Is insider trading really all that bad?
When my team was handling E.ON’s 2002 takeover of Powergen, I got called up by dodgy hedge funds seeking inside information so regularly I should have set up an 0800 number and made a few extra quid. And it wasn’t only my nefarious clients – the FSA has concluded that 30% of UK takeovers are preceded by ‘suspicious share price movements’. Likewise, nearly every UK utility acquisition that I oversaw was announced early because the takeover panel noticed sharp price increases and forced the management to issue a statement. No one ever got caught and the speedy recompense was a cheeky 25-30% profit. For those who analyse risk/reward for a living, insider trading is a ‘no-brainer’. And although I was (obviously) too honest to get involved, I always felt it was
a ‘victimless crime’, a bit like that insurance scam ‘a friend’ of mine pulled on his gap year. But one day a colleague explained why I was wrong: whenever an unscrupulous hedge fund buys stock that’s about to jump in price they will generally get it off some unsuspecting pension fund that will subsequently not benefit from the upcoming price hike. Insiders are essentially mugging grannies to fund their coke habits and that’s never a good look… even for a banker.
A colleague of mine recently shafted me big time – any suggestions for revenge?
Back in 2001 my bank installed an intranet system that allowed front office staff to inform everyone else of their fantastic insights about the market. Within hours of its birth the whole bank was privy to a certain analyst’s exciting theory: his message simply read ‘greasedupchoirboys.com’. You could hear the titters spread across the trading floor as we all concluded that the poor fellow had come a cropper trying to access his favourite website. In reality, however, an aggrieved team-mate had waited for the chap to head to the toilet and then typed in the offending words on his colleague’s computer. A few years later I saw a senior trader receive a package in the post that he eagerly opened, only to discover a DVD of Shaving Ryan’s Privates. His desperate excuses only goaded his colleagues into ever more brutal ribbing that probably still persists to this day. Both these guys had been the victims of revenge and the perpetrators probably gained some minor satisfaction but were the risks really worth it? If the victims had found out who had shafted them they could have got their antagonists fired for gross misconduct. Rather than jeopardise your job you should expend your energy on more traditional banking pursuits; like backstabbing and thunder-stealing from your errant colleague because that hits him where it really hurts – his wallet!
With decision time on bonuses coming soon, how can I butter up the boss?
Brown-nosing the boss is an essential skill for employees at any bank but I have seen so many schoolboy errors conducted by colleagues that it felt like amateur night every time we hit the bar in Q4. The key to success is subtlety. You should equate sucking up to the boss to wooing a beautiful lady. Obvious crap about ‘pretty eyes’ simply won’t cut it, though. A relaxed, confident demeanour, which puts you on an equal footing with the ‘man who can’ is far superior to sycophantic bullshit. Birthday cards and Christmas presents will merely result in you being treated like the kid who brings an apple in for teacher.
The key to success is subtlety. You should equate sucking up to the boss to wooing a lady
Likewise, don’t talk business straight away – let the subject arise naturally and allow your manager to think he decided to bring it up. A spreadsheet detailing your boss’s football club, kids’ names, sexual peccadilloes, etc is also helpful when pretending you’re actually interested in him and not just his ability to dictate your bonus. Of course, it is always better to be feared than loved as one colleague, who once saw his boss spend an inordinately long time in the VIP room at Secrets, understood. He used to remind his boss of that wonderful memory, usually while in his office holding up the desk photo of his boss’s lovely family. Funnily enough, come B’day, that fellah never seemed to get shafted.
Do you have any questions for Professor Cityboy? Email them to letters@squaremile.com.
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