"The Buy Side" is the type of book hedge funders hate.
The new tell-all account by former Galleon Group, Argus Partners and J.L. Berkowitz stock trader Turney Duff is a 301-page study in the worst stereotypes of Wall Street. There are vivid anecdotes of insider trading and dealing at Galleon under Raj Rajaratnam; cocaine-and-whiskey fueled debauchery in New York and Miami paid for by bankers desperate for hedge fund business; and nasty hazing incidents involving shots of tequila and Tasers.
Duff's coming of age story during the fast-money, loose-rules days before the 2008 financial crisis is the stuff Wall Street critics love to seize on. Duff's account of his work on trading desks seems to underscore what naysayers have long contended: that the investing game is rigged and that financial professionals are a bunch of ethically challenged dollar-chasers.
Most hedge funders, of course, won't see themselves in Duff. They do their own analysis instead of pumping what Duff calls his "hedge fund mafia" for investment ideas. They go home to their families instead of spending nights at the "White House," a sell-side-funded Manhattan safe house for enjoying cocaine and prostitutes. And they don't descend into drug-induced paranoia that results in lost homes, girlfriends and jobs.
Duff is, by his own admission, insecure and unstable. His experiences are as much a function of his inability to control himself as they are about the fast-trading, hard-partying culture that nearly destroys him.
Duff grows up middle class in small town Maine. After college in Ohio, he makes his way to New York City to become a journalist. Having trouble finding a writing job, Duff becomes an entry-level sales assistant at Morgan Stanley in 1994. He joins Galleon in 1999 and becomes a healthcare focused stock trader.
The author describes a malicious culture at Galleon under Rajaratnam and co-founder Gary Rosenbach. Employees are pitted against each other and verbally abused, trades are made on insider information and clients of the hedge fund are robbed of some of their deserved trading profits.
Galleon's history of lawsuits and eventual demise in 2009 back up some of Duff's claims. Rajaratnam is serving 11 years in prison term for insider trading and others at the firm have gone to prison for similar wrong-doings. Rosenbach was never charged and left the firm just before Rajaratnam's arrest; he now owns Rose Valley Ranch in Weatherford, Tex. and rides horses in cattle herding competitions. A lawyer for Rosenbach, Doug Koff, declined to respond to Duff's allegations.
|| Turney Duff|
While Duff finds the culture at Galleon abusive, he also starts having fun. Shy at first, he learns to immerse himself in meetings with the brokers who want his fund's business, and with the after-hours party culture that goes along with it. First at Galleon and then at Krishen Sud's Argus beginning in 2001, Duff relishes the perks that come with being a desirable client. He is flown to South Beach on a private jet and given a bag of ecstasy to party through the weekend. He watches the 2002 Patriots-Rams Super Bowl from the 50-yard line. He takes helicopters to the Hamptons and jets to Las Vegas.
But the fun doesn't last. While he's making lots of money--$1.86 million in 2003 alone--his party binges begin to hurt his performance at work and his relationship with his girlfriend and their young daughter. He goes to rehab. He relapses. He loses his job. By the end of the book, Duff is a broken addict who can only save himself by leaving Wall Street.
It can be hard to keep track of who Duff really is. In one scene he's the nice, naïve guy in the office being humiliated by his crass bosses. In the next he's pushing his way into exclusive Manhattan nightclubs by saying "I don't wait in lines. I snort them." He's sober, wanting only to be a responsible father. Then he's throwing himself into a street puddle to fake a mugging as an excuse for missing work and family obligations during a cocaine binge.
"The Buy Side" isn’t always elegantly written. Duff sometimes uses gimmicky literary devices like using a made-up image of a check with his annual pay as a chapter or a series of relationship anecdotes introduced by letters that eventually spell "I LOVE YOU." The writing can also be choppy. Duff goes back and forth between stories without breaks in a way that's sometimes confusing. But overall it's a clearly written, easy to understand glimpse at what it is like to work at a volatile hedge fund and the lifestyle that can go along with it.
Duff just wants to tell his story and largely avoids broad indictments of hedge funds and Wall Street. But his mere act of telling the story is rare and valuable. It's impossible to read his book without wondering how much of the selfish, destructive culture he describes still exists--and what it means for the future of the industry.