Canadian Business, December 1995
[I have never worked at a broker-dealer firm. This account is not necessarily indicative of practices at other firms. It was originally published under a pseudonym.]
Did I call you? Chances are good that I did. For two years I was one of 30 “openers” at a Bay Street broker/dealer. I called 300 people a day — 150 when I was taking it easy, or toward the end when I didn’t care anymore. In all, I figure I dialed about 100,000 people over the course of my career in the scummiest sector of the investment industry. If I didn’t have your number, one of my fast-talking colleagues almost certainly did.
I got my job by answering an ad that made it sound as if I would be working for a reputable broker. But I and the four other new hires quickly realized something was fishy. Broker/dealers do not have seats on any stock exchange. They sell high-risk, over-the-counter issues from their own inventory. They’re not agents for investors; they’re peddling paper to random names out of the phone book.
The sales manager told us what to expect. He said 10 percent of the people we called would snarl and hang up. Another 10 percent would be “lay downs” — folks who’d be writing a check while we were just launching our pitch. The remaining 80 percent would need convincing. Our success didn’t require guile, cunning or intelligence. Just volume. “Take your brain out of your head,” said the sales manager. “Drop it on your desk, pick up the phone and start dialing.”
At the start of our hitch we got the best leads, or “cards,” as they’re called. Each of them had been cold-called and offered a market report. It was an efficient way to identify likely suckers. Once they bit on that lure, their names were handed over to us.
We obeyed the law, but that didn’t offer much protection. For instance, I had to make it clear you could lose all your money. But I camouflaged that with a lot of bunkum about how Better Luck Next Time Technologies (or whatever garbage we were pushing) was hotter than a pistol, and how it thrilled us all. The law also said I had to tell you what the firm had paid for the stock. But I could turn that around and make it part of my sales pitch.
“We started buying this at 25 cents a share,” I’d say, “and it’s currently sitting at $1.” (I didn’t have to mention this price was solely because my overlords decided to offer it at $1.) “Hot damn,” you were thinking, “it’s quadrupled already.”
I had to disclose my commission: between 15 percent and 20 percent, depending on the deal. But by that time you were already calculating your profits, dollar signs popping up in your eye sockets as though you were in some old cartoon: “ka-ching!” Finally, I had to mention you were buying the stock from us — not through us on the open market, the way you would if you were dealing with a listed firm with a seat on the Toronto Stock Exchange. But if you were still on the phone by the time I said that, you knew nothing about the stock market — a lack of knowledge you might even be foolish enough to admit.
It was those innocents that I grew to love. “That’s what I’m here for,” I would say if you professed your ignorance. “You lost money in the market before? With this company?”
“No,” you’d say, naming another slimy outfit exactly like ours.
“Not doing business with them anymore, are you?”
“If I lose you money, you’re not going to be doing any more business with me, and why would I want that?” I would reply. “I want you as a client. I want your future business.” Initially, that was true. Later, I realized that was just a polite way of saying, “I want the 8 percent commission I’ll get once we dump another thousand shares of this elaborately printed trash on you. And I’ll never talk to you again.”
You might still be skeptical. “Start small,” I’d say in my best sincere, confidential tone. “Pick up 500 shares. Hey, you lose $500 in the market, you gonna jump out a window? Be selling pencils on the street? I don’t think so. If I make you some money, we’ll be doing more business.” You would send in your check and I’d send out your confirmation. A trust company would send you your shares.
Then you would get a call from one of our 10 “loaders.” “Your broker is away on a course,” he would say. I was six meters away, rolling more calls, opening accounts for more saps like you. “We work on a team basis here,” he’d continue. “I’m looking after his accounts for him. See you got some of that Better Luck Next Time. Got a press release here, says Jesus Christ himself is going to be landing on the roof of its headquarters next week and blessing the company with a custom-made miracle. We think this could affect the price of the stock. You bought it at $1, and now it’s up to $1.25. [The firm put it there arbitrarily.] We have seen bids as high as $1.50. [In our dreams.] We’re advising clients to maximize their potential. I’ve set aside a block of 5,000 shares for you.” If you were the cautious type, you would buy a couple of thousand. If you were stupid, you swallowed the whole load.
Either way, you were hooked. You started following the share price of Better Luck Next Time in the unlisted stock tables in the newspaper. It hit $2. You wanted to sell. Fat chance. You called the firm looking for me. I was on a course, away, in a meeting, or one of a million other excuses. Then they bounced you to voicemail cyberia, where a phone robot ordered you to push buttons for 20 minutes before it hung up on you. Or maybe it shunted you to the loader, who talked you out of selling and saddled you with another 2,500 shares, gleefully howling, “Thanks a lot, stupe!” as he slammed down his phone.
Ninety days after I started, my cards started getting worse. Of the five guys who started in my platoon, two remained. One of those who left just couldn’t sell. The other two recognized the operation for what it was and cleared out. I knew what was going on but I was clearing $3,000 in a good week and growing more cynical every day. A new squad of openers started, just as green as I’d been. Listening to these guys talk about work was like listening to virgins talk about sex.
The best openers got to be “braves,” an elite cadre of sycophantic wieners who strutted around like paper-bag princes, raptly hanging on to the sales manager’s cheap tales of cheaper glory. Everybody else was either a whiner or a debaucher.
The whiners complained about everything: the job, the cards, the clients, the new guys and management lying to them. But dishonesty shouldn’t have been surprising in a place where everyone lied for a living. Without warning, managers would split the commission three ways, instead of two, with some lame rationale for skimming a third of your payoff. Or they’d persuade a client to open an account in his wife’s name and stiff you entirely.
The debauchers were past caring. They were making enough to medicate their misery: hoovering cocaine in the men’s room, smoking high-grade dope out in the alley, off for another liquid lunch.
Then back to work — stoned, ripped, drunk. No matter. Just keep dialing.
A year into the job, my cards deteriorated beyond useless. Blood lust flagged. Pressure increased: “Open more accounts! Unload more stock!” I had two options. I could “write wood,” making up orders I hadn’t sold — although, in a lot of cases, clients billed for wood paid anyway — or I could steal the good cards from the new guys. I stole cards.
Sometimes neither strategy worked. Feeling roasted? Burned beyond recognition? Beaten down? Blown out? Just can’t seem to get it up anymore? Maybe you need a pep talk from the sales manager.
“You guys are a bunch of bums,” he would say. “Don’t tell me about the lousy cards. If you guys handle a woman the way you handle a client, you’d never get called back for a second date.” To illustrate his point, the sales boss would mime desultory copulation, grunting weakly and finishing with a flaccid Bronx cheer. “Here’s the deal. You open people’s mouths, reach down their throats and rip out their balls,” he would say. “You are not stockbrokers; you’re telephone terrorists. You’re pirates, sailing around and robbing people. Got a problem with that? Go! There’s the door.”
Being incessantly flogged like retarded mules demoralizes people. Every couple of weeks, the openers would hire a stripper to spend the night shift trudging around naked on the boardroom table as a distraction. Fistfights would erupt: suddenly, two salesmen would be flailing at each other for no reason at all. They all deserved at least a punch in the mouth anyway; their socking each other saved the rest of us the trouble. And the fights boosted morale, creating a kind of warped excitement. People absent from a battle would hear about it the next day and curse themselves for having missed a ringside seat. Marriages disintegrated. Self-medication increased.
Then my nightmares started. In the most persistent one, I’d be relaxing in a hot tub. The sales manager would be there, saying, “Isn’t this great?” I’d realize I was soaking in blood — and wake up sweating, unable to get back to sleep. After another year of ripping off heads, I moved on to a listed firm. I now have to talk to my clients when they call, but I don’t have to lie to them. The hours are better, but I have to do more than just show up. I get to use my brain. I’m not making $3,000 a week, but I sleep nights.
A more aggressive Ontario Securities Commission is making life tougher for the six broker/dealers who continue to operate on Bay Street. But it’s unlikely anyone will eradicate the fuel that keeps the business pumping: a high-octane mix of greed and lazy stupidity — at both ends of the phone.