He likes small to medium-sized dogs and thinking about things.
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Some readers (two to be exact) of The Independent Republic of Harvey Markson, claimed to be intrigued by one of the main characters of that opus, Zygmunt Adams. Even Harvey agreed there was a story there. He felt it should be written with all the respect a memorial deserves.
But the production of The Republic (the novel’s short name though scooped by Plato twenty-four hundred years earlier) taught Harvey two things: only half-crazed individuals write books – the planet produces a million or two new books each year, he argued, why in the world would it need one more? Secondly, though he agreed to be interviewed and to forward on all relevant emails, Harvey thought the most intelligence-deprived activity next to writing a book was to undertake to find a publisher for one.
So I stepped in.
1. I am an experienced writer. When I finally passed the exam to become a licensed financial advisor, my brother asked me to take over the writing of our family company’s newsletter – Swasont Brothers & Mayham’s Monthly Investment Insights. I did that for twelve years and gained a great deal of authorial experience. But, because I acted at the same time as a commissioned salesman (a “Registered Representative”) in the investment business, some people claimed I was somewhat loose with facts.
At least, that was the way sympathetic readers put it. The less sensitive ones, including a few former clients, accused me of being a consummate bullshitter. To be frank, sometimes in the investment world one needs to speculate on situations. Although I am a thorough researcher and did dozens and dozens of interviews to put Zyg’s story together here, I admit that at times I had to fill in gaps which my research could not possibly have unearthed. I am not the first writer in history to do that, believe me.
2. Further, in the interests of full disclosure, I should also point out that there were rumours freighted about, especially by (not to name names) my ex-sister-in-law, that I had sought the help of sex therapist or, more precisely, to use her expression, that I had problems with my hydraulics. Allow me to refute that accusation here and now. Not common knowledge at the time was the fact that I supported a lap-dancer whom I met at a night class in ethics (a subject I knew little about having spent my working life in the investment business). I supported her through her Divinity studies right up until she moved away to become pastor of a small parish outside Ottawa.
Today, too many relationships turn out to be nothing more than temporary arrangements driven into by here-today-gone-tomorrow lust. For one thing, until Swasont Brothers & Mayham was once again on sound financial footing, I did not want the expense, complications, encumbrances or the anguish of the typical urban male/female relationship you find today. It’s a simple as that. While Zyg was known in many quarters as the Mr. WD40 of the Bar-and-Squeaky-Bed set, accusations of envy on my part, let me assure you, would be entirely unfounded.
With those two possibilities – journalistic tendencies and sexual envy – dealt with openly and frankly, for the sake of emphasis let me add a disclaimer. In fairness, most of the wording comes from the prospectus of the latest “initial public offering” (an expression created to replace “new issue” and make things clearer for the average investor) brought to market by The Federal Wealth and Great Trust Company, a division of The Federal Financial Group of Canada:
Some of what you read may not jibe with reality nor with other reports of the same events. Some gaps in the research, however diligent, might be filled in for the sake of narrative continuity. It is a good idea, if not more, to double check all references and dates before quoting the material herein.
Past performance is no guarantee of future performance.
Note: While good performance in investing offers no assurance whatsoever of repetition in the future, many studies suggest poor performance tends to persist, much like a character flaw.
October 2010 Ferdinand Daniel Swasont
PART ONE: Explosive Breaking News
Like a one-eyed king, the big clock in the tower of the Old City Hall, the flower beds below freshly turned, peered down lower Bay Street between the tall bank buildings, as if to keep an eye on things. Its view of the harbour was blocked by an ugly raised expressway, the on and off ramps clogged all day long, mostly with people coming from or going to the city’s financial district.
Of late, life had not been kind to that district − “The Street” as those who work there like to call it − as it suffered the aftermath of the high-tech binge at the end of the twentieth century. Not kind at all. Just a block south of the clock tower, though, the hint of spring and the recent sandblast to restore the yellow brick façade of the thirty-two storey office building at 370 Bay suggested one of the tenants might get a new lease on life.
And though they objected, and very vigorously, to the size of the rent increase that went along with their new lease, still, the tenants of the fourth-floor of 370 felt a solution to their recent problems close at hand. The corporate brochure referred to the fourth-floor as “The Head Office of I.E.D. Securities Inc., one of Canada’s most prestigious investment houses since 1969.”
Mind you, the Winnipeg branch of I.E.D had a slightly different description for those premises. When Toronto phoned in, the speaker system would announce something like “Mr. Bennett, Clownhaven on line two for you, sir.”
Wilfred Cross Bennett, an old classmate of mine from boarding school, was in charge of the Winnipeg office. He had just returned from two weeks of golf in Phoenix and had come in an hour early, before everybody, that particular Monday morning, to catch up on his emails. He scrolled down through the dozens and dozens of messages that awaited him, deleting one after the other, many unread (stopping only – knowing him - for discount offers on libido boosters and enlargement pills) until his cursor highlighted the subject “Welcome Our New President.” That one he read. That one he read word for word.
“Jesus Christ!” Cross blurted out, not a soul around to hear. Then he re-read the message, all 58k, and repeated those same words, this time a little slower and a little louder. Then, he shouted, in short, chopped syllables, “I mean, Jee-sus. Jee-sus Kee–riced!” rotating his freshly-tanned head from side to side, eyelids clamped shut over his small brown eyes, one hand massaging his square moustache. “Has everybody down there gone stark raving goddamn nuts? I mean, Zyg Adams? Just what we need – a sex fiend – for a president? That’s the guy who’ll save us? Are you kidding me? Jees-us! I mean, for the love of god, that little four-eyed fornicator has slipped into more beds than a worn-out bedpan. Are we really that goddamn desperate?”
Then Cross looked away from his computer. “You know what I think? I think this whole goddamn company is going to blow up,” he informed the empty office.
PART TWO: A bit of a challenge
One school of thought argued that the wording “one of Canada’s most prestigious investment dealers since 1969” implied I.E.D. Securities Inc. had been around long before that and only became prestigious in 1969. That, however, was actually the year the company was founded. Two old Toronto firms with old Toronto names that no longer carried any weight – Irwin & Co. and Elsworth-Densmore – merged, the new partnership settling for the name “I.E.D.” In case something went wrong, as it so often had, how much better to drag letters of the alphabet through the mud than old Toronto names, once again.
Over the next three decades, like the inscrutable movements of stock prices, I.E.D journeyed through many ups and many downs, but unlike most markets, through many more downs than ups. In 1974 with an oil embargo and the Dow Jones Index of U.S. stocks hitting what turned out to be a low point unmatched in the decades that followed, partners begrudgingly had to throw in capital to keep the proud ship afloat. In early May of 1980, two weeks before the province of Quebec held a referendum on whether or not to separate from the rest of Canada, the Montreal partners had had enough and closed down their office having guessed – incorrectly – Les Séparatistes would win the day.
Then in 1981, after just three years in business, the Calgary office closed up shop when the oil business in Alberta, in the words of the World of Finance “plunged” into some lean years, very lean indeed. Three members of the Calgary staff opened a Vancouver branch but the timing, always difficult to get quite right, was definitely quite wrong. Then, in 1986, cirrhosis of the liver and concomitant hepatitis claimed the life of the eldest founder, Mr. A. A. Irwin. A year later the stock market took so severe a drop – 22.6% in one day – that the two remaining founders, Messieurs Ellsworth and Densmore, threw in the towel. They foresaw nothing except bleak times ahead for the stock market, times as bleak as the Great Depression, especially Mr. Densmore, an economics major at university. So the two men sold their interests and disappeared.
By then, only the head office in Toronto and a branch office in Winnipeg existed. More precisely, co-existed.
In its history, even at its most successful, I.E.D. was never what you would call a significant or important brokerage house. Any attempt to make a significant increase in its size and importance, an astute investor would take as a sure sign – “a leading indicator” – that the stock market was about to tumble or, in as they say on The Street, head south, very south. After every expansion, a bloodbath followed. Then, and only then, wounded and oozing red ink, would I.E.D. slim down to its fighting weight of about seventy-three people, twenty-three of which held the title of vice president or better. Of those twenty-three, sixteen had no executive responsibility at all, their titles awarded solely for marketing purposes.
In 1989, I.E.D.’s ad agency translated that rich history into a corporate symbol – a fluted Doric column – to imply stability. (Within a day, the new logo became known throughout the company as “The Shaft”). To go along with that logo, the tagline underneath the I.E.D. Securities Inc. name, on all letterhead and envelopes and all forms, all business cards, on the corporate brochure, and in all its newspaper ads and, later, on its website, read: “Stability. Integrity. Compactness.”
Naturally, what appealed most to the two new major shareholders was the compactness. Though small, I.E.D. had most of the components of the much larger, bank-owned brokerage houses. For Sherwin Chable, chairman, CEO and president, and his cousin, Martin Chable, vice-chairman, I.E.D.’s configuration suited them to a “t.” Their expertise lay in helping small technology, biotechnology and mining companies share with the public the rewards of nearly-new ventures.
It had a comfortable and attractive reception area where several reproductions of Cornelius Kreighoff’s lush winter scenes played off against the Wedgwood blue walls and the dark-blue broadloom, somewhat timeworn in front of the receptionist’s desk. At the centre of the room, draped in beaded-glass strands, hung a chateau-sized chandelier, all but a six or seven of its dozens of little bulbs glowing. A set of dark mahogany-stained doors opened into a boardroom, the walls proudly bearing the photo portraits of the three glum-faced founders. The large mahogany table could seat all I. E, D.’s top executives and quite a few vice-presidents for sales meetings. The harsh glare of the overhead lights, much like that you’d expect in a police interrogation room, could be lowered for meetings with clients or left bright, should a vice-president get engaged, for an all-night crap game.
The other door in the reception area opened onto a long corridor. On the left, a pair of glass doors, the entrance to the executive suite which could only be opened by plastic I.D. cards or when one of the administrative assistants inside pushed a button. A little further along and on the opposite wall hung a large needlepoint rendition of The Great Wall of China, meant to assure the world that the reams of confidential information held behind in the investment banking department remained…confidential. Rumour had it, though, that in nearby bars after work or on suburban golf courses during weekends, cracks sometimes formed in The Wall.
Farther along the corridor was the research department of Skly Cszymorska (pronounced “skly cszymor-ska” as the welcome-on-board memo clarified) and his two research analysts. And beyond Skly’s office lay a great hall with two long rows of desks, separated by a shoulder-height partition, which held the work desks of I.E.D.’s thirty-two Registered Representatives. Most often they were called “Reps” (interchangeably called “The Producers”), the people who dealt with the customers (interchangeably referred to as clients). The room constantly buzzed with phone chatter and outbursts of laughter. All overseen, from a glass-walled office, by the darting eyes of Don-Phil de Vita, senior vice-president of sales.
Then, beyond the desks of the Reps, on the far side of the hall, sat the back-to-back desks of the two Equity Traders, and the Head (and only) Bond Trader (Cross Bennett’s job in the early eighties).
Next to the men’s toilet, sat the “Back Office.” Its job was to handle all the paperwork the Reps created and to make sure of adherence to the infinite number of regulations. The air smelled stale. The yellow walls had faded into to a dirty-water gray. The hand-me-down desks, chipped and scratched, looked ready for pick-up any day by The Salvation Army. That department – administration and compliance – consisted of two tiny offices and five cubicles, the staff all crammed in together as snugly and gloomily as the contents of a sardine can, not a vice-president in the lot.
In spite of the predictions made by the two founding fathers when they sold their interests in late 1987, stock prices did begin to rise. And in spite of the “Housing Bubble of ‘89” and in spite of the U.S. Savings and Loan Crisis of ‘89, the Kuwaiti crisis of 1990, the Asian Currency Crisis of 1997 and the Russian Financial Crisis of 1998, stock prices moved up and up. And I.E.D customer-clients bought up large chunks of every “Initial Public Offering” the company brought to market. By 1999, wealthier than they ever dreamed they’d be, the majority shareholders of I.E.D., both men in their late fifties, took most of their profits “off the table” in the form of bonuses, dividends, stock buybacks and the sale of shares to their partners, and retired to Panama. For reasons, both claimed, of health.
Winnipeg’s diagnosis? A chronic allergy to taxes.
Nothing at all seemed wrong with the cousin, Martin, who took Pilates classes three times a week. And although Sherwin carried thirty pounds of excess weight, he never missed a weekend of skiing in winter. His only visible ailment came from an accident at Snowbird, Utah, when a member of The Church of Latter Day Saints skied into him. He called the limp his “Mormon Knee” and complained about it incessantly to anyone who would listen.
The title of Chief Executive Officer of I.E.D. then fell upon the broad shoulders of Robert Wiseman Little, at one time a lumbering all-star right guard for a small college in the Maritimes. He graduated with average grades (very average) in the late-seventies and for the next two decades lumbered along as a broker-without-distinction. Then, suddenly, with the final up-wave of the markets in the late nineteen nineties, he caught on to the game. For three years straight he “produced” more than a million and a half dollars in commissions (forty-seven percent of which he got to keep, before taxes). He did that by trading clients’ in and out of stocks as the market made its jagged ascent towards the year 2000, many of those stocks those freshly-minted by the Chables and their Street confreres such as the highly influential, Federal Wealth and Great Trust Co. owned by one of the big five banks
For the first two years as a top salesman and the contributor of hundreds of thousands of dollars to company revenues, Big Bobby Little was presented, out of a sense of gratitude, with tickets to the opening baseball game. By the third year, though, the firm had no choice but to recognise his efforts. To his title of vice-president was added that of “Chief Equity Strategist.” Not five days later, the producer of This Week in Capital Markets, its theme song James Carlie White’s melodic Cracked Pots Cantata (in C major), phoned with an invitation to appear on the show.
And right after that appearance, a call came in from Toby Williams from Today’s Business. Toby wrote a tough-minded column, highly critical of the financial industry and its adamant refusal to put in writing, in any place other than its advertising, that the client’s interest came first. The column, titled “Frequently Unanswered Questions,” was referred to by The Street by its acronym, F.U.Q.’s, pronounced “few-Q’s” or, more commonly, as “fuh-Q’s.”
Other nightly business news programs, both television and radio, began to invite Mr. Little to pass on his investment wisdom. Hardly a week went by in those days when one writer or another from the business media did not seek out the views of I.E.D.’s Chief Equity Strategist for the “quotes” needed to complete their columns. And, of course, the World of Finance’s good old Halvert Tulvin began to call regularly on the lookout as always for gossip droppings for his Goings On column, opening with the standard inquiry used by all top-notch investigative journalists these days: “Anybody new in the doo-doo?”