Chapter 3

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Going to Work for PGR


June 2006
Mountain View, California

In 2000, I completed my teaching credential but decided not to teach. In the middle school classroom where I did my student teaching, I felt more like a cop than an educator. I went to work for a friend’s company as the office manager where I helped find an office space for this tech start-up and made sure there was food in the fridge and comfy chairs for the software developers. When this company went out of business, I landed an entry-level sales job for a software company, selling a spam-blocker. I really enjoyed sales and had a good run there for a few years before the company was bought out in 2006. I posted my resume on a couple job boards and PGR found me. I really didn’t understand the business entirely, but the three founders seemed like smart, driven guys who believed in what they were doing. And I knew if I was successful I could make a lot of money. Most clients were paying over $100,000 a year for PGR’s service and my commission was 10%.

“Here,” my boss said on my first day, just after 6am, handing me the Wall Street Journal. “Read this and we’ll synch up a bit later and go over a few things.” I’d never read the Journal. I’d never been at work at that hour.

My boss had spent about fifteen years on Wall Street and he was going to help me get into some accounts. Additionally we had a partner we were working with in New York who would be setting up meetings for us there.

“We’ll need you to go to New York every couple months or so,” I was told. “Will that be OK?”

“Sure.” I’d spent exactly a day of my life in New York.

“Great. We’ll bring you along on a few meetings to get your feet wet.”

“What about the Series Seven?” I asked.

“That’s not a problem. You don’t have to be registered to meet clients. Just take your time. I know it must be intimidating. Don’t worry about it. You’re a smart guy. You just need to spend a little time every day going over it.  I recommend 6am-7am. That’s when the guys in New York are just getting in and pouring over the news from Europe and wading through the pre-market crap. You don’t want to be calling on them then anyway. Make it your study time.”

Passing the Series Seven means getting your stockbroker’s license. The Series Seven is a couple college courses of finance material packed into a fat binder.  It covers many topics including the history of the US Stock Market, how to calculate the yield on a bond, options trading, securities regulations, taxes and lots of other things I had no experience with or interest in. Generally the folks who had to pass this test were brokers making stock recommendations or executing trades for clients. I would be doing neither, but PGR decided it best to err on the safe side and have all salespeople registered as a measure of caution and a compliance sales point to clients.

“Make some goals,” my boss coached me. “Maybe a chapter a week or so. We’ll talk again in about a month or so and see where you’re at.” I felt relieved and was happy to be able to focus on generating new business and not memorizing finance formulas.

I mined an online database PGR had paid for and identified all the big hedge funds in New York and elsewhere that had significant holdings in technology companies that PGR covered well. I assembled an Excel spreadsheet listing these funds and the technology analysts who worked for them. I met with my boss. He scanned through the list quickly, highlighting the targets and scratching off the duds.

“These guys are assholes,” he said, “and they don’t pay the Street anything. Bad combo. Don’t waste your time.”

“I know the Director of Research here. I will ping him.”

“My buddy knows the head trader here. I will give him a call and see if he can hook us up with any of the tech analysts.”

“We had a meeting with these guys about a year ago in Midtown. Beautiful fucking office overlooking the Park. They have a ton of mid-cap tech holdings that we cover well. Not sure what happened. I’ll go through my email.”

“I used to run into this guy all the time wind-surfing at Crissy Field. Get me his number. We’ll call him together.”

As connected as my boss was, there were still about a hundred or so funds on my list he was not able to help with. I asked him how we were going to split the list with the other salesperson.

“That won’t be a problem,” he said. “Layard does not cold call.”

After observing my stunned look, he added, “He sorta uses the buddy system to network into accounts. He just signed up a new fund run by a guy who was his summer camp counselor in middle school.”

Layard had worked in the industry for about eight years. His dad was some big wig at Goldman Sachs, or was it Morgan Stanley? Upon further reflection, his method did not seem so outrageous. I was calling on Wall Street analysts after all, not IT managers. Maybe cold calling on guys managing billions of dollars would not work? And I never went to camp.

A few months before joining PGR, I was making nearly twice as much money selling a spam-blocker to small and and mid-sized businesses. This was easy money for an aggressive salesperson who knew how to work smart. The customers had a real problem. I had a great solution. What was PGR’s solution?

“This is the work these guys should be doing but few are,” my boss preached, standing up from behind his elevated desk. He actually did not have a chair, but spent his workday on his feet.

“A lot of these funds are in your grandfather’s pension or your retirement account.”

Both my grandfathers were dead and neither had had pensions. I did, however, have a four-figure retirement account.

“These guys need to be doing this work! This is the fundamental research they should be doing to really know what the hell is going on with these stocks. Talking to management is bullshit. You gotta do the channel checks. You have to talk to all the different folks in the supply chain to make a play on the PC component makers and the chip guys. You need to know what’s going on with DRAM pricing in Taiwan. You gotta be ahead of the curve to know where these companies are heading…to generate Alpha!”

I nodded in agreement, smiling slightly, afraid he’d detect I was a little lost. By leveraging context clues, I figured “Alpha” must be the pixie dust of Wall Street. I Googled it later and found it meant to outperform your peers—to get better returns. Pixie dust indeed.

A couple months later, the partner we were working with had generated exactly zero leads. My boss had gotten me into a couple of accounts but they had stalled after initial conversations. However, my cold calling had gotten me in touch with a prospective client in Kentucky, of all places. They were evaluating our service and things seemed to be going well. They had a big stake in a chip company that supplied TVs. The stock had been battered over the last few weeks and they were trying to figure out if it was a dog or perhaps the market was overreacting and they should be buying up more shares.

For the evaluation, they did about four calls with contacts in our network. I don’t know what they concluded, but after the trial they started trading though our desk. This meant they were paying PGR. I had landed my first client.

The desk was just a cash register. Instead of paying us a quarterly fee directly, some of my clients chose to do stock trades with PGR’s desk and pay a commission on the trades which hopefully added up to our negotiated fee of five to ten thousand dollars a month.

Our clients had multi-million and even billion-dollar holdings. They also had large research budgets. The money they paid for our service was a relatively small investment. Some of our competitors had million-dollar annual subscriptions with the larger funds they served.

Our trader sat next to me. We had tables, not cubes, so we were literally elbow-to-elbow. I had a laptop and the Series Seven binder in front of me. He had four large LCD screens tracking movements in the market.

The trades drove me a bit crazy because I had no idea when they were coming in or in what amount.  At the same time, it was kind of exciting. Kentucky trading might be heavy for a few days and then disappear for a few months.  This was how I got paid and I found the unpredictability unnerving. In my previous job, my customers would fax or email me a purchase order. In seconds, I could tell how much I would see in my next paycheck. This Wall Street system was so random.  I could make as little as $50 on a customer trade and as much as $10,000. I had to talk to the trader to find out what was going on. Soon after Kentucky started trading,

The new trading business that I brought in fattened Trader’s paycheck since he got a percentage of all the company’s trading activity. However, he never showed any appreciation for this. What he did do was take the time to explain to me what a complex set of hurdles he had to leap in order to execute his multiple trades each day and how pleased clients were with his great work. He helped make their trades more profitable with the art of playing the intraday fluctuations in the market. He loved to talk about his art, but had little patience for questions concerning my clients’ trades. He found this irritating, because it hinted at the idea of him working for me, which was intolerable. He was the seasoned Wall Street veteran and I was the anxious sales idiot asking him yet again if my client had traded.

Trader seemed to get along a bit better with the other sales guy, though I watched him chase Layard across the office one day and heard later that they exchanged blows outside. Not long after I started at PGR, we opened a San Francisco office which they both worked out of while I remained in Mountain View. In my four and half years at PGR, I would have very little interaction with either of them.

Five years later, both of them would be approached by the FBI just a couple weeks before my trial. Under immunity from prosecution, they did their best to try and fuck me in any way they could. On a company-wide conference call in 2009 I mentioned talking to one of our consultants the previous week who said that business was strong. I was letting other salespeople know, so they could point their clients to him if they were interested. Layard embellished the story, claiming that I disclosed revenue numbers relating to the consultant’s company. This lie and the fact that he was given immunity and approached just before my trial, suggested the Feds were leaning on him hard, scrambling to dig up anything they could on me. Trader said he believed I was a detriment to the company, but could not offer up any specifics. To his credit, Trader did not corroborate Layard’s bullshit story. However, Trader kept offering to check his “business records” to help find something the Feds could use against me at trial.

A few days after Kentucky started trading, I came in to the office and found my desk had been cleared. All my stuff had been moved to an office down the hall. Our Chief Compliance Officer was concerned that I was talking to Trader about my client’s trades and thought it inappropriate for me to be sitting beside him. No one had expected me to have a trading account so quickly. I suppose my reward for the quick start was the new office, however I had no idea what punishment I had in store for my work at PGR.


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