The Golden Pitchbookk

March 23, 2019 | Author: Iftekhar | Category: Financial Adviser, Fiduciary, Financial Industry Regulatory Authority, Investing, Economies
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the amazing pitchbook a real mystery...


Junior brokers cold-call prospects for up to 14 hours a day, working from a memorized script that they rehearse by screaming pitches across the room to each other before the opening bell, a former employee of the firm told BuzzFeed. BuzzFeed obtained both that script, used by brokers of eery leel at the !""-employee firm, as well as another script known internally as the #$olden %itchbook,# which is gien only to a priileged few senior brokers at the firm. &onsidered a performance reward for top brokers, the #$olden %itchbook# is handed down from their mentors at the firm who hae also receied the elusie tome, the source said. #'t(s secret, priileged information,# said the source. #)ome people at the firm don(t een know about it.# *he book(s origins date to the 1+"s at Bear )tearns, and it has gone through arious iterations on its ourney into the hands of the lucky J*F broker who, after impressing superiors, is walked down the street to a inkos, where senior brokers superise the book(s copying and handoff. #'t(s a reward for senior brokers to gie to unior brokers on their team as an inestment in them,# the source said. #/nce they had it, they used it all the time.# *he book offers a rare behind-the-scenes look into the world of highpressure, hard-scrabble 0all )treet stock ockeying, featuring detailed scenarios and responses used to pitch stocks to prospectie clients. *he aggressie pitch tactics in the book and supporting J*F documents, such as what one scenario described by the source as #on(t %itch *he Bitch,# hae caught the attention of the FB', FB', the  the )ecurities and 23change &ommission, and the Financial 'ndustry egulatory 5uthority. 5uthority. 'n 6arch, the )2& charged charged Belisis  Belisis with fraud for a hedge fund scheme in which he steered bloated fees to J*F. 5 month later, Finra filed filed a  a formal complaint against J*F regarding the firm(s actions in Februrary !"1!, when it allegedly pushed shares of 5merica 0est esources, 'nc. 750)8 common stock on inestors, thus inflating the price. Brokers at the firm also allegedly failed to e3ecute sale orders for clients in a timely manner but sold the maority of its proprietary shares for a more than 91 million profit. *he firm(s alleged failure to e3ecute at least 14 client sell orders lost inestors thousands, and 5merica 0est is now in bankruptcy. bankruptc y. 'n an een more outrageous twist, the Finra complaint accuses Belesis of

intimidating employees with threats of maligning their broker records and, in one case, running oer an employee with his car.  5gainst that backdrop, here are some of the techni:ues outlined in the #$olden %itchbook# used by J*F brokers. *he firm(s attorney, obert Bursky, in February told Bloomberg it did not use #high-pressure tactics.# ;e said at the time it doesn(t use scripts. Bursky did not respond to BuzzFeed(s re:uests for comment.

Scenario #1: "Speak to My Wife"/Don't Pitch the Bitch When a potential client (prospect) told a JTF broker he wanted to speak to his wife before placing an order, the broker would oer a series of rebuttals designed to pressure the prospect to buy immediately. ccording to a source familiar with the !rm, this method is referred to internally at JTF as "#on$t %itch the &itch," a bit of industry 'argon made famous in Boiler Room that discourages brokers from making sales pitches to women and implores male prospects not to inole their wies or girlfriends in stockbuying decisions. "(Prospect) if you want to call me back so you can ask your wife if you can buy the stock, I will call my wife and see if I can sell you the stock, come on! You make business decisions daily  without your wife" "ets face it, if you #o home and tell your wife that you want to in$est with a broker whom you dont know $ery well, chances are you will be hit with a fryin# pan and spendin# the ni#ht on the couch %owe$er, once she sees my brochure from the &rm and a dossier that I send you in the 'ed packa#e with a buy con&rmation, what do you think she is #oin# to say* Besides, it is a lot easier to be# for for#i$eness than to ask for  permission ri#ht*" "+hould I send it to your home where your wife will throw it out  or to the oce where you will put it by your merchant banker book that you ne$er read either*"

Scenario #2: "Not Interested"/he S!ap and $ *f a prospect told a JTF broker +atout that he was not interested, the broker would use a techniue called "the slap and hug" to essentially belittle the prospect before building him back up through kindness or feigned concern. &rokers also used reerse techniue, "the hug and slap," at times.

"I ha$e ne$er in my life met anyone who wasnt interested in makin# serious money ('irm) is makin# more serious money for people than anyone out there It is not that you are not interested, somethin# else is botherin# you I am a problem sol$er Perhaps if you tell me what your actual concern is, I could help"

Scenario #%: he &on$er( )e!ationship  JTF brokers want prospects to know that they are in this thing for the long haul, but they are de!nitely -T gay. "ets face it, your &rst step is the hardest I am not lookin# for  a one ni#ht stand You married your #irlfriend ri#ht* et me ask you a -uestion, you met your wife, but you did not .ump into bed with her on the &rst ni#ht did you* /f course not!! 0aybe you held her hand or maybe e$en kiss 1ell look, I am not lookin# to .ump into bed with you or e$en #et a kiss, I simply want you to hold my hand with 233 shares and 4in5 678 months you are #onna (sic) want to #et into bed with me -uite frankly I am not that #uy 4lau#h5 +o do the 233 shares not because its #ood for me, but because it is #ood for you"

Scenario #*: his +o(pany Is ,oin$ to Be Bo$ht Soon So -o Need to By No.  To coa/ a reluctant prospect into buying immediately, the script contains a boilerplate response scenario suggesting that whateer stock the broker is pitching is about to get acuired, likely for a premium. "0ore importantly, when I ha$e timed it with a near term e$ent  I ha$e made a tremendous amount of money the e$ent here is a possible takeo$er 1e are not buyin# this stock for earnin#s9 we are buyin# it for a takeo$er, which I feel is eminent"

Scenario #: My +!ients 0re )ich and S(art n!ike  -o333 ...nd the more you inest with JTF, the better your chances of becoming rich. "I want to say sincerely: I ha$e many clients with net worths ran#in# between ;o disrespect, but you tellin# me you are not li-uid is an insult to both you and me! A #uy with (amount) in the market has a couple hundred in the bank to back it up Chere is always an ecuse not to buy stock, but there is ne$er an ecuse not to make money!" "uys like you dont e$er let your bank accounts fall below 8 &#ures Its not that you cant do it, its that you wont do it I am #oin# to buy you (shares) of (stock) at (price), money is due in one week but make me a promise 1hen I am not .ust ri#ht but eactly ri#ht, net time out we work in siDe and you send me 6 of your #ol&n# buddiesE/=*" "(Prospect) if I oFered you a Rolls Royce in min4t5 condition today for ;23,333 could you come up with the money* /' G/HR+ Y/H G/H!! ets be candid, if you like my idea today, you could come up with ten times that amount" 0cenario 193 Trust :s, We #id the ;esearch for 4ou

 The script takes pains to instruct brokers in ways to aoid sending additional information reuested by the client on the stock being pitched. "By the time you #et information or research reports, you are buyin# the stock < points hi#her Che way to make money in this business is to buy in to fundamentally sound companies that are timed with near term e$ents or catalysts 1ith this approach I ha$e made a fortune for a select #roup of indi$iduals" "/k (prospect) 'ine! I ha$e no problem with that, but let me ask you somethin# &rst, correct me if I am wron# 1hat youre tellin# me is that if I send you the information you want about the company and it mentions the merits I described, that you

will open an account* (>/) Chen ob$iously (prospect) the re-uest for information is not your real concern" 0cenario 1 does not reuire brokers to hae a !duciary duty to their clients, only !nancial adisers. *n fact, the commission has been pushing to change the laws pertaining to !nancial serices professionals and their !duciary responsibility to their clients, and has een acknowledged that inestors are confused by the leel of !duciary responsibility their !nancial planning professional has to them.  The 0=> has formally recommended a rule that would "implement a uniform !duciary standard of conduct for broker dealers and inestment adisers when proiding personali?ed inestment adice about securities to retail customers." 8ike, say, customers who may hae 'ust bought the ne/t merica West from a broker at John Thomas Financial. 78#=- %*T>5 &@ 

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