Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street, by Sheelah Kolhatkar, is the story of how Federal authorities tried to convict Steve Cohen, head of the SAC Capital hedge fund, on charges of insider trading.
The story of the authorities’ investigation and their efforts to obtain incriminating evidence against Cohen reads like a thriller. Some readers might be disappointed that the investigation did not end in a conviction. But the ending is never really in doubt. Anyone with experience in the corporate or legal world would have a pretty good idea that Cohen, with his unlimited funds, was going to be able to out-lawyer the Government.
Notwithstanding the absence of a satisfying ending I found that the story operated well as a description of how an evil criminal can pull off a perfect crime. Kolhatkar describes in detail how Cohen profited off of the insider information obtained by his associates while maintaining plausible deniability regarding his own knowledge of their sources. And she makes Cohen look even more evil as he goes about his life while his associates’ lives are ruined because of their participation in the scheme.
This is a very well researched and readable book that explains how hedge funds really operate and what traders do to earn their exorbitant salaries. It captured my attention and I read it over just a few days. I give it 4 stars and strongly recommend it especially for those who are attempting to make a few dollars in the stock market without cheating. ...more
In Red Notice: A True Story of High Finance, Murder and One Man’s Fight for Justice author Bill Browder describes his experience running Heritage Capital Management, a Hedge Fund that he created to invest in Russian assets. Browder explains how he capitalized on inefficiencies in the Russian markets to build Heritage Capital into the largest foreign investor in Russia. And he explains how he protected the fund’s investments by exposing corruption in the companies in which it was invested.
But Browder’s efforts to push back on corruption created enemies in high places in Russia. He found that one or more of the Funds’ companies was being stolen, that he was being accused of tax evasion and that his safety was at risk. Browder was able to liquidate most of the Funds’ investments and left the country for his own safety. He also arranged for the safe exit of most of his business associates. But one of his associates, an attorney named Sergey Magnitsky, did not leave because he had faith in the Russian legal system. Unfortunately, the Russian authorities arrested Magnitsky and he died while in custody because they denied him required medical care.
Had Browder ended the book with Magnitsky’s unfortunate death I would have considered Red Notice a triumph. I would have called it a very well written expose of how doing business in Russia can result in tragedy.
However, Browder did not end the book with Magnitsky’s death. He went on to describe in detail how he got justice for Magnitsky by encouraging United States legislators to pass legislation (known as the Magnitsky Act) which prohibits the responsible Russian authorities from entering the United States or using its banking system. It is worth noting that, in response to the Magnitsky Act, Russia passed legislation prohibiting Americans from adopting Russian orphans.
I found the discussion of the Magnitsky Act to be troubling. Browder never admits that his efforts to make as much money as possible for his Fund in Russia may have been partly responsible for Magnitsky’s death. And his extensive efforts to obtain passage of the Magnitsky Act could be construed as self-aggrandizement for actions that would not have been necessary had he been a little less greedy and a little more cautious in his investing activities.
There is no question that Red Notice is a very well written book. It is as exciting as any adventure novel and, like such a novel, I could not put it down. But I cannot get past Browder’s descriptions of his own actions. He falsely makes himself out to be some type of hero because of his successful effort to obtain passage the Magnitsky Act. I give this book 3 stars....more
I read a lot of historical narratives because I enjoy learning about other times, places and events. While these books are always informative, occasionally, I will find one that is also a real page turner. Red Card: How the U.S. Blew the Whistle on the World’s Biggest Sports Scandal by Ken Bensinger is one of those books.
I do not follow international soccer on a regular basis. However, like many people, I do tend to pay attention during the World Cup, the quadrennial tournament that pits the best national teams against each other to determine the best team in the world. I never gave much thought to the administrative workings of the various soccer associations around the world. However, I certainly took notice of the day in 2015 when Swiss Police, pursuant to the request of the United States Department of Justice, raided a Zurich meeting and arrested numerous members of FIFA, international soccer’s governing body. Red Card is the extremely well written story of the investigation that led to charges of fraud, kickbacks, bribes and money laundering brought against those who were arrested on that day in Zurich.
Bensinger does a great job of introducing the characters, both the investigators and the criminals, explaining the crimes that led to the charges, and describing the meticulous steps in the investigation. Anyone who wants to understand the rot in international soccer that led to the greatest sports scandal in history would be well advised to read this book.
That does not mean, however, that this book is without its shortcomings. All of the characters seem to be a little one dimensional. Bensinger presents all of the investigators as dedicated public servants seeking to bring wrongdoers to justice. He presents the soccer officials as greedy administrators who take bribes because that is just the way that business is done in their industry. I would have liked to have seen a little more depth on the motivation of the soccer officials. What did they have to do to reach the top ranks of their respective associations where they were in a position to start receiving bribes? Were they aware that they would start receiving bribes once they reached the top ranks? Were any of them surprised when they started receiving bribes as part of the regular course of business? Did anyone ever refuse a bribe or express concern that they were so prevalent?
Notwithstanding the above described shortcomings Red Card is a very informative and entertaining book. I recommend it for everyone and I give it four stars.
In Empire of Pain: The Secret History of the Sackler Dynasty author Patrick Redden Keefe tells the story of the Sackler family’s roll in the opioid crises. As told by Keefe, the Sacklers, through their ownership of Purdue Pharma, manufactured oxycontin, which they aggressively marketed as a non-addictive opioid. He explains that, even after they knew that oxycontin was leading to addiction and ruining people’s lives, they ignored its harm and continued to promote its use so as to maximize profits.
The story, as told by Keefe, is about how the Sacklers ignored a public heath crisis of their own making in order to feed their own greed. His story is very well researched and reads like a novel rather than a historical narrative. This book deserves its place on most of the best book lists of 2021.
However, this more than a story about one family’s greed. As tragic as this story is, it is not all that shocking. It is a cautionary tale about what can go wrong in our capitalist/litigious society. The following set of circumstances, as related in Empire of Pain, should be familiar to most readers:
An entrepreneur identifies a market for a new product. The entrepreneur develops the product. The entrepreneur aggressively markets the product with the single-minded goal of maximizing profits. The product is successful and the entrepreneur makes a lot of money. When it turns out that some people are being harmed by the product the plaintiff lawyers swoop in to hold someone accountable. The entrepreneur uses a portion of his profits to buy the support of politicians and regulators and to hire high priced lawyers that make the plaintiffs’ litigation as difficult and expensive as possible. In the end the product is altered or removed from the market, the entrepreneur gives up a fraction of his profits and the lawyers end up with a lot of the money.
This is a very thought provoking book both from the perspective of the actions of the Sackler family and from the larger perspective of how their actions are not that unusual in our society. I give this book 5 stars and recommend it for all....more
In Fall: The Mysterious Life and Death of Robert Maxwell, Britain’s Most Notorious Media Baron, author John Preston describes the rise and fall of Robert Maxwell. While Maxwell controlled a vast media empire during the 1970s and 1980s, his name has all but disappeared from the headlines. That is, until recently, when his daughter, Ghislaine Maxwell, was indicted and tried for her alleged assistance to convicted sex offender Jeffrey Epstein. Preston brings the memory of Robert Maxwell back to life with this engrossing page-turner.
Maxwell’s story can be divided into three parts. The first part of the story is how he became Robert Maxwell. It begins with Maxwell, then named Jan Hoch, escaping his home in Czechoslovakia just before the Holocaust. Preston wastes little time describing his thrilling adventures throughout the War where he worked in multiple roles and changed his name several times. He ultimately ended up working for the British where he adopted the very British name of Robert Maxwell.
One of his roles during the War was that of a spy. And Preston suggests that Maxwell may have continued with his espionage activities (possibly for Britain, or Russia or Israel or for more than one of the above) well after the War ended. Preston does not delve deeply into this issue. Instead, through his brief description of Maxwell’s work as a spy and his ability to slip in and out of new identities, Preston simply lays the foundation for a man that may not be all that he seems and may be something of a con man.
The second part of the story is how Maxwell built his media empire. During this period, Maxwell purchased multiple publications, grew very rich, and befriended some of the most powerful people in the world. Preston suggests that there may be something shady about the source of Maxwell’s wealth and the way that he managed his companies. Another author may have dug deeper into this issue and given more details regarding Maxwell’s finances. But, Preston again chooses not to delve too deeply into this issue. Instead, he moves quickly through the financial dealings and uses them to reinforce the mystery surrounding Maxwell.
The last part of the story describes how Maxwell’s empire fell apart. In this part Preston describes the failures of the individual corporate ventures and Maxwell’s futile efforts to do everything he can to possibly save them.
Since Maxwell built a media empire that came crashing down to earth this could have been a story about corporate intrigue. But it is not. It is simply a story about Robert Maxwell. Preston learned about Maxwell through his numerous interviews with Maxwell’s former associates and employees. While Preston describes many of Maxwell’s actions, such as his cruelty to some of his employees, in detail, he carefully leaves much of his life in the shadows. Maxwell, the enigma, coming to his fall, is what this book is all about. This is an excellent read. I give it 4 stars and recommend it for everyone. ...more
Over the last 200 years innumerable bankers have poured money into America’s ever growing capitalist economy. Their mythic and controversial stories include the creation of enormous industries and/or the disappearance of huge fortunes. In Inside Money: Brown Brothers Harriman and the American Way of Power, author Zachary Karabell, tells the story of Brown Brothers Harriman, possibly the least exciting and most conservative firm ever to grace Wall Street. But while the firm might be a bit boring Karabell’s telling of its story is not.
The story of the firm is fairly straightforward. It starts with the arrival in Baltimore of Alexander Brown, a Belfast linen merchant, in 1800. Alexander Brown, together with his four sons, expanded the firm’s business into cotton, coffee, iron and sugar. But, eventually, the firm phased out of physical commodity trading and phased into financing trading by others. Alexander always stressed to his sons that the firm should value risk management over profits. And it was that conservative ethos that always pervaded the firm’s business practices.
Because of its conservative nature the firm remained quite small and, until relatively recently, was managed by direct descendants of Alexander Brown. It was only in the 1930s, when needing an infusion of capital, that the firm merged with the firm created by railroad magnate, E.H. Harriman. And while the firm is no longer managed by heirs of Alexander Brown, Karabell explains how the Brown’s original ethos is carried on in current times by like minded members of the “establishment” who have established close, almost familial, ties during their years at places like Groton and Yale.
Had this book been solely about Brown Brothers Harriman it might have been no longer than 100 or 200 pages. In fact, there may have been no real reason to write a book about this highly conservative and non-controversial firm.
However, this book is about far more than Brown Brothers Harriman. Its more than 400 pages traces the history of the United States, as seen through the eyes of the financial community. Of particular interest in the financial community’s participation in the development of public policy. Karabell makes it clear that, while at one time, members of the financial community, tried to manage their business while staying above the political fray in Washington, D.C. they now are fully entrenched in the political process drifting seamlessly between their firms on Wall Street and their appointments in government in Washington, D.C.
And although Karabell usually takes a straightforward, almost professorial position in the book, he does not shy away from revealing his view of Brown Brothers and the rest of the financial community. For example, he makes it very clear that, while members of the Brown family may have believed that slavery was morally wrong, they saw nothing wrong with profiting from the trade in cotton, which was facilitated by slavery on the cotton plantations.
Those who are considering this book may be seeking some inside details about one of the longest surviving firms on Wall Street. And towards that end the book reveals how Brown Brothers Harriman used its ethos of conservatism and risk management to survive the country’s numerous financial crises. However, because of the far-reaching extent of this book the reader will also gain a better understanding of the interconnection between the history of the financial community and the history of the nation. I give this book 4 stars and recommend it for anyone interested in the history of banking and finance in the United States....more
In Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich Thomas Levenson traces the beginnings of our current financial system back to 18th century London. While a story about finance may seem to have narrow appeal, in Levenson’s capable hands, this story will be appreciated by a much broader audience.
The role of the narrative historian is to “connect the dots”. That is, to identify disparate events and to weave them together into a cohesive tale that informs and entertains the reader. Sometimes the dots are easy for the historian to identify. But other times, the historian must reach for dots that are more obscure. Levenson opted to reach for obscure dots. In Money for Nothing he has managed to connect the London Plague of 1690, Isaac Newton’s development of differential calculus, England’s unending wars with France, the South Sea Bubble and Robert Walpole’s term as Prime Minister of England. The connections work seamlessly
At its heart, this is the story of how England borrowed funds to finance its wars with France. England’s borrowing capabilities were greatly enhanced when the South Sea Company assumed its outstanding debts from creditors in exchange for shares of South Sea stock. South Sea, therefore, received payments on the debts from England and either kept them as added capital or paid them out as dividends to its shareholders. Most importantly, Levenson describes how, after the debts were converted to South Sea shares, the shares were fungible and could be traded, at prevailing prices, on the newly formed Exchange Alley.
As Levenson tells the story, this development of financial markets took place at a time when scientists and mathematicians were starting to quantify actions and risks that had previously been unquantifiable. This quantification could have been used to rationally value the South Sea shares. But, alas, it was not. Levenson’s is a story about people, not numbers. So instead of using available tools to value the stock, the investors acted in response to their greed and emotion. This greed and emotion fueled what became the South Sea Bubble.
Levenson explains how England was able to recover from the ultimate bust of the Bubble and to create workable financial markets. However, he warns that new financial instruments, like the ones that fueled the South Sea Bubble, are constantly being created and that investors, to this day, still find themselves investing based upon their greed and emotion rather than mathematical quantification.
I rated this very informative and entertaining book 4.0 stars. It should appeal to fans of English History. And it is also a good primer for anyone interested in financial markets. ...more
After retiring from my career in the electric utility industry I wrote a book that describes the 130-year evolution of electricity service in America. My book begins with the story of Thomas Edison’s stubborn adherence to his direct current electric system and J.P. Morgan’s decision to undermine Edison and to merge his company with Thompson-Huston Company to create General Electric.
Having written about the birth of General Electric, I was anxious to read Lights Out: Pride, Delusion, and the Fall of General Electric by Thomas Gryta and Ted Mann. Gryta and Mann are reporters who followed GE for the Wall Street Journal. Their book tells the story of GE, beginning with Jack Welch’s final years as CEO. They focus primarily on the 16-year period when Welch’s successor, Jeff Immelt, was at the helm.
During the 20 years when Welch was CEO General Electric’s value increased from $14 billion to $400 billion. When Welch retired in 2001 GE was considered to be one of the greatest companies in the world and he was celebrated as a management savant. During Immelt’s 16 years as CEO GE’s fortunes reversed and its value fell from $400 billion to $175 billion. Largely because of actions taken by Immelt, that value has since fallen to close to $50 billion today.
As GE’s value was falling, GE management jealously watched as the value of newer companies soared. Gyrta and Mann describe how GE, under both Welch and Immelt, went down a dark path to try to regain GE’s position at the top of the corporate community. They show how GE management focused entirely too much on making their quarterly earnings targets, how they used questionable accounting methods to achieve those targets, and how they pressured financial analysts to maintain ratings on GE credit even when cracks started to show in GE’s finances. Most importantly for the reader, they clearly unravel GE’s most harmful attempt to stay on top - its continuing reliance upon GE Capital to boost earnings when needed.
I have read a number of books that describe the fall of previously high-flying companies. Few fully explain the inner workings of the company as well as Gryta and Mann. They paint a dramatic picture of GE’s world that is all too familiar to many of us who have spent time in corporate America. It is a world where employees who try to give bad news to management are intimidated, where members of the Board are too busy with their day jobs to spend the time necessary to fulfill their fiduciary duty to shareholders and where management operates in fear of financial analyst downgrades.
The story of GE, as told by Gryta and Mann, is basically a story of hubris. No matter how bad things got at GE the attitude of the company was that “our management team is the best and they can overcome any hurdles that are put in their path.” But Gryta and Mann finally show that, notwithstanding all of their Harvard MBAs and their gold plated management training programs, the fact is that many of the executives at GE are (pardon my oxymoron) just very average.
I give this book 4 stars and recommend it strongly for anyone interested in supplementing their own business education with an expertly written case study of how strong corporations with the best intentions can go off the rails without proper institutional safeguards in place....more
In Lords of Finance: The Bankers Who Broke the World, author Liaquat Ahamed tells the story of the men who headed the world’s central banks just prior to the Great Depression.
Ahamed tells his story through the eyes of Benjamin Strong, head of the Federal Reserve Bank of New York, Montagu Norman, head of the Bank of England, Emile Moreau, head of the Banque de France and Hjalmar Schacht, head of the Reichsbank. He shows how these four men, both individually and jointly, tried to manage numerous financial crises that occurred throughout the 1920s. Their jobs were made difficult, if not impossible, by their attempt to adhere to the gold standard, the post World War I reparations imposed upon Germany, and the general frenzy over investments in the stock market.
Ahamed explains, in exacting detail, how these four men tried to deal with the various crises that they faced. They could have dealt with those crises by tactically increasing or decreasing interest rates and/or by tactically increasing or decreasing the amount of their nation’ currency. But Ahamed shows that all four lacked the expertise, the tools and the intellect to fully grasp what was happening and how they could control it. When they took action it was generally for the benefit of their own country without adequate thought to what affect their actions might have on the international economy. Ultimately, because they failed to rescue their financial institutions, the world suffered a global economic depression and the rise of Adolph Hitler.
Our knowledge of the Great Depression usually focuses on unemployment, food shortages, and the rise of fascism. But Ahamed puts a face - or rather four faces - on the men who who might have prevented the Great Depression from ever happening. Certainly, the very knowledge that the Great Depression might have been prevented is somewhat frustrating. However, the good news is that, just prior to 2009 when Ahamed wrote this book, the world averted another financial crises because central bankers took action to bring the economy back from the brink. By showing how poorly the bankers responded to their crises in the 1920s Ahamed demonstrates that we may have learned something from their actions so that something like the Great Depression can be prevented in the future.
A book about international finance is not going to be for everyone. However, this book is not simply about international finance. It is a captivating book about four flawed men who failed to prevent an international calamity by not thinking beyond the conditions of their own countries’ economies. This is a very well written book and Ahamed makes sure that the story of these men does not get lost in the details of international finance. I give this book 5 stars and recommend it for anyone interested in the history of the years between the World Wars or anyone interested reading a very accessible primer on international finance. the Great Depression Have Been Prevented?
In Lords of Finance: The Bankers Who Broke the World, author Liaquat Ahamed tells the story of the men who headed the world’s central banks just prior to the Great Depression.
Ahamed tells his story through the eyes of Benjamin Strong, head of the Federal Reserve Bank of New York, Montagu Norman, head of the Bank of England, Emile Moreau, head of the Banque de France and Hjalmar Schacht, head of the Reichsbank. He shows how these four men, both individually and jointly, tried to manage numerous financial crises that occurred throughout the 1920s. Their jobs were made difficult, if not impossible, by their attempt to adhere to the gold standard, the post World War I reparations imposed upon Germany, and the general frenzy over investments in the stock market.
Ahamed explains, in exacting detail, how these four men tried to deal with the various crises that they faced. They could have dealt with those crises by tactically increasing or decreasing interest rates and/or by tactically increasing or decreasing the amount of their nation’ currency. But Ahamed shows that all four lacked the expertise, the tools and the intellect to fully grasp what was happening and how they could control it. When they took action it was generally for the benefit of their own country without adequate thought to what affect their actions might have on the international economy. Ultimately, because they failed to rescue their financial institutions, the world suffered a global economic depression and the rise of Adolph Hitler.
Our knowledge of the Great Depression usually focuses on unemployment, food shortages, and the rise of fascism. But Ahamed puts a face - or rather four faces - on the men who who might have prevented the Great Depression from ever happening. Certainly, the very knowledge that the Great Depression might have been prevented is somewhat frustrating. However, the good news is that, just prior to 2009 when Ahamed wrote this book, the world averted another financial crises because central bankers took action to bring the economy back from the brink. By showing how poorly the bankers responded to their crises in the 1920s Ahamed demonstrates that we may have learned something from their actions so that something like the Great Depression can be prevented in the future.
A book about international finance is not going to be for everyone. However, this book is not simply about international finance. It is a captivating book about four flawed men who failed to prevent an international calamity by not thinking beyond the conditions of their own countries’ economies. This is a very well written book and Ahamed makes sure that the story of these men does not get lost in the details of international finance. I give this book 5 stars and recommend it for anyone interested in the history of the years between the World Wars or anyone interested reading a very accessible primer on international finance. ...more
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