John Lefevre, author of “Straight to Hell” and former bond market executive behind @GSElevator, spoke with Bloomberg Television’s Erik Schatzker and Matt Miller and Bloomberg View columnist Matt Levine about his time on Wall Street.
When asked whether the debauchery he describes in his book pervades all of banking, Lefevre explained: “Perhaps I am an outlier, but I would say unequivocally there isn’t a single fixed-income sales in Asia who isn’t traded women and/or drugs for business with their clients.”
When asked about legal issues in the business industry such as “collusion, conspiracy, price fixing, dissemination of non-public information,” Lefevre said: “There were a lot of things I couldn’t document” suggesting illegal activity that would have been self-incriminating.
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Lefevre notes that the pattern of “bankers behaving badly” is “this kind pervasive deviance…I’m talking about basically the entire industry”
When asked about criticisms from the public mentioning that young professionals might take this book as a “how-to manual,” Levre said: “People will comment aspirationally about emulating or looking up to this kind of elitist, sexist, racist, misogynist mentality that the character perpetuates online. And I try to write unapologetically without the kind of cliches of epiphany and redemption, because I think that’s important. People can draw their own conclusions.”
John Lefevre: ‘Straight to Hell’ Chronicles Wild Wall Street Culture
Former Trader Details Seedy World of Banking in Asia
ERIK SCHATZKER: John Lefevre is here. So is Bloomberg View columnist, Matthew Levine, who did work at – who did, I should say, work at Goldman Sachs, spent more than three years in Goldman specializing in equity derivatives, pardon me.
MATT MILLER: Shall I?
SCHATZKER: All of a sudden, something about this book. Matt also penned a review of “Straight to Hell” for Bloomberg Businessweek. Gentlemen, welcome. John, welcome.
JOHN LEFEVRE: Thanks for having me.
SCHATZKER: John, I have to begin with this question, the character who emerges from the pages of your book, is something of a D-bag, isn’t he? He is arrogant. He’s cocksure. He’s delusionally self-confident.
SCHATZKER: Is this the person you were, the person you are, or —
LEFEVRE: I would say it is the person that I was.
SCHATZKER: Who are you now?
LEFEVRE: Now I’m a nice family guy with two kids who likes playing golf and living in the suburbs of Houston, Texas.
SCHATZKER: How does one make a transformation like that, because believe me, anyone who reads this book will find some of the tales surprisingly —
LEFEVRE: Revealing, outrageous, offensive?
SCHATZKER: Yes. We can go with that.
LEFEVRE: Okay. I woke up one day and said, each year I was spending in Hong Kong was taking probably five years off my life. And so I said, I have had enough of this. I going to go back and live on a golf course and take it easy.
MILLER: Now I’d I say, I’m a fan of these kind of books, and I love tell all, fun life of bankers, especially ex-pats, and I feel like I know a lot of people that live that life. But you have said, hey, I worked at Goldman Sachs and I didn’t witness any of this there. Is that just because you think Goldman Sachs employs bankers with a higher moral compass? Or did you — is it possible that you just worked in that side of the business?
MATTHEW LEVINE, BLOOMBERG VIEW COLUMNIST: Yes. I think that’s a possibility. I think that — I think as you said in the book, Asia gets a little wilder than a lot of the home offices. You’re kind of further away from supervision if you’re working at a U.S. bank in Hong Kong or Tokyo. I also maybe think that you kind of focused on the worst aspect of banking in some ways, and that the character in the book is to some extent the stereotype of like what people want to hear about bankers, rather than —
MILLER: It’s not making the world a better place like everybody in Silicon Valley.
LEVINE: Yes. I think there’s — and like there is like a day-to-day that, at least in my experience wasn’t hookers and cocaine every day.
LEFEVRE: I think he’s talking about is the kind age-old battle between the kids that sat in the back of the class and the kids that sit in front of the class. So you can say that perhaps I am an outlier, but I would say unequivocally there isn’t a single fixed-income sales in Asia who isn’t traded women and/or drugs for business with their clients. And you talk about maybe Goldman Sachs being slightly different. My counterpart there —
LEVINE: The front of the class, please.
LEFEVRE: — my counterpart there is a guy who, and I can’t mention his name, left his wife for a stripper. So we’re talking about —
MILLER: But this was — you’re in bond syndicate, right?
MILLER: He is an equity derivatives, maybe a different kind of group, maybe a different kind of class of people?
LEVINE: Yes, perhaps.
LEFEVRE: And I think Matt might be one of the guys who had a Nerf football thrown at him across the trading floor a few times.
SCHATZKER: John, can we talk about the business, because that is really what your —
LEFEVRE: Yes. Either — I think there are lot of — you talk about highlighting the worst elements of perhaps, but there are a lot of substantive issues in there besides saying —
SCHATZKER: Yes, collusion, conspiracy, price fixing, dissemination of non-public information,
LEFEVRE: Giving bad advice on purpose, absolutely, all those things. So one example I gave is I talk about how my boss came to me, And we had a deal that we were looking at doing in November, but our bonus numbers had already gone in, so he said, hey, just get on the phone. Let’s tell the client January is a better execution window, so we can attribute this to next year’s bonus. And that’s kind of the mentality that we lived every day, and perhaps Matt’s experience might be slightly different.
MILLER: Well actually I was — I want to ask you about this, because we were talking about these issues in the meeting this morning and I was like, what are we going to say? Doesn’t everyone know that bankers collude? Obviously these guys are doing this kind of stuff, right? Does it really surprise you that that kind of behavior not only exists, but sort of runs the banking calendar?
LEVINE: I mean, look, I think it’s interesting to kind of see former bankers sort of say it so directly, like I mean I think it’s widely assumed that a lot of these issues exist that syndicate bankers tell people when deals are coming, that people — that co-managers on deals fight with each other and don’t necessarily put the client’s interest first.
MILLER: Rod Rudding (ph).
LEVINE: Yes. It’s interesting —
LEFEVRE: Colluding on fees. And again —
LEVINE: Yes. Colluding on fees I found interesting because —
LEFEVRE: Matt used the word cliche, and what you said is true. We all kind of roll our eyes when we hear stories about bankers behaving badly. And those certainly aren’t new stores, but what I think is particularly interesting about this is the vantage point that has never really been explored before. So from the fixed income syndicate desk I worked with investment bankers and traders.
I worked with buy-side clients and sell-side, and I did deals with every bank on — every relevant bank on Wall Street. So what I describe is this kind pervasive deviance. And so it’s not simply a function of saying, this is how I act and this is how I do what I did. I’m talking about basically the entire industry.
SCHATZKER: In your opinion, is some of the stuff that you document in this book, and perhaps some of the things you didn’t document in this book —
LEFEVRE: And there were a lot of things I couldn’t document, yes, absolutely.
SCHATZKER: — illegal?
LEFEVRE: Yes, absolutely.
MILLER: Are you not afraid of that appraisal from —
SCHATZKER: Or is there not an element of self-incrimination here?
LEFEVRE: Matt implied that that could quite well be the case, and I’m more than happy to face whatever.
MILLER: I’d love — did you talk with a lawyer? Are the statute of limitations up? Is it okay as long it did in Hong Kong?
LEFEVRE: Yes. We have edited it very, very carefully with more than — more than one lawyer.
SCHATZKER: Well have you been contacted by securities regulators?
LEFEVRE: Not as of yet, but —
SCHATZKER: Do you think you will be?
LEFEVRE: I don’t they don’t have my number, but taken the — they know where to find me.
LEVINE: You’re right here.
MILLER: What do you think about that? You surely must have thought about that as well? As soon as I started reading about price fixing, or fixing of fees, collusion on fee, I mean it’s off the record.
SCHATZKER: PMB (ph) IN THE Hong Kong hotel.
LEFEVRE: Yes. And it’s not just that. There were times, and I don’t get into this with a great deal of specifics, but there were times when a bank would be in on a deal and would be very close to an issuer, and they would select their joint book runners. And we would get together and say, listen, don’t show anything lower than $0.20 or $0.30, because if a client sees that then it’s kind of the lowest common denominator.
MILLER: Let me ask you. Michael Lewis has always said he thought “Liar’s Poker” should discourage people from working on, wanting to work on Wall Street. And when I read it, I’m sure the same as when you read it, I was like, I want to go and work there.
LEFEVRE: Absolutely, yes.
MILLER: Is this — do you think this should discourage kids from wanting to major in finance or go work in a big bank?
SCHATZKER: Or is it a how-to manual?
LEFEVRE: And I’ve seen that on Twitter. I’ve seen kind of people will comment aspirationally about emulating or looking up to this kind of elitist, sexist, racist, misogynist mentality that the character perpetuates online. And I try to write unapologetically without the kind of cliches of epiphany and redemption, because I think that’s important. People can draw their own conclusions about —
MILLER: Although that obviously happened to you. You obviously had a moment of epiphany where you were like, uh, I don’t want to do this anymore.
LEFEVRE: But I don’t look back with regret on — on my career or the things that we did. We had a lot of fun. Most of my friends, most of the people in this book are still at big banks in senior positions. And so —
MILLER: Are they mad at you? Did you change all their names?
LEFEVRE: Oh absolutely, changed — changed pretty much all their names. I wanted to keep some of the names of some people, but the lawyers made me change — change those names too.
SCHATZKER: Guys in senior management.
LEFEVRE: All very, yes, all very senior people, absolutely.
MILLER: Any former buddies call you up and say, dude, do not do this?
LEFEVRE: These — these are stories that we have been sharing over drinks in bars for years and years, and we’ve always had a great time sharing them. So as I wrote it, and I had a great time writing it, and hopefully that comes out in the book that it’s a fun read, I shared these stories with my banker friends as I was writing them.
MILLER: Well I feel bad about myself for thinking I can’t wait to read this book. So congratulations on that.
SCHATZKER: And, John, thank for coming.
LEFEVRE: Thank you very much.
SCHATZKER: John Lefevre. He is the author of “Straight to Hell, True Tales of Deviance, Debauchery and Billion Dollar Deals.” The book lives up to its title, and of course Bloomberg View’s columnist extraordinaire, Matt Levine. Matt, thank you.
LEVINE: Thank you.