Another client was deemed a muppet because he couldnt

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Another client was deemed a muppet because he couldn’t quite get the concept that, when buying futures, you had to post a certain amount of margin. Another client mistakenly gave an order on his options contract with the wrong strike price (the stipulated price at which the client could buy or sell the underlying stock in the future). The client asked the salesperson if Goldman could just adjust the price of the strike and leave the price the client paid for the option the same, so he wouldn’t get in trouble with his boss. What the client failed to grasp, because he didn’t understand options pricing theory, was that the error was in his favor. Sure, said the salesperson. The muppet didn’t realize that his price for the derivative should’ve improved significantly, and that he had overpaid for the structure by about $1 million. Still another muppet, who “had no fucking clue what he was doing,” put on a huge short volatility position right before the crisis and got blown up. The list went on and on. I was struck by how out in the open this attitude was. It was odd, and was so counter to what I thought the firm once stood for. It was also problematic, because in order for me to build my book of business, I needed to build relationships with clients, not muppets. The basic streams of revenue I wanted to turn on required a little elbow grease at the beginning, but once we could persuade clients who’d done only elephant trades to use Goldman for options, swaps, and plain-vanilla derivatives—and it wouldn’t take much persuading—they could provide us with an ongoing stream of profit. This was found money. Low-hanging fruit. Why the resistance? The first partner I pitched my bread-and-butter business to was one of the heads of sales in Europe. I said, “I’ve been meeting with your salespeople, and they’re all telling me they think the business I’m here to start up isn’t lucrative enough. But the clients I’ve talked to feel differently. What kind of message are we sending to them if we’re turning away their business?” He pushed back at me pretty hard, with what I had now come to recognize as the Goldman company line, European-style. At least he had a colorful (if hostile) way of expressing it. “We only have a certain number of bullets to use with clients,” he told me. “We’ve got to make sure we keep them for the big elephant trades, the high-margin trades.” I blinked. Where was he coming from? I wondered. The last time the elephants had run free was 2008. They weren’t doing much running anymore. He was holding on, I guess, to the dream of those $1 million and $2 million structured-product deals that were drying up but that could still be sold to the Simple Client or the Client Who Doesn’t Know How to Ask Questions. The business I was planning would bring in $50,000 in fees here and $50,000 there, and at the end of the year we’d have made the $20 million I had projected going into the job. By telling clients, “We don’t do smaller, U.S. derivatives-based business,” we were just alienating them—or worse, sending them elsewhere. How did we ever expect them to do their big business with us if we were telling
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