The Devil's Casino_ Friendship, Betrayal - Vicky Ward [50]
with Gregory and had some surprising news. She said Gregory had told her he had never
really liked Tucker. He felt they had different styles. While Tucker had never been as
close to Gregory as he had been to Lessing or Pettit, he had believed they had a genuine
friendship. He had even taken Gregory to lunch six months after he 'd left Lehman
because he'd felt like Joe was "slipping away."
When he heard what Hament said, Tucker felt like he'd been punched in the stomach.
Joe? His carpooling buddy?
He called Lessing, who was more sanguine. Lessing told Tucker, "Joe's a phony, Tom.
Haven't you worked that out yet? A complete phony."
Part Two
THE ECHO CHAMBER
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
--William Butler Yeats, The Second Coming
Chapter 11
Russian Winter
It was us against the world. Because we went through that
Shearson experience, it forced a group of us to be totally
together.
--Steve Lessing
Toward the end of 1996, a Lehman proprietary trader in Japan got caught in a position
that was plummeting and he was stuck there, overexposed. His department (fixed
income) and his boss ( Joe Gregory) would lose all the profits they 'd made over the year.
November, as every trader knows, is the worst time to make a mistake. This one cost
Lehman $100 million.
Once again, according to sources, John Cecil believed that Gregory had not kept a
zealous watch over all his employees.
The loss meant that Cecil, not Gregory, was the second-highest-paid executive in the firm
that year.
Cecil earned more than $5 million--nearly $2 million in cash plus $2.3 million in stock
and $1.1 million in restricted stock units (RSUs) and options--earnings that, according to
sources, irritated Gregory.
He would "remind" Cecil "how easy it was for someone not running a division" to do
well. He had never talked like this to Cecil before, and it was this kind of bonus envy that
Fuld had hoped to eliminate when he reorganized senior management.
Fuld had replaced Pettit and the operating committee with six division heads who would
be paid equally, which he called the frontline committee (the title was quickly dropped,
according to Cecil, in favor of executive committee). Then there was a group of 20,
known as the operating committee, which included the people who ran divisions like
information technology (IT) and operations.
The reason Fuld came up with this idea of a committee of (supposed) equals, according to
Cecil, was that he was tired of all the friction around him. It wasn't good for the firm.
Fuld hated arguments, some of which concerned matters he was only barely familiar
with, and he hated making management decisions--particularly concerning bonuses and
drama between personnel.
He wanted to be left alone at the top, with the quiet and orderly Cecil behind him, but out
of sight. (Cecil usually kept to his office on the 10th floor, and rarely appeared on the
trading floor.)
Fuld meanwhile pushed to increase his visibility--and stature--outside the firm. The once
taciturn trader suddenly and aggressively entered the New York establishment milieu: He
became a member of the Council of Foreign Relations (Tom Hill was a member); he was
named to the board of the New York Stock Exchange; he was a member of President
Clinton's Advisory Committee for Trade Policy and Negotiation; and he became a
member of University of Colorado Business Advisory Council.
The memories of Pettit faded fast. Articles about the firm's growing revenues (they were
up 12 percent in 1997) never mentioned him, and by 2008 many people at Lehman had
never heard of Chris Pettit. "We were all so relieved not to get any more memos signed
TCP," says one senior person. (Internal memos were signed with