CHAPTER SEVEN

A STAR IS BORN: THE ADVENT OF ZVI

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I LASTED ANOTHER YEAR AT DATEK. A lot happened: The tech bubble burst, 9/11, my wedding day. Of these, 9/11 might have been the most impactful. The finance community was hit particularly hard. Everybody knew somebody. If it wasn’t our immediate friends and family murdered (though for many of us, it was), it was at least someone we knew casually. In the weeks right after, baseball caps and flip flops at Datek were replaced by suits pulled from the back of our closets, as we attended the funerals of friends and colleagues who had done nothing more than kiss their kids and spouses goodbye one Tuesday morning and show up for work.

While several I knew were lost, I did have two close friends spared by what I can only describe as the hand of God. The first, my friend George, was on a golf trip with clients in New Jersey, instead of at his desk on the 102nd floor for Aon Insurance. Though 192 Aon employees perished that morning, it could have been 193. The other, my first cousin Brian, was taking a cigarette break outside on his perch at Morgan Stanley in the South Tower when the first plane hit. Security instructed him to go back upstairs until it could be sorted out, an order so preposterous in hindsight he luckily disobeyed it. Plane number two hit eighteen minutes later.

For me personally, 9/11 was emotionally devastating. Rather than seek professional help—as I would years later, after my arrest—I tried to chase the anger and sadness by smothering it with vodka. The emotional maelstrom and difficulty of that period wasn’t helped by Lisa’s work situation, either. She had been laid off the week before by Food Network. It turned out that while I was at work numb from grief and watching men in Hazmat suits scour our office’s ledges and terraces for missing body parts, Lisa was dealing with things in her own way. I would come home, still in a state of mild shock, and find her and her Food Network friends carousing on the stoop of our West Village apartment, polishing off bottles of wine by the case and cooking up ornate hors d’oeuvres. Perhaps they were smothering sorrows in the best ways they knew how, but I couldn’t relate on even the smallest level. I’d just trudge upstairs past them, barely able to say hello. Looking back, it feels like this was the first real gap of weirdness and disconnection that opened between my wife and me. Rather than address it, I chose to drown it—drinking for nights on end, occasionally with friends from work, but mostly alone in my living room.

In 2002, I moved from Datek to Schoenfeld Securities, where I lasted almost three years. By the spring of 2005, I was feeling antsy. I hadn’t learned a goddamned thing in most of my time at Schoenfeld. The talent at the firm was thin. I was just grinding out a living day-to-day, not getting significantly better as a trader or improving my skillset. The stagnation allowed me to spend a lot of time with Lisa and Sylvie, who had just turned two, while finishing up my Chartered Financial Analyst degree. The CFA is a three-year degree. Candidates are required to pass one test each year to move on to the next level. I had just passed Level 3, the final stage of the degree, making me an official Chartered Financial Analyst, a member of a select group of individuals that had passed a mostly meaningless series of tests and obstacles for little more than bragging rights. And I knew that. Thousands of brilliant analysts weren’t CFAs and, likewise, thousands of current CFAs couldn’t make money armed with tomorrow’s Wall Street Journal.

Even so, I still think Level 2 of the CFA exam just might be the hardest standardized test in existence. The fabled NY State Bar Exam, the bane of most new law school graduates and a four-time victor over JFK Jr., feels like third grade addition and subtraction by comparison. About 60 percent pass the NY Bar at their first go. The pass rate the year I took Level 2 of the CFA was less than 30 percent. Whatever the worth of the CFA, people who knew trading knew I had done something very hard. I wanted to use that to move up in the world. By the summer of 2005, I was trying to network my way into a new and better gig.

Every Wednesday night that summer, I played softball in Central Park. It was a real collection of misfits. Bryan Roth, my trading “partner” on the Schoenfeld desk, had recruited me to play for a slow pitch team composed mostly of former Datek traders. The only three guys I didn’t know on the team were Yoon—my friend Kwan Soo Lee’s K-town buddy—and two former Datek traders from a different floor. One was Joe Mancuso … and the other, this guy named Zvi.

Zvi’s brother Nu was also on the team and worked at Datek back in the day, but I actually remembered him, since he sat near me for a couple of weeks just before I left for Schoenfeld. Nu offered a nearly flawless imitation of Andrew “Dice” Clay upon command. It took a little while, but I eventually realized this wasn’t an imitation. Nu was actually a Dice Clay doppelgänger, who looked and sounded remarkably like the Brooklyn-born comic, so a dead-on impression wasn’t a challenge at all; it was second nature. On Datek’s trading floor, Nu was green, but showed potential. He was both fearless and disciplined, two of the toughest traits in the trader’s arsenal to acquire, and two of the most essential to succeed. It may come as a surprise to most amateurs, but discipline can be learned a lot easier than fearlessness. The ability to step out of your comfort zone and size up a trade appropriately is one of the most difficult things to learn as a trader and almost impossible to teach. Nu showed early promise at both. Nu’s compass pointed to softball, drinking, eating, and trading. I didn’t know him well enough yet to discern what else made him tick, but clearly these were the staples. It was only after years of being friends with the guy that I realized that I had solved the enigma of Nu in the first few weeks: there really was nothing else. He was blessed with a disposition and mental capacity that enjoyed life and didn’t ask too many questions. He operated at two distinct speeds, drunk and business, with the volume knob stuck on eleven for both of them. Whether it was a softball field, trading floor, or bar, within seconds Nu made his presence known. With an unmistakable permanent “outdoor voice” peppered by booming belly guffaws and an ever-present beer super-glued to his hand, Nu walked the earth like a tenth-century Viking reincarnated in the body of a twenty-first-century elephantine Jewish simpleton from Brooklyn. To this day, I’d be surprised if Nu had made a single adult decision in his entire life without first consulting his brother, including his eventual decision to get married and have two children.

After losing two of our first three games, our team began to properly click. We reeled off eight wins in a row to make the playoffs, and then dismantled three straight “unbeatable” teams to win the Central Park B Team championship (the A League being comprised of semi-pros—seriously, they were mostly mustachioed mercenaries bused in from Milwaukee, or journeymen minor leaguers). Friendships were accelerated by the joy of winning, and cemented during customary post-game binge drinking at Blondie’s West Side, on 88th and Amsterdam. We’d start at 7 p.m. and practically shut the place down. One of the owners was a friend and granted us most favored nation status with reduced pricing, bottled beers for $4 and shots for $6—and that’s in New York City. Yet somehow we still managed to run up a $1,000 bar tab nearly every time.

When it came to business, it wasn’t until near the end of our championship season that the newcomer Zvi laid his cards on the table. The best salesman is one who is selling you without your realizing it. I didn’t really notice when he was doing it. For a twenty-eight-year-old kid, he was a goddamned natural. Zvi gradually shared that for the past six months he had been working on launching a new proprietary trading firm backed by a very well-known and respected hedge fund manager, Rob Koltun. Rob was the founder of RNK Capital, a sizable hedge fund specializing in carbon and energy credits, a sexy new field. Rob was one of the earliest entrants into the carbon credit business, and the respect he enjoyed was more a result of his being an early mover in the space than for any stellar performance. Rob was looking to start a complementary hedge fund specializing in energy equities, the stocks of energy companies. Apparently, Rob planned to use this equities platform to launch a synergistic prop trading firm that Zvi and his other partner, John Deignan, were going to run. Zvi raved about Deignan, characterizing him as an aggressive trading veteran with connections all over the Street.

“You need to sit down with Rob and Deigs,” Zvi insisted one evening, waving his hand as if to dismiss any other potential opportunity I might be inclined to pursue. “It’s the best possible career move you can make right now.”

I was tempted.

With Schoenfeld a boring grind, if Zvi’s new baby was even one quarter of the things he said it was, I felt prepared to give it a shot. I explained to Zvi I was more interested in working for Rob as an analyst or trader for the hedge fund, rather than the prop trading firm. I had “done prop,” and was eager to try something new, something challenging. Zvi assured me he could get me a meeting with Rob and that I’d be a good fit with the hedge fund.

And so, one hot late afternoon in June, just after the market had closed, Zvi and I walked from his offices in the Radio City Music Hall building on 51st and 6th over to meet Rob at 44th and Lexington, home of the proprietary trading firm they were calling Remsenberg Capital. It had been named after Rob’s beach house in the town of the same name, albeit spelled incorrectly. (It was actually Remsenburg.) The space on 44th Street was huge, and the plan was to move Rob’s hedge fund there as well. But for the time being, Rob was still working out of offices on 54th and Madison in a hedge fund hotel seeded by Sanders Morris Harris and operated by a guy named Mike Rosen.

During our walk over, Zvi explained that Rob was going to move his operations to 44th and Lexington, and that Zvi and his current boss, Gregg Ettin at Carlin Financial, would be joining the floor in the near future. On the elevator ride up, Zvi let me know that Rob was a “casual guy” and might not be what I expected. The stereotype of the hedge fund honcho has become fairly recognizable in NYC over the past decade: Fit (courtesy of a $3,000 a month personal trainer), well-groomed ($150 haircut and manicure every other week), in a hand-tailored suit, hand-crafted brogues, a platinum Swiss timepiece, chic wire-rimmed glasses, and an attitude that said “Not only am I better than you, but consider yourself incredibly fortunate to even be in the same room with me having this conversation.”

We passed through a small reception area with Remsenberg plastered on a frosted pane window, then made our way into a spartan yet sizable trading floor shaped like an “L.” A few traders typing on keyboards glanced up at us for a few seconds before returning to their screens. Somebody came strolling out of one of the executive offices in the back. Based on Zvi’s advance warning, I assumed this was Rob, a short, round figure with graying straight hair that could use a trim and that looked to be allergic both to both comb and brush. He wore tan khakis and a generic lemon yellow polo shirt that was splattered with what appeared to be several ounces worth of a chocolate milkshake. A large pair of unisex eyeglasses usually seen only among the elderly of Palm Springs or Palm Beach was perched on his large, bumpy nose. On his feet, a pair of tattered, filthy Stan Smith tennis shoes with the laces untied. The sneakers looked so old, Stan Smith himself might have worn them. I honestly thought that I was being punked. Was this for real? The guy was a mess, a hybrid of MIT Media Lab and homeless chic. Zvi made the introductions and we shook hands, both of us all smiles, mine slightly bigger than his, despite my best efforts.

“I’ve heard a lot about you,” Rob said, and gave a laugh that was three seconds of an escalating, falsetto whine. He had the most peculiar quirk of awkwardly chuckling in the most bizarre manner after most everything he said. Words can’t really do it justice, but people who didn’t know him, or who met him for the first time, would look at each other with furrowed brows as if to say, “What the fuck is that? Is he not aware that he is doing that?”

I cloaked my surprise by forcing myself to say, “Likewise, nearly all of it good.”

He walked me around the trading floor and then we spoke about my background and trading style. I explained my voodoo and my approach to trading, and asked him about his plans.

“We’re going to build the best damn prop shop we can, from the ground up, and I want to fill the seats with guys exactly like you,” Rob said matter-of-factly.

“You had me at hello, Rob.” I smiled, shaking his hand again when I realized I had the job.

Naturally, there were details to work out, but it was happening. Even though Rob was a little odd, I was impressed by what I had heard and seen. Also important to me was that the location was a mere block from Grand Central and the Metro-North commuter train I hopped to and from Larchmont every day. You couldn’t find a more convenient location. That was it. I gave notice at Schoenfeld and less than two weeks later, I was at Remsenberg programming my screens and software.

But all did not go as forecasted.

After a few months, I noticed that two out of the three people Zvi had told me were going to come onboard never really arrived. Most bizarrely of all, that included Zvi himself. I tried to convince myself that this was irrelevant; I liked the location, the setup, and was learning and developing a good trading rapport with Deignan, or JD as we called him. It would still be a good place to work. Only in my few idle moments did I wonder whether Zvi’s plans had been altered by changing circumstances, if they had been bullshitting me the whole time for some reason, or what?

One day, my curiosity got the better of me, and I called Zvi to ask when he was planning on moving over.

“My boss still needs to work out a few details with regard to our current space,” was all he would say.

When I broached the question again, months later, the answer was more definitive.

“It doesn’t look like it’s going to happen. There are some issues surrounding whether I can still be a partner at Remsenberg. Conflicts. I’m probably going to end up selling my shares back to Rob, and giving some to Joe Mancuso as well. I’ll still be able to have a say in the management and the firm through Joe, but it’s best for everyone if I’m not on paper.”

At the time, it made sense to me.

Zvi’s boss was Greg Ettin, a well-established execution broker at Carlin Financial, handling order flow for mutual funds. That this created conflicts was obvious. Even the big Wall Street firms pretended to separate execution business for clients, or brokerage from the banks’ own proprietary in-house trading. What was less obvious to me was that Rob and his financial partner Ian Behar had already settled with Zvi weeks ago, giving him back his startup capital in exchange for his shares. That had nothing to do with conflicts, but solely with Zvi’s non-performance. After I was firmly in the door, Rob and Ian would comfortably badmouth Zvi behind his back.

Apparently, other than me, Zvi had only able to bring in a handful of pikers who didn’t move the needle at all, although he had promised Rob twenty good traders by mid-year, and fifty able bodies in the six months after that. And so they quietly came to an agreement: Zvi would get his startup capital back, and then he would quietly go away. It might have been the last quiet thing Zvi did in his life.

I should have been so lucky.

At the same time, I don’t think Rob ever planned to sit at 44th Street and run his fund from there. Weeks passed, and I hadn’t seen Rob in a while, so after the market closed one day in late September, I walked up the ten blocks to 54th Street to see him. The second I entered that office, I realized there was zero chance Rob would ever leave. Decorated luxuriously, with enormous glass windows providing a view of majestic Madison Avenue, it looked like an Aston Martin DB8 compared to the Honda Civic we were driving. Other than keeping trader morale up, a marquee location and expensive furnishings were meaningless on the prop side. However, hedge funds are primarily asset gatherers at heart, and to gather assets you have to impress clients. These clients tend to be extremely wealthy people who won’t invest capital in a business that looks “poor” or somehow shoddy. Nothing says you’re doing something right like Carrara marble floors and original artworks by the likes of Julian Schnabel.

Prop, on the other hand, typically has partner capital or one or two investors and a younger trader base that’s less influenced by appearances. Take the notable trading firm First New York. They were based in offices on 47th and 3rd Ave. that had stained carpets from ten years ago, paint peeling off the walls, and cheap chipped wooden Staples desks cobbled together with duct tape where people sat and traded hundreds of millions of dollars. It had all the markings of a telemarketing center in Bangalore, but for the fact that many of the traders were routinely taking home seven-figure paychecks.

That was our world. That was just how it went.

Anyhow, I eventually saw Zvi again.

At a Remsenberg poker tournament in early June of 2006, I found myself seated at table next to Zvi. We passed the time trading stories from our Datek days and polishing off a twelve-pack of beer between us. We both advanced to the next table through a combination of luck and conservative play. In poker, as in trading, you can win sometimes (or at least be ahead) simply by doing nothing. And that’s what we did for the first hour, a whole lot of nothing. We talked trading styles and stocks. I told him about a few things I was trading and then keyed him into a company that I had put a lot of work into, Imergent, IIG. It was a god-awful piece of a garbage company, but its price reflected that, with a healthy discount. The company sold “do it yourself websites” for several thousand dollars, a business that had a shelf life of a few years at most. That technology was getting cheaper all the time, and major players were moving into the space. Its stock had been cruising along at $30 until Stock Lemon, a website run by a notorious cabal of short sellers, got their hooks into it. Stock Lemon and its insiders (i.e. those lucky enough to get the heads-up that a nasty editorial piece was imminent) had thoroughly crushed the stock and slandered management. A bear raid nonpareil that quickly followed left the company in convulsions, bleeding like a deer that had just been run over by a twelve-wheel rig. The tactical execution was a thing of beauty to watch, except I found myself long and wrong as I tried to catch a bottom. It was an absolute feeding frenzy for shorts and they shredded the stock from $30 to a single-digit midget in a matter of weeks.

Now it was on life support at $4 and some change, yet absolutely nothing had changed in terms of its core business. Sure, there were a few lawsuits from the attorneys general of two states, charging that IIG had misled customers and demanding that they refund money. Still, even if it did refund the money of every person owed in those two states, the company still had enough free cash flow in the other forty-eight that the stock deserved to be trading around $15. My friend’s fund was a major shareholder and had done significant work on the company. The fund spoke to management, who assured them their capital was more than adequate, their business opportunities still prolific, and their regulatory issues mostly behind them. Companies will often lie to your face about these things, which is why stocks like IIG need to be purchased at a discount. At the current discount, the worst-case scenario was all but fully priced in … and one piece of good news would likely send shorts scrambling.

I broke it all down for Zvi and laid out the exhausting due diligence I had performed on the company. The clincher was the Amex had just started trading options with a $5 strike price. Sentiment was so bad, that you could buy $5 calls out to November for a mere .50. If the stock goes to zero, you know your damage or exposure is capped at fifty cents. If they release decent earnings and force the shorts to cover, there could be a stampede to $10 in a hurry. Clearly the market makers at Amex misunderstood the backstory and the amount of volatility in the stock. I had started buying shares at $8 and had been adding at intervals on the way down, convinced the worst was behind the company. Limited downside, significant upside, short squeeze potential—Zvi loved it and thanked me profusely, telling me he was going to put it on tomorrow and then do some research on the company. Not wanting to take without some give, he took a pen from his pocket and wrote the ticker symbol JAMS on the cocktail napkin next to me.

“Just be there,” he said with a measured glance to his left, then his right. “I’ll talk to you more about it when we’re alone.”

From the look on his face I knew he was serious. That’s why you play poker, to network and talk to people in the business. I had been to countless dinners, happy hours, industry conferences, and events. A lot of them were miserable affairs, but one good idea can make it all worth it. You never know who you’re going to meet or what you might learn.

“You long a nice amount?” I asked.

Zvi smiled.

“Nice doesn’t even begin to describe it, buddy,” he said, nodding his head and pretending to push his entire stack of chips forward, mouthing the words “All in.”

I had just spent the better part of fifteen minutes giving him a comprehensive bottoms-up analysis of a company based on sweeping diligence, yet with a mere four letters on a napkin Zvi had me salivating. I was ready to take off my IIG position and plow the proceeds into JAMS—something I had never even heard of. Ah, the power of hidden allure. A dollar and a dream, indeed.

Later that week at Remsenberg, I approached Zvi’s brother Nu and asked him if we could talk privately. We went to the soda machine in the kitchen alcove. I told him what his brother had said during the poker game. I asked Nu how much he thought I should buy, or was that a question for his brother? His immediate response was “Ask Zvi,” but then he also volunteered that he was long 200,000 shares for now.

“200K?” I said. “Wow. Okay.”

I was genuinely surprised, and worried that my inflection had exposed me as a piker. Sure, it was only a $1.50 stock, but 200,000 shares was still a nice chunk and significantly bigger than any other position he had. I figured I’d buy 150,000. I didn’t know the whole story and Zvi hadn’t given me any other details.

Anyhow, for the next month, the stock yo-yoed between $1.40 and $1.60. Even after several conversations with Zvi, I still wasn’t sure what the play was or where it was coming from, other than the fact that there were “friends of friends” involved. A broker from Saratoga Capital was apparently instrumental somehow, and even Rony Seikaly, the former center for the Miami Heat and Syracuse Orangemen, had made a cameo appearance in Zvi’s tale. He was a known companion (known by whom? I wanted to ask) of several apparently connected guys (connected to what, Zvi?) and was coming in, possibly as a capital (or drinking) partner to one of the principals affiliated with an investment group that was circling. This was like the financial version of the game Clue, except instead of Colonel Mustard in the living room with a candlestick, I already had a feeling that the only one about to get murdered was me. It wasn’t a pure flyer though. I could verify that JAMS owned a portfolio of extended-stay apartments and cheap hotels. The rampaging value of American real estate made the ground the hotels were built on worth more than the company as an operating business. Kmart and numerous other companies were looking to monetize the fair market value of their real estate assets by selling or spinning them off. The fundamentals of the company supported a higher stock price, and this was 2005; every expert and his mother knew real estate would continue to double every four years into perpetuity.

JAMS seemed to relish being in a tight trading until a week later, when Nu was in Hawaii for his honeymoon. Nu had already lived and died for almost two months with this piece of garbage, and the stock seemed to enjoy Nu’s absence as a chance to engage in a little opportunistic volatility. On Monday, it broke its range on the downside and started to bleed … $1.30 … $1.20. By Tuesday we were looking at $1.10. On Thursday morning, Nu’s assistant Eric was fielding an angry, panicked call from Hawaii. Eric had to check twice to make sure that he had heard Nu correctly: “You want me to blow out of the entire position right now?”

I typed it up on my trading screen and readied myself for fireworks. As the first large prints began to come through and the stock started ticking violently downward for no apparent reason, I whispered “foot in the aisle” to the guys in my row and starting putting in my buy orders lower. JAMS was a relatively thin trading stock, and Nu’s 200,000-share “out-in-a-hurry” market sale smashed it. When the $1 level broke, additional stop losses were triggered and the stock traded down to 90 cents in a heartbeat. As soon as $1 broke, I was bidding and bidding, scooping Nu’s puke and then buying back up to $1 when it started bouncing. I unloaded the entire position at $1.30 a week later, to break even overall in the trade. It was nice to be on the receiving end of a panic trade for a change.

I felt slightly bad for Nu, certain that the JAMS implosion and call to Eric would remain the primary memory of his honeymoon. I had seen this movie before. In fact, I had starred in the original*. But my sympathy was tempered when I waited, and waited, and waited even more for a follow-up call from Zvi, Nu, or Eric to say that these guys had hit the eject button and I was flying solo. It eventually came days later, but too late to be of any use whatsoever. As I would slowly but surely learn, after a few weeks in a stock, Zvi would typically become disillusioned and snap if you asked him a follow-up question. Ostensibly, this type of reaction was a manifestation of his frustration and hypersensitivity with the underperformance of the position.

A cliché in the trading business is that there’s always another train leaving the station. The challenge, however, was always to find the one that was going to reach its intended destination before it derailed. I was learning that, in Zvi’s mind, such an action was an admission of defeat. I thought that was nuts. There were no “sure things” in this game (at least not for people at our level). Everyone that’s been in the industry for more than a few years knows that the timeless admonition of caveat emptor reigns supreme. We’re all adults. You swim at your own risk. Zvi was learning by trial and error. Mostly error, but he was on the right path and just had a little growing up to do—all part of the learning curve.

I privately decided that if he could ever learn or be taught to distinguish between a nugget of gold from a nugget of fool’s gold, he had the potential to be the real thing. And with this little bit of maturing and molding on my part, we would get there together.

Fast forward to our next softball season. I’d been working at Remsenberg for several months. We were back at Blondie’s on the Upper West Side after a game. It was after my seventh shot and seventh beer, following a big victory against a team from Price Waterhouse, when Zvi leaned in and started telling me how he would soon be running a billion-dollar hedge fund. I listened politely—drunk and under the impression I was being bullshitted—with one eye on the Yankee game in the background. Zvi wanted to raise his own fund. He complained that his current boss was taking every one of his ideas and passing them off to their clients as his own. To listen to Zvi, it sounded like David Winters and Bob Jaffe were putting up impressive numbers solely because some unknown broker’s assistant’s assistant was feeding them his brilliant ideas. Yet it wasn’t entirely implausible. It had happened before.

I got bored and said: “I’m going to lighten on ATYT.”

“Why?” Zvi asked. He appeared not to mind having his tale derailed, but also suddenly seemed worried. This was because Zvi had been the genesis of the “get long on ATYT” idea a month before, a call buttressed by JD and his contacts at hedge fund SAC.

“Garrett is concerned how one-sided our firm is in it,” I said invoking Remsenberg’s risk manager. “I’m also hesitant because the rumors are so pronounced and the stock price hasn’t ticked up at all.”

For weeks, ATYT had been the subject of wide-eyed tales of takeover.

“Don’t you think if someone was kicking the tires, the stock price would be climbing higher?” I added dismissively. “This thing is on its ass still.”

“Don’t sell a share,” Zvi said, and took a long sip of his beer.

When all I did was raise an eyebrow, he began to fill the silence.

“What I’m about to tell you can’t go to anyone else,” he said softly.

“If you tell me not to tell anyone else, I don’t tell anyone else,” I assured him, and thank God I didn’t. JAMS, BGO, TWX, HD, KGC, ALEX, BMHC … the list of stocks where he told me to “load the boat” went on and on—a long shortlist. Indeed, if I had told anyone else about these “high conviction calls” from Zvi there’d be a lynch mob out after me, with torches and pitchforks. I almost laughed at the dichotomy between the caliber he ascribed to himself and his information and the objective reality of his actual performance.

“So last week, one of my Galleon guys calls me,” Zvi said, still sotto voce. “Long story short, this is the guy who originally told me about ATYT, and he knew about it because he sits near Raj’s execution trader. During lunch, he overheard Raj’s trader on the phone say, ‘He wants 500 thousand more ATYT?’ in a really surprised voice. My guy asked him what was up, and the guy told my guy he didn’t know anything except that that Raj was buying ATYT for size again. It’s now one of Galleon’s biggest positions.”

Zvi took another long sip from his Amstel. It seemed as though the oracle had spoken.

“Um, okay. Cool. Thanks, man,” I managed, trying to flag down the waitress for another round.

“Idiot, that’s not the story.”

“Oh? Then what is?”

“Later, my guy is taking a piss next to Raj in the men’s room … And Raj asks him what he’s doing today. My guy says to Raj, ‘Please don’t ever talk to me when I’ve got my dick in my hand!’ which Raj thinks is hysterical and practically pisses all over himself. Then my buddy says he’s only kidding and asks Raj if he saw the article in Light Reading on ATYT.”

Light Reading was an industry rag focusing on networking.

“Raj said he hadn’t, and asked him to send it over to Ian, his trader,” Zvi continued. “My guy then says ‘What do you think of the name here?’ to which Raj replies with a devilish smile, ‘Buy it. This one is for your kids’ IRA.’ Your KIDS’ IRA! FOR YOUR KIDS’ IRA!”

Zvi was shouting and people at the bar were looking over.

“Do you know what that means?” he continued, wide-eyed.

I actually didn’t, and not just because the number of beers I’d consumed was nearing double digits. I had no fucking clue what it meant. The phrasing was familiar, though. I had heard people describe high conviction ideas as “Buy it for your retirement fund,” or “Buy it in your IRA.” Retirement funds are supposed to be the safest, most conservative investments, so the connection was that if you were buying it in your IRA it was a safe, high conviction play. “Buy it for your kid’s college fund” was another one, meaning essentially the same thing. But buy it for your kids’ IRA? Was this an investment Minotaur, some mythological, rare, ultimate hybrid of safety and return, or just some Sri Lankan mogul with piss on his hands confusing the investment lexicon?

“Are kids even allowed to have IRAs?” I asked with a wiseass smile. “I’ve never heard of that.”

Zvi looked at me like I’d suddenly grown a second nose one my face.

“Are you fucking retarded? Who cares if kids are allowed to have IRAs? This is the King saying he was buying it for his kids’ IRA.”

“Wait, wait, wait,” I said drunkenly. “You told me he told your friend to buy it for his kids’ IRA, not that Raj was buying it for his kids’ IRA.”

“WHAT FUCKING DIFFERENCE DOES THAT MAKE?” Zvi exploded, slamming his beer bottle onto the table and sending foam billowing.

“I’m just trying to get the story straight,” I said trying not to smile. He stared at me like he was deciding whether to put me in a headlock, smash his beer over my head, or maybe—just maybe—keep talking.

“You’re missing the point,” he said, finally lowering his voice again. “You’re missing the point because you’re drunk, Michael. The King is saying ‘Be there.’ Do you realize how rare it is to get that type of edge in a stock? This is Raj. He makes more money in a day than you and your whole fucking family have made their entire lives; he is the best tech investor in the game. Period. You ignore a call like that at your own peril. I’m going to be there for size.”

A lot of what Zvi was saying was true, or at least close to it.

At the time, Raj’s reputation was pure gold. Universally considered one of the smartest guys in the tech space, Raj had built Galleon from $10 million to $7 billion in less than a decade. He was friends and partners with a Who’s Who of investors and contacts throughout the industry. I was debating telling Zvi that my daughter Sylvie was now two, and maybe I should actually check into opening up an IRA for her. Zvi’s teeth were grinding in frustration and the jaw muscle in his right upper cheekbone was popping in and out like a golf ball with a heartbeat.

A core trait of Zvi’s was that he lacked all patience with other people’s questions or perspectives. After a certain point, Zvi would simply shut down, and any subsequent comment or argument would only enrage him. It was like dealing with the Incredible Hulk. In fact, according to Nu, Zvi even had a nine-inch foam action doll of the Hulk on his desk. (That bothered me. Not just because the Hulk was an irrational beast brimming with violence, and Zvi seemed to embody some of these characteristics, but because I loved the Hulk and felt an emotional connection to him. Growing up, I’d bonded with the big green monster. He was my favorite superhero. That he should have any connection to a guy like Zvi was always somehow disheartening.)

Anyhow, I left the bar before Zvi could turn green and smash the place up.

The next day, the tension at Remsenberg rivaled Kennedy’s blockade of Cuba, with the potential for full-scale global thermonuclear war.

Nu had tried to buy another 10,000 shares each of ATYT and RBAK, as Zvi had hinted he should the night before. But the orders were rejected by the system, flashing him a message that he had exceeded his intraday buying power. Nu went to discuss the situation with Garrett and was told that he couldn’t be leveraged more than 6 to 1. That meant if Nu had $100,000 on deposit, he could purchase only $600,000 worth of stock. After Nu growled for a few seconds, Garrett turned spineless and immediately pointed the finger at JD. Two critical traits for a risk manager are (1) forewarned consistency, so traders know what is expected of them, and (2) a sturdy, healthy spine. Remsenberg’s risk parameters were ad hoc at best, and Garrett’s spine was never featured on the back of a milk carton because he never had one in the first place.

Nu went to the conference room to fill in Zvi on the situation via conference call. I imagined that from Zvi’s point of view, this was no less a declaration of war than the Japanese bombing Pearl Harbor. There had been an hour of back and forth shuttling to and from Garrett’s room, the conference room, and a furious barrage of IMs between Zvi, Mancuso, JD, Garrett, and Nu. The end result was me (how’d I get dragged into this?) and everyone in the conference room, sans JD, with Joe frantically telling us that Zvi was coming down to the firm “to break JD’s legs.”

I laughed out loud when Joe said this. The rest of the people in the room looked at me like I was out of my mind. This, it seemed, was serious business. I thought it was pure bluster, but my colleagues Nu, Joe, Eric, and Garrett were all guzzling the Zvi Kool-Aid. As if it were prophesied and already written, Garrett instructed us that the only chance JD had of saving his legs was for this determined Fellowship of the Conference Room to intervene somehow on his behalf. I still didn’t know Zvi that well and was unabashedly eager to see what kind of a person breaks another guy’s legs over proper financial risk management. I had intended to go out and grab a sandwich for lunch, but now I was prepared to stay and go hungry just to see how it would all play out.

Actual fights on trading floors are extremely rare. There had been one wrestling match back at Datek, but that had been over issues of religious jingoism. A Pakistani trader had referred to Rediff, an Indian software company, as “pig shit.” An Indian trader had taken exception and offered a few choice words about the relative attractiveness of the Indian stock market compared to Pakistan’s. A few seconds later, one of them—I forget which—went all-in and brought up the disputed region of Kashmir. That was it. They ended up wrestling on the floor to the wild cheers of the rest of the traders.

Ever the peacemaker, I went to the group with an idea. I proposed that if Nu bought puts on the position, we should really only calculate the exposure based on the part that was unhedged. This meant that if ATYT was trading at $15 and Nu bought puts with a strike price of $10, he really would only have $5 of exposure, because if the stock traded under $10, he would be protected from all further losses by the puts. The group seemed to like my solution and murmured their approval. Perhaps my proposal was the difference—perhaps not—but either way Joe intercepted a fuming Zvi on the street and cooler heads prevailed.

Regrettably, my compromise may have avoided short term pain for JD, but it enhanced the myth of Zvi the Hulk. In retrospect, it would have been better to instruct Joe to stand down and let Zvi rage. Had Zvi’s bluff been called then, Zvi might have been much easier to deal with in the future. Instead, the threat of violence, which is always much more effective than actual violence, was left unchecked. And in the future, Zvi would use it to get his way.

You won’t like me when I’m angry, Hulk would say. I tended to believe Zvi was telling the truth.

* During the tech meltdown in 2000, I had shorted SUNW, the last tech soldier standing, and done so relentlessly, only to cover the day before my wedding/honeymoon. SUNW proceeded to drop 25 percent in the next two weeks, which would have paid for several dozen honeymoons had I still been short.