The Young and the Reckless
- Joshua M Brown
- August 16th, 2012
We talk a lot about the asymmetric risk of having large Wall Street banks who pretend they can police themselves while simultaneously maintaining a culture of maximum douchebaggery and testosterone poisoning.
A story today perfectly highlights why they can't.
It concerns a young man named Jared (of course) who, at the height of the financial crisis, had exceeded his $116 million trading limit at Morgan Stanley with a bet north of $1.3 billion worth of some kind of useless, convoluted Seussical derivative contracts. Jared's trading access was cut off the next day and a grown-up at Morgan had the trades unwound for a $15 million loss.
Jared was merely playing the game as it is played, though. I have many friends who've played for for Goldman, Lehman, etc, so I know this to be true. You get a spot on a trading desk and an initial stake, you ramp up the leverage and take the biggest risk you can. Because if you don't, you can't make the kind of money that leads to a permanent gig. If your bet pays off, you move up. And if it blows up, well, you wouldn't have made it anyway by taking little risk so nothing ventured, nothing gained. So you take a shot.
Anyway, it's three years later and Finra has just imposed a $450,000 fine on the firm for this lax oversight of their trader. But how's young Jared doing?
The industry regulator suspended Weinryt from trading for two months and fined him $7,500 earlier this year, records show. He consented to the sanctions without admitting or denying the findings, according to Finra. Weinryt declined to comment.
He now works in the institutional fixed-income sales division of Palm Beach Gardens, Florida-based Kiley Partners Inc., which trades securities including municipal bonds, U.S. government bonds and corporate debt.
“We were delighted to have an opportunity to employ a smart and talented employee like Jared Weinryt,” Chief Executive Officer Michael Kiley said yesterday in a phone interview. He “does a great job for us and his clients.”
Palm Beach Gardens! Sure, why not? And you just know he's rocking Tods driving mocs to work without socks. Probably making more money than every regulator working on his case combined and definitely getting more ass.
And that, ladies and gentlemen, is how the game is played. Regulate that.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.