CHAPTER EIGHT
The Nineties
Cary Cimino was back. The eighties were so over, the ski slopes of Aspen beckoned. He was now driving a Ferrari, flying first class, spending as fast as he earned. He was enjoying yet another long weekend on the slopes, playing hard and ordering only the best of everything. Everything he bought he laid off on his clients anyway, so what the hell? His partner, Jeffrey, did the same thing. And jetting away from New York for a weekend in the winter was always a good idea. Especially this year. This had not been the best of years for Wall Street or for the city itself.
The 1990s already looked like the kind of decade in New York that would never be regarded in the sentimental glow of nostalgia. The forties had the abstract expressionists, the fifties had the Dodgers, the sixties had the World’s Fair. The nineties were beginning to look like the seven-ties, with “Ford to New York: Drop Dead,” Son of Sam and the garbage piling up in the streets. Just like those sordid days, the 1990s were all about chaos and anarchy in the streets. Murders were way up, surpassing two thousand in one year for the first time since the New York City Police Department bothered counting. Crack cocaine was killing certain poverty-wracked neighborhoods, turning ordinary people into raging sociopaths. The more out of control the city appeared, the more out of control it became. A tourist from Utah was stabbed in Midtown on the way to a tennis tournament in Queens. A new street name had sprung up for the innocent people shot while walking down the street: “mushrooms.” The squeegee man reigned, shaking down motorists at stoplights all over. Hundreds of homeless people took over Penn Station every night. Activists were distributing free sanitized needles to drug addicts to halt the spread of AIDS. Time magazine ran a front page proclaiming New York City the “Rotten Apple.”
The glory days of New York seemed distant and remote, like a great baseball pennant race that would never happen again.
Down on Wall Street, the 1980s were definitely over, but a new economy was emerging. Perhaps it was the general atmosphere of criminality pervading the city or a creeping belief that New York was no longer governable, but as the Dow recovered and the pace of trading again began to increase, a new white collar underworld began to emerge. As the Dow began to rise again, people like Jeffrey Pokross abandoned their car lease scams and check kiting operations and Ponzi schemes and set up shop on Wall Street. If money was to be made, they were going to be part of the party.
For Cary Cimino, the return of the Dow meant a second chance. This time, however, he was going to do things differently.
Considering the circumstances, Cary was doing pretty well. The end of the eighties had turned into a head-on collision for his career. He’d exhausted any currency he’d accumulated in the industry, jumping from firm to firm, swallowing up-front bonus after up-front bonus, failing to produce while amassing mountains of debt. Job offers had stopped coming in. Headhunters no longer called. A legitimate firm was simply no longer an option for Cary Cimino. He had gone from being a partner at one of the most prestigious brokerage houses in America to an unemployed stockbroker nobody wanted to touch.
No problem.
It was time to adjust the methodology. After he was fired from Prudential Bache for lack of production, Cary decided to remake himself entirely. His days as a partner or even as senior vice president were over, and that was just fine. He told himself the opportunities for brokers working for big or even little firms were too restricted. You always had to kick up a percentage to the boss, and he had come to believe that was not his style. He decided the only way to go was to be independent. He decided to transform himself overnight into a stock promoter.
In the 1980s, stock promoters were considered a kind of second-tier player on Wall Street. They were kind of public relations pimps who plugged small companies headed for public offerings in the over-the-counter market. Now in the 1990s, Cary decided stock promotion was the only way to go. Only suckers stayed with the big brokerage houses. Stock promoters were basically guys without broker’s licenses who would promote the stock of a specific company. They essentially hyped specific stocks, for a fee. This was different than the supposedly objective world of the stockbroker, who wasn’t supposed to have an allegiance to one particular company or another. Always a master of jargon to make something sound greater than the sum of its parts, Cary put it this way: “I would do financial PR. I would try to get retail buying or establish retail interest in their company.”
Cary was well aware that his newfound vocation had the potential to drift from the purely legal into the clearly questionable, but he was willing to take his chances. He had come to believe that truly successful people did not get where they were by following every little rule and regulation. Sometimes you had to push the envelope, take risks. There were too many rules, anyway. Nobody followed every one. Just watch people driving. People ease through stop signs without coming to a complete stop every day, and rarely does that cause problems. People switch lanes without using their blinkers every minute of every day. Probably once in a while that causes an accident, but the numbers aren’t overwhelming. You’re already signing up for risk when you get behind the wheel of a car. The same holds true for Wall Street.
The biggest problem was all those disclosure requirements.
Stock promoters were really children of the night. Rarely did they stand in the sunlight of full disclosure and tell the trusting investor that they were being paid a fee by a particular company to promote that company’s stock. Brokers were never supposed to be wedded to a company financially, and if they had any such ties they were obligated—required—to make that known to their clients. Stock promoters had no such requirement because they were never supposed to be in direct contact with the clients. They worked behind the scenes, and were useful in facilitating any number of transactions. Mostly they were about making a company appear to be the next McDonald’s. They were capitalist weathermen, using charts and graphs and most importantly numbers to prove their case. They implied exclusivity. They made the investor feel like he was getting something the other poor loser was not. They made the investor feel the superiority of the insider, the guy who gets past the velvet rope. They used the euphemisms of business to reassure nervous investors that they, and only they, held the key to massive and easy affluence.
And 1991 was a good time for stock promoters. Hardly anyone in the world of government regulation paid much attention to them at all. As far as Cary was concerned, that was okay. And he’d convinced himself that promotion was a legitimate way to make lots of money. He would tell friends the big firms like Bear Stearns did almost the same thing when they bought blocks of stock in a specific company they had an investment banking relationship with. The firms would designate the client’s stock as the stock its brokers would now push as “stock of the week.” In return, the brokers pocketed commissions. Sometimes the clients were aware of the fiduciary relationship between the brokerage house and the company. Sometimes they weren’t.
“The stock would then be in my partnership account and that stock would then become the stock of the week. Then our four hundred and sixty retail brokers would get on the phone and use any other words you want, pump the stock, hype the stock, and we had, at one point in time, we had five hundred brokers. When I say ‘we,’ I speak of the partnership at Bear Stearns. We had five hundred retail brokers, which were the highest producing brokers on the Street. And this wonderful retail sales force would go out, all right, and recommend the stock that we had in our account. And there would be whatever sales credit, there would be whatever extra commission the firm would give.”
He described the “stock of the week” companies feting brokers at the Four Seasons, pumping them up about selling the stock that the brokers owned themselves. It was called a “dog and pony show,” and, Cary was quick to add, it was all legal financial PR.
That was the way Cary saw being a stock promoter. He was still working with Lowenthal Financial Group, but it didn’t really matter who he was working for. If there were any problems, he was a stock promoter. Lowenthal, for instance, had been caught by the NASD “forgetting” to make payments in arbitrated disputes. They’d been fined and reprimanded, but Cary’s fingerprints were nowhere in sight. He was under the radar; he was living on the edge.
Cary had reason to believe the edge would soon be mainstream. In the middle of 1991, with the city spinning out of control and the mayor of New York insisting that his city was not Dodge City, there were whispers of a Wall Street revolution in the wings. The word was the financial markets would never be the same because of a little known entity that was growing year by year. It was called the Internet, and Cary believed it was going to be huge.
In 1991, the Internet was still used mostly by university professors and scientists and Department of Defense employees, but it was growing every day. The first microprocessor had been around for twenty years. Apple Computer had been around for thirteen years. IBM had produced its first PC a decade earlier, and Microsoft was now its operating system of choice. By now, Microsoft had split twice and was trading just under $5, up from the pennies it started with. The web had been in existence for two years, and already people were talking about using it to let investors know about investments. The over-the-counter market, which had been powerful during the 1980s, would soon be the over-the-web market and the opportunities would be endless.
Or so Cary hoped. Anyway, he couldn’t complain. In his new role as stock promoter, he was making a killing, which was why he could afford to be spending a long weekend in Aspen. His new gig also allowed for more flexibility. He wasn’t working for a brokerage house anymore, so he was his own boss. If he wanted to spend a four-day weekend in Aspen, he could just buy the first-class tickets and disappear for a bit. His clients could leave messages with his phone service, and he’d get back to them quickly. They usually didn’t need him on an emergency basis anyway, so when the phone rang at the hotel where he was spending his well-deserved cash, he figured it was not about work.
His sister Andrea was on the line. She kept it simple.
“Mom is dead.”