From Bucknell to Boiler Room

“Suddenly, the Fox stopped in his tracks and, turning to the Marionette, said to him:

“Do you want to double your gold pieces?”

“What do you mean?”

“Do you want one hundred, a thousand, two thousand gold pieces for your miserable five?”

“Yes, but how?’”

And thus begins Pinocchio’s downfall.

Anonymous (abetted by Timothy Harper) opens License to Steal with a similar story of duty and vice in the balance. Laszlo, a handsome, dark skinned, and well dressed Hungarian stock broker, takes Anonymous and a co-worker out for an evening of serious material culture in Manhattan. First, a stop at his apartment with its breathtaking views. Then a dinner of calamari and Chilean sea bass, washed down with a bottle of Antinori Chianti, and topped with expensive cigars. Then not one but two stretch limos, one for Laszlo, one to take Anonymous and his buddy to a titty bar.

There our heroes partake of cocaine while the limousines wait in the street. All retire with a “beautiful blond” to a dark and dirty and no doubt illegal casino in the “rough part of Hell’s Kitchen” to lose thousands borrowed from the house. The next morning at work, Laszlo makes up his losses by illegally using his client’s accounts to make stock purchases, churning enough commission to pay back his debt and avoid the indignity (and attendant dry cleaning problems) of having his Armani clad arms broken by an enforcer.

After this heady introduction, our hero, Anonymous (who calls himself “Rob Burtelsohn” in the narrative) flashes back to when his innocence was first shattered. Anon. describes himself as a lithe limbed, intelligent, All American son of a self made man. After graduating from Bucknell, Anon. gets a job selling office lighting and security systems. But the lad is not satisfied with his easy triumphs here. He knows in his heart he is made for the big time.

Falling in with a crowd of Manhattan stockbrokers, he sees what the big time is all about: parties! tailored suits! girls! So Anon. switches to stock brokering, training as a cold caller at Harvard (not its real name), a prestigious boiler room, and moving to Junior College (not its real name, either), a less prestigious boiler room, when he gets his license.

Both places make money by silently and skillfully bilking the client. The game is dicey but legal, and it goes like this: your broker buys a stock for your account. He doesn’t explain that he is acting as the ‘principle” in the stock sale. This way he skims money off the differential between the ask and bid prices of the stock. He does that by buying the stocks from the house at lower prices than he sells them to the client. To make more money, the broker will sometimes let the spread grow bigger in order to make a larger commission. This pushes an iffy trade into practical illegality.

The time frame of the book seems to be the early nineties. Junior League makes most of its money from pumping up dubious IPOs. Daytrading and the Internet boom have evidently not yet arrived. The book does enforce a salutary lesson: never trust your broker.

“Falling in with a crowd of Manhattan stockbrokers, Anon sees what the big time is all about: parties! tailored suits! girls!”

More interesting than the book’s heavy breathing accusations is its dumb and dumber atmosphere. Before Anonymous takes his Series 7 test to become a broker, he has to study for it, about which he has this to say: “The study books were actually looseleaf binders, each several inches thick. I couldn’t remember the last time I’d read a book all the way through to the end. Probably in college, but I couldn’t say for sure.” Anonymous is not alone in his aversion to literacy. Here is his intructions to the Kid, a cold caller with a philosophy degree, on the proper response to a prospect who claims to feel pressured:

“I would say, “please don’t misconstrue my enthusiasm for pressure.”

“What does misconstrue mean?” the Kid asked me.

“It doesn’t matter what it means,” I said.”

Here’s the real, glorious scandal of the book: real investors actually trusted this fool. Even Pinocchio finally learned his lesson, which is how he became a real boy:

In the evening the Marionette studied by lamplight. With some of the money he had earned, he bought himself a secondhand volume that had a few pages missing, and with that he learned to read in a very short time.

Take note, stock brokers of the world!

License to Steal: The Secret World of Wall Street and the Systematic Plundering of the American Investor by Anonymous and Timothy Harper (HarperBusiness)