Confessions of a Wall Street Analyst: A True Story of Inside Information and Corruption in the Stock Market

Confessions of a Wall Street Analyst: A True Story of Inside Information and Corruption in the Stock Market

by Daniel Reingold, Jennifer Reingold


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Dan Reingold believed in the "Street." But in this controversial, highly personal memoir written with Fast Company senior writer Jennifer Reingold, the author describes how his enthusiasm gave way to disgust as he learned how deeply corrupted his industry had become. Confessions of a Wall Street Analyst is a sobering expose of Wall Street: a jungle of greed and ego, a place brimming with conflicts and inside information, and a business absurdly out of touch with the Main Street it claims to serve. In the tradition of Liar's Poker and Den of Thieves, Confessions of a Wall Street Analyst is a no-holds-barred insider's account that will open the eyes of every investor.

About the Author:
Dan Reingold is currently Project Director for Telecom Finance at Columbia's Graduate School of Business

About the Author:
Jennifer Reingold is a senior writer at Fast Company magazine

Product Details

ISBN-13: 9780060747701
Publisher: HarperCollins Publishers
Publication date: 05/29/2007
Edition description: Reprint
Pages: 384
Sales rank: 869,903
Product dimensions: 5.31(w) x 8.00(h) x 0.86(d)

About the Author

Dan Reingold was a Managing Director and telecom analyst for fourteen years at Morgan Stanley, Merrill Lynch, and Credit Suisse First Boston. He was ranked number one or number two by Institutional Investor magazine for most of his career. Prior to that he was a financial executive at MCI. He has been profiled in Barron's; frequently quoted in the Wall Street Journal, the New York Times, and BusinessWeek; and interviewed on TV, including CNBC and Wall $treet Week with Louis Rukeyser. Reingold is currently Project Director for Telecom Finance at the Columbia Institute for Tele-Information at Columbia's Graduate School of Business.

Jennifer Reingold is a senior writer at Fast Company magazine. She is the coauthor of Final Accounting: Greed, Ambition, and the Fall of Arthur Andersen and the BusinessWeek Guide to the Best Business Schools. Jennifer is Dan's niece.

Read an Excerpt

Confessions of a Wall Street Analyst

A True Story of Inside Information and Corruption in the Stock Market
By Daniel Reingold

HarperCollins Publishers, Inc.

Copyright © 2006 Daniel Reingold
All right reserved.

ISBN: 0060747692

Chapter One

The Plunge


Ed picked me up at my house in a taxi. My home, at the time, was nothing super fancy, but Paula and I had put a lot of sweat into it and were quite proud of it.

Ed took one look at the house and almost started laughing. "You ought to come to Wall Street and hit the big time," he said.

July 14, 1989

"This Is the Street Where They Fool People."

That's what I was thinking as I stepped off the early morning express train from Scarsdale and stood on Madison Avenue, blinking nervously in the bright sunlight. As I gazed up at the rows of tall buildings and tried to avoid colliding with the natives, I felt the tiniest sense of relief.

At least my job was on Wall Street. Madison Avenue, by contrast, was the center of the advertising world, the place where smart and manipulative companies burned loads of cash and creative energy to convince us that we needed to wash our hands with Dial, brush our teeth with Colgate, and wipe our derrieres with Charmin. At least I was going to be an analyst whose job it was to evaluate companies on their merits, not someone whose raison d'etre was to seduce America's soap-opera watchers with meaningless slogans and exaggerated promises.

My new job in equity research, I believed, had nothing to do with manipulation and everything to do with balanced, rational thinking. I had made the leap to Wall Street in part because of the money, but also because being an analyst seemed like the perfect job for a serious guy like me who liked to reason his way through life. Sure, emotion and hype sneaked into my line of work occasionally, but in the end, the stock market was rational, analytical, cool. Fooling people wasn't part of this equation.

Or so I thought. In retrospect my naivete sounds charming or -- let's not be charitable -- silly. Of course Wall Street was as much about fooling people as Madison Avenue was, at least if you were one of the corporate executives trying to convince investors -- and analysts -- that your company's shares would shoot to the moon. But my job, I hastened to tell myself, was all about shooting straight. I had been in a sales role before, and I'd never liked it. Now I'd have a chance to focus entirely on the facts.

I grabbed on to that belief as if it were a life preserver and clutched it as I walked up Madison, then west on Forty-eighth Street and north on Sixth Avenue until I reached the headquarters of Morgan Stanley at Fiftieth and Sixth. I was 36 years old, it was my first day on Wall Street, and I was scared out of my mind.

Not that I had fallen off the turnip truck or anything. I had moved here from Washington, D.C., where I had been director of business analysis at MCI, the brash upstart that was shaking up the telecommunications business. I had interacted with Wall Street and its analysts and bankers for the past two years, trying to make them see my company as positively as I did. What I loved the most was the intellectual sparring as we debated the future of MCI and the telecom industry. It had been a great gig.

But this was the big time. I had been recruited by one of the premier investment banks, a place better suited to Brooks Brothers-clad Greenwich bluebloods than a middle-class public school guy from Buffalo, New York. I was going to be one of a select group of some 35 analysts at Morgan Stanley whose job it was to recommend stocks -- and, I had been told, move the financial markets. The prestige and power of my new job filled me with pride. But the responsibility terrified and humbled me. All of a sudden I was in the major leagues, and I'd never even played Class A ball. What was I doing in the middle of this?

Already, I'd ventured pretty far from my beginnings as the son of a scrap-metal dealer with a high school education. I'd been a political science major and math minor at the State University of New York at Albany, where I'd met my wife-to-be, Paula Zimmer, during a Wiffle ball game on the first day of our second year. She studied art history and then went back to school to become a pediatric-intensive-care nurse. And I'd gone on to become a starry-eyed graduate student of Middle East politics at the University of Chicago and Princeton University, certain I wanted to devote my life to bringing peace to that powder keg of a region.

I ended up at the LBJ School of Public Affairs at the University of Texas, earning a master's degree in 1979. I was hoping for an assignment that involved foreign policy but instead accepted a $24,000 offer from Coopers & Lybrand, one of the world's largest accounting and consulting firms, as an economic consultant in its Washington, D.C., office. For a few years, I was really happy at Coopers. The job appealed to my inner wonk, and I worked my way up the food chain. But once I was promoted to manager, my job became more and more about selling new consulting services to clients. The whole selling thing turned me off. I didn't want my life to be defined by the spin and hype of selling. Working inside a growing company began to sound a lot more interesting.

From Consulting to Communications: MCI

It just so happened that the Coopers's D.C. office building backed up against the new offices of MCI, an upstart telecommunications company that had been in business since 1968. MCI had emerged as a young, exciting David to AT&T, the ultimate corporate Goliath, with a more responsive, entrepreneurial culture. Its founder, Bill McGowan, had found a way to compete against AT&T in the long distance market even . . .


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All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents

Acknowledgments     xi
Cast of Characters     xv
Prologue: Tuesday, March 15, 2005     1
The Plunge: 1989-1991     11
"This Is the Street Where They Fool People."     11
From Consulting to Communications: MCI     13
My First Run-in with Jack Grubman     17
Street Smarts     19
Ed Comes Knocking     22
From the Jetway to the Attic     28
"We Do Not Make Negative or Controversial Comments About Our Clients."     34
Around the World in Seven Days (or Less): 1992-1993     40
Climbing Over the Wall     40
"You're the Only One."     43
"Hi, I'm John Mack..."     48
Privatization Pandemonium     53
The Perils of Papadam     57
Mississippi Madness     60
Rainmaker, Dealbreaker: 1993-1996     66
Fraud 101     66
Tone and Notice     71
Jack's Knack     74
Afternoon Tryst     78
My Major Opinion Change: Upgrading the Bells, Downgrading AT&T     84
The Power of the Poll     87
"Just to Make Things Interesting"     91
Intimidation: 1996-1997     94
M&AMania     94
Nothing Personal?     95
Internet Ignorance     98
Suffocation     100
My Failed Quest for Qwest     104
Fido Loves WorldCom     109
Irrational Exuberance     110
Merger Mania: July 1997-January 1999     115
The Case of the Secret Document     115
MCI/BT: The "BloodBath"     124
Jack and Bernie: Inextricably Linked     128
Jack Plays Loose: I Play Banker     133
How I Lost My Bank {dollar}25 Million     138
Oxygen Deprivation: 1999     146
My Multibillion-Dollar Mistake: AT&T     146
"You're Missing the Fucking Boat on Level 3"     151
"You Know He Can't Keep His Mouth Shut"     156
The SEC's Deadly Mistake     161
"How Can Your Best Friends Become Your Worst Enemies?"     165
To Publish or Not?     170
The Leak, the Ambush, and the Dupe: 1999     173
"Shame on Them?"     173
The {dollar}14 Billion Leak     174
The Ambush     178
A Piece of the Action at CSFB     182
Merrill: I'm Outta Here     188
"Any Idea What the Hell They Were Talking About?"      191
The {dollar}1.5 Million Mistake     193
The Dupe: Jack's AT&T Upgrade     194
"I've Never Had a Conversation Like This."     197
Humpty-Dumpty: 2000     201
Playing with the Devil     201
My Mountaintop Message     205
Who Wants to Be a Millionaire?     209
Two Minutes to Midnight     211
The Beginning of the End     215
The Guide-down Game     220
A Week from Hell     223
Crash and Burn: 2001     230
The Crash     230
The Show Must Go On     234
Global's Insider Game     236
Nacchio's Wrath     240
The Analyst Plays the Villain     242
Jack, the All-Knowing     246
Qwest and Global: The Swapstakes     248
Vindicated-But So What?     250
Outed: Qwest's Accounting Gimmicks     254
"How Do You Know This?"     255
Jack Fell Down: 2002-April 2003     260
The Worm Turns     260
WorldCon     267
Hearings from Hell     269
"What's a Level 3?"     276
Sex, Lies, and Videotape     279
So Long to the Street      287
Epilogue: Where Are They Now?     292
Afterword: Back to the Future: Some Policy Prescriptions     298
The Middleman's Dilemma     301
Why Spinning Off Research Won't Work     302
A Critique of Actual and Proposed Reforms     303
What Needs to Be Done     309
Notes     316
Glossary     325
Index     329

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