“Yeah,” he shot back, “a eureka moment. As in, Eureka!I just figured out a way to steal a quarter billion dollars and fuck over the SEC in the process!”
Hmmm,I thought, very clever and cynical this OCD was. Alas, he also happened to be right, although I would dispute the amount of money I stole. I mean, it couldn't have possibly been a quarter billion dollars! Or could it? With a sinking heart, I said, “Yeah, well, whatever the amount was, I tell you the God's honest truth that I didn't startStratton with bad intentions. But, like they say, the road to hell is paved with good intentions.”
“Fair enough,” snapped the Bastard. “You can tell that to the judge at the appropriate time.” He flashed me his warden's smile. “But for now let's just stick to the facts.”
I nodded in resignation. “Well, it started with George Grunfeld and what he'd said to me my first day at the Investors’ Center. This whole notion about rich people not buying penny stocks had never made sense to me, so I had Danny do a little experiment for me—trying to sell penny stocks to rich people. But rich people weren't interested. So I figured maybe they were turned off because the stock was less than a dollar, so I found a six-dollar stock and had him try that. But that didn't work either, and I have to say it surprised me.
“I mean, I reallythought rich people would go for that, but when I called Danny into my office, he completely disagreed. ‘Maybe if I were calling from Merrill Lynch,’ he said. ‘But not when I'm calling from Stratton Securities; there are just too many things working against me. They haven't heard of me, they haven't heard of the firm, and they haven't heard of the stock.You see what I'm saying?’
“ ‘Yeah,’ I said, ‘I see exactly what you're saying,’ and— boom!— just like that it hit me. I had my eureka moment. ‘Come back in here in fifteen minutes,’ I said to him, and before he was even out the door I had already picked up my pen and started writing a new cold-calling script. Fifteen minutes later, he was back in my office and I was explaining my new system. ‘Okay,’ I said, ‘when we call someone for the first time, we're not gonna try to sell them anything; we're just going to introduce the firm and ask them if they'd be interested in hearing from us down the road.’ I handed him my new script. ‘Read this to me and tell me what you think.’
“He looked at the script for a second, and then started reading: ‘Hi, this is Danny Porush, calling from Stratton Securities. I know you're busy, so I'll get right to the point. You probably haven't heard of us before, because for the last ten years we've been strictly an institutional block-trading firm, dealing with banks, insurance companies, pension funds.’ Danny started laughing. ‘This is classic…’
“ ‘Just shut up and keep reading,’ I said.
“He nodded and continued on: ‘However, we've recently opened up our doors to the more substantial private investor, and what I'd like to do, sir, with your permission, is send you out some information on our firm, Stratton Securities, and then get back to you down the road, next time we're making a recommendation to one of our institutional clients. Sound fair enough?’ Danny stopped and flashed me one of his famous smiles.
“Ironically, Stratton really hadbeen in business for ten years, and the only business they haddone was trading with other brokerage firms, and since brokerage firms are considered institutions, I wasn't really lying about Stratton's business being strictly institutional.” I smiled at my own twisted logic. Then I gave up my smile and said, “I won't deny that the script was a bit misleading, but that's besides the point.
“Anyway, Danny was getting about ten leads a day, and after a week it was time to execute step two of my plan, which was to start off by selling a big stock, meaning a New York Stock Exchange stock they were familiar with. That's why I chose Eastman Kodak: because of the name recognition and also because it was a very sexy story. They were in litigation with Polaroid at the time over patent infringement, and my script focused on how Kodak was sure to trade higher once the litigation settled.
“Yet, as good as my script was, Danny wasn't all that impressed. He said, ‘Even if someone buys ten thousand dollars of Kodak, my commission is only a hundred bucks. So what's the fucking point?’
“ ‘Think of it as a means to an end,’ I replied. ‘Next week, after they've paid for their trade, we'll call them back for step two.’ And, with that, Danny shrugged and walked off, spending the next ten days opening accounts on Kodak, twelve of them in all, and each for around five thousand dollars, which was a hundred shares.
“Then I called him back into my office and explained step two, which wasn't quite what he thought it'd be. ‘You mean you don't want me to get them to dump their Kodak and buy a house stock?’ he asked.
“ ‘No,’ I said. ‘I want you to tell them that everything looks great with Kodak and that they should hold it for the long term.’ I handed him a script I'd written for a company called Ventura Entertainment.” I paused, offering my captors a wry smile. “I'm sure you're all familiar with Ventura; it was the first stock we ever recommended.”
“Yeah,” said a cynical OCD. “And it was also the most overvalued entertainment stock in the history of entertainment stocks.”
I nodded sheepishly. “Yeah, but it wasn't intentional. I just couldn't keep up with the demand.” I shrugged. “But, that aside, Ventura was only a six-dollar stock back then, a tiny start-up not even listed on NASDAQ yet. It was still trading on the Pink Sheets. In truth, it could have just as easily been a penny stock, but by sheer coincidence the company's president, a man by the name of Harvey Bibicoff, had been thinking the same thing as me— namely, that a six-dollar stock sounded more valuable than a twenty-cent stock. So when he took Ventura public, he structured it with only a million shares outstanding, as opposed to the twenty million shares a typical penny stock would have.” I looked at OCD. “You follow me, I assume.”
He nodded. “Yeah; a million shares at six dollars is the same as twenty million shares at thirty cents.”
“Exactly,” I said. “On a mathematical level they're one and the same; however, on an emotionallevel they're entirely different. And as Danny stood in my office, studying the script, I knew it was perfect, especially the opening, where I transitioned from big stocks to small stocks.
“ ‘Read it to me,’ I said to him. And he nodded and started reading: ‘Mr. Jones, two reasons for the call today. First, I wanted to give you a quick update on Kodak. Everything looks great there; the stock is right where we bought it, and it looks to trade higher over the short term. There's been heavy institutional interest over the last few days, so for right now we'll just sit tight.
“ ‘And the second reason for the call is that something just came across my desk this morning, and it's perhaps the best thing I've seen in the last six months. It's one of our own investment-bank deals—a company we're intimatelyfamiliar with—and the upside is much greater than Kodak. If you have sixty seconds, I'd like to share the idea with you.’ Danny looked up and said. ‘This is fucking great! Let me give it a whirl!’
“I nodded in agreement. ‘Okay, but remember: These people are rich and sophisticated, so they're not going to fall for hype and bullshit. You use logic and reason, and massive pressure. Never forget, Danny: We—do—not—work—on—callbacks! You have only one shot with these people. So stick to the script like glue.’ With that, Danny reminded me once more that he was Danny-fucking-Porush and that he could sell oil to an Arab and ice to an Eskimo! Then he nodded and walked off.”
I shrugged. “In retrospect, it's rather ironic that I was only hoping to get a slightly bigger trade from my new system—maybe a thousand shares of Ventura, versus two hundred shares—but that was what I had in mind at the time.