony, innocuous enough except for a shakily scrawled message that the renovators seem to have missed: “Sergei Zhinovievsky, 1897-1930. Died a destitute hero of the revolution after an unfortunate affair with a show trial.”
Downstairs the caviar and champagne are being served, signalling that the ethical challenges are about to begin. Our host is called Johann the Good and claims to descend from Peeter the Good. He starts by asking us to take each other’s hands and confess openly what our bonuses were this year and if we felt good about them.
Two confessions down the line a fist-fight has already erupted, with stools flying hither and thither and JJ’s belly taking a rib-cracking blow from a filing cabinet. Johann raises his hands: “Brethren of the markets! I can see there is much work to do in these 48 hours. Please stop punching each other, breathe deeply and say: ‘My bonus is not a reflection of my inner worth. It is the client I love and work for’.”
We all slip into this non-offensive lie with ease. Johann then starts posing ethical questions which we are expected to answer. The first is a teaser involving arbitrage in the art world:
“A subordinate is browsing inside a large gallery when he sees a small Dutch landscape priced at $100,000. He immediately recognizes it as a slightly damaged work by Henk von Post, a 17th-century artist, and takes it to the studio, touches it up and sells it to a collector in Japan for half a million dollars.
“He is delighted and expects you to be too. But the gallery in question is also one of your picture-framing division’s best customers. It also emerges that the picture was accidentally priced by a work-experience schoolboy. Do you:
1 Order the painting sold back at the original price.
2 Book that gain and say well done for doing your job so effectively?”
Not a lot of debate on this one. But Johann shows no sign of disappointment as he continues with a second question much more familiar to the humdrum of investment banking:
“You are confronted with the question, Who comes first: the client or the firm? What is your reply?
1 It depends who is asking.
2 I believe the interests of the client and the firm are mutual.”
Again we answer in unison. Question three introduces the ethics of FX:
“You walk past a ringing phone and the voice on the other end asks you to make a two-way price on dollar-yen. In the background there is a hush as news emerges that eight mof officials were seriously injured by a bank that collapsed on them in Kobe. The client wants to go long yen. And the firm’s book is uncomfortably long yen. Do you:
1 Recognize your mother’s voice and warn her against financial speculation.
2 Chew on some onion rings and fill her order?”
Rutger asks how big a position his mother wants to take, and says he can’t answer the question unless he knows. Johann tries to explain that this is irrelevant, but Rutger says, of course it’s not, otherwise how can he put his hedge in place? Question four gets back to basics and is rather bleak:
“There is a client dying on the sidewalk. Do you:
1 Say: ‘Sorry, there’s a figure due at 4pm, hope you feel better soon’.
2 Recognize the client’s long-term value to the firm and take him to Le Gavroche for his final meal?” This one splits us down the middle. Some of us are particularly fond of Le Gavroche, while others suggest it’s not as good as The Waterside Inn, if you take atmosphere into account. But someone says it’s such a pain to go so far out of London, unless you’ve hired a helicopter.
Johann asks us to try to pretend we live by a normal moral code for the final question, one which has confronted humankind since its inception:
“A childhood friend has murdered one of your clients. You are the first to know. The client is the brains behind a huge business empire. Do you:
1 Start a blood feud.
2 Short the client’s stock, thus benefiting from your inside information?”
Before you can say “S-E-C” we’ve put together an immaculate short list of 10 companies that might fit the profile, worked out their volatility vis-à-vis chief executive life/death situation, and decided which market-makers to call first.
I notice Johann has left the room by the time we get to thinking out our options strategy. I, on the other hand, just hope we can persuade our stockholders that the $50,000 we have so far consumed on booze, loose Russian ladies and gekkos (for own account) is in the interests of long-term shareholder value.
