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Executive Times |
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2008 Book Reviews |
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King of
the Club: Richard Grasso and the Survival of the New York Stock Exchange
by Charles Gasparino |
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Rating: |
*** |
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(Recommended) |
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Click
on title or picture to buy from amazon.com |
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Operatic Charles
Gasparino has written an engaging book titled, King of
the Club: Richard Grasso and the Survival of the New York Stock Exchange.
In it, Gasparino chronicles the rise of Richard Grasso, his peak in reopening
the NY Stock Exchange after the events of 9/11/2001, and his rapid fall when
terms of his compensation became front page news. The story is either epic or
operatic: the tragic hero dedicates himself to the success of his
organization, and then crashes when the plots of others force him to leave
behind his creation. Here’s an excerpt, pp. 141-3: But
back at the exchange another scandal was brewing. What had begun as a mere
nuisance was now turning into something much uglier. For years Hank
Greenberg, the volatile CEO of AIG, had been badgering Grasso and his
specialist for better pricing on his stock. Grasso had never met a CEO who
wasn't obsessed with his stock price. For a time, Sumner Redstone, the
chairman of Viacom, rivaled Greenberg in this department. Like AIG, Grasso
had stolen Viacom from a rival exchange. But it wasn't long before he began
having second thoughts. Redstone complained incessantly about his specialist
until Grasso placed Mel Karmazin,
Redstone's number two, on the board of the exchange. The complaints didn't
stop, but they began to lose
their intensity. Grasso
had no such luck with Greenberg; who gave the word “obsession" new
meaning. Greenberg was approaching eighty, but he was like
no other eighty-year-old man Grasso had ever known. Greenberg worked
out incessantly with weights and a stationary bike that kept him lean and
mean. But he scared the hell out of Grasso with his expletive-laced tirades
about the pricing of his stock and his threat that he
would return to the Nasdaq if the AIG specialist didn't start doing a better
job. Grasso
did all he could to appease Greenberg. Greenberg told Grasso he believed AIG
had outgrown the exchange; the stock was too big to be handled by some guy on
the floor. Only a computer could make the stock trade at a more accurate,
loftier level. With that, Grasso
began investigating Greenberg's complaints in a more
direct way, asking for details about trading positions directly from AIG's specialist
on the floor, a man named Todd Christie, just to see if Greenberg's harping
had any merit. News
of Greenberg's pressuring Christie, a specialist for Spear, Leeds &
Kellogg, soon spread through the floor, particularly as Grasso was spotted
more and more over at Christie's station discussing AIG. Grasso was walking a
tightrope: if he didn't keep Greenberg happy, he could lose a valuable
listing. AIG was one of the biggest stocks in the world, one of the most
actively traded on the floor. But
Grasso couldn't just order Christie to create an "unnatural floor"
and bid up AIG's stock price. The securities laws were pretty straightforward
on this count: the job of the specialist was to keep prices stable, not to
satisfy management. If Grasso pushed Christie to bid up shares, he would have
violated exchange rules and committed securities fraud. If Christie agreed,
both of them could end up in jail. Whether
Grasso crossed the line was an open question at the exchange as Greenberg
stepped up his demands. Grasso maintains he never told Christie what to do,
other than to "do the right thing." Floor traders, though, say his
mere presence on the floor, asking about the pricing of the stock, was
problematic. One
morning Greenberg wanted to send a message to Grasso as well. AIG was in
negotiations to purchase another insurance company, using its stock as currency,
so the last thing Greenberg wanted was a falling stock price that would
jeopardize the deal. Grasso's
secretary SooJee Lee, was often the first to receive Greenberg's calls. Lee
wasn't merely a secretary, she was also Grasso's gatekeeper, deciding which
calls Grasso needed to answer and which ones he could ignore. There was no
ignoring Greenberg, however. Lee received so many calls from the AIG chief,
in fact, that she came up with a nickname for the AIG chief: "Mr.
Yoo-hoo." Lee was out of the office when she retrieved the latest
message. She called one of Grasso's assistants and told her to transcribe the
following: "Hank Greenberg is not looking for AIG to go under $76.50 or
the deal won't go through." The
deal went through, but the complaints continued. "Mr. Yoo-hoo" was
on the telephone again and again, badgering Lee about how Christie priced his
stock, demanding information about his trading positions, and generally
driving Christie mad. Christie was one of the most prominent traders on the floor
and a partner at Spear, Leeds. Langone once described the specialist business
as "license to steal, but somehow Christie had figured out a way to lose
money with AIG amid the complaints from Greenberg. Christie
e-mailed Lee to tell her he would deliver his long and short positions
in AIG to "Mr. Yoo-hoo" by the end of the day, noting that
"Mr. Greenberg is a bad man." "I
think he's not happy in general," Lee said. About ten minutes later
Christie said, "Neither am I." Grasso
maintains that he constantly reminded Christie not to "do anything
stupid" when it came to his dealings with Greenberg, who, for all his
complaints, remained at the exchange, probably figuring he had a better
chance at getting good pricing for his stock by badgering Grasso and Christie
than he would by moving to the Nasdaq. And while Christie couldn't stand
being near the old man from AIG, his relationship with Grasso was as strong
as ever. Grasso would eventually appoint Christie to his board. It
wasn't bad having Grasso as a friend, unless, of course, the price of his
friendship was having Hank Greenberg as a client. Christie
kept a photo of Greenberg at his specialist post, right next to a photo of
his dog. When Grasso first saw the photo, he couldn't stop laughing,
particularly after he heard Christie trying to defuse a particularly nasty
call from Greenberg by saying, "Hank, I love you as much as my
dog." There’s
a gossipy tone on many of the pages of King of
the Club that will attract the attention of those readers looking for
more of the inside story. Grasso is a charismatic salesman, and Gasparino
captures his qualities in a way that will resonate for many readers, and
shows the vulnerability that all leaders have when tides turn. Gasparino’s
insight into Grasso’s flaws as well as his skills makes King of
the Club an insightful book for readers. Steve
Hopkins, February 21, 2008 |
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The recommendation rating for
this book appeared in the March 2008 issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/King of the Club.htm For Reprint Permission, Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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