Bill Browder - Red notice

I arrived at Salomon Brothers headquarters at 7 World Trade Center on Friday morning. The Twin Towers glistened in the bright morning sun just to the southwest. I was sent up to the thirty-sixth floor and met by Bobby’s secretary. She greeted me and swiped us through the door to the trading floor. It was huge — desks went as far as the eye could see — and the energy was palpable. This was raw, aggressive capitalism to the core.

We walked along the side of the floor, passing a dozen rows of desks, and then through a short hallway that led to Bobby’s office. Bobby’s secretary announced me and left. Bobby was behind his desk staring out the window toward New York Harbor. He was around fifty but looked much older with his unkempt red hair and a stringy mustache that fell over the corners of his mouth. Except for a bunch of messy stacks of reports, his office was spartan, and aside from his desk and chair, the only furniture was a small, round table and two other seats. As Bobby asked me to sit, I noticed that he wore a pair of beat-up leather slippers and that his red tie was stained. I later learned that this was his lucky tie, which he’d worn nearly every day since he’d made $50 million on a single trade. Bobby settled behind his desk and I got out my presentation, put a copy in front of him, and started to talk.

Normally when one gives presentations, audiences indicate that they’re interested or bored or curious, but Bobby didn’t do any of that. He just stared vacantly at the charts and graphs as I flipped through them. There were no Uh-huh s or nods or anything else to give me an indication that I was getting through — just a blank stare. It was unsettling. Then, when I was about halfway through the slides, Bobby abruptly stood and, without saying a word, walked out of his office.

I didn’t know what to think. This was my final chance to save my career at Salomon and I was blowing it. What have I done wrong? How am I going to salvage this meeting? Should I speed up the presentation? Slow it down? What the hell should I do?

For nearly forty minutes I stewed in panic and uncertainty, but then I saw Bobby returning. He stopped to say something to his secretary and then, slowly, came back in. I stood, ready to beg if that’s what it was going to take.

But before I could even get a word out, Bobby said, «Browder, that story’s the most amazing thing I’ve ever heard. I just went down to the risk committee and got twenty-five million for us to invest in Russia. Don’t waste time doing anything else. You get back to Moscow and let’s put this money to work before we miss out, you hear?»

Yes. I did. I heard loud and clear.

Those words changed everything for me. I did as I was told, returned to London, and got right to work on investing Salomon Brothers’ $25 million. Unfortunately, since this was Russia, I couldn’t just call my broker. There wasn’t even a stock market in Russia yet. If I wanted to invest, then I was going to have to make it up as I went along.

On the Monday after I returned from New York, I sat at my desk in the bullpen and began cold-calling contacts to try to figure out how I was going to move forward. When I was on my fifth call, I noticed a serious-looking middle-aged man walking briskly toward me, two armed security guards flanking him. When he got closer, he barked accusatorily, «Mr. Browder, I’m head of compliance. Can you tell me what you’re doing?»

«Excuse me. Have I done something wrong?»

He nodded. «We’ve heard that you’re conducting securities trading from inside the investment bank. As I’m sure you know, that would be a violation of the employee code of conduct».

For those who may be unfamiliar, investment banks are divided into two halves: the sales and trading division, which buys and sells stocks, and the investment banking division, which advises companies on such things as mergers and new-share issues. These halves are separated by what they call a Chinese wall so that the stock traders can’t trade on confidential information that the investment bankers have acquired from their clients. I worked in the investment bank and was, therefore, not allowed to trade stocks. In practical terms, this meant that when we finally figured out how to buy Russian stocks, I would have to move onto the trading floor. But that was still a long way off.

«I’m not buying any securities», I explained timidly. «I’m just trying to figure out how it’s done».

«I don’t care what you call it, Mr. Browder. You have to cease what you’re doing immediately», the head of compliance commanded.

«But I’m not investing, I’m coming up with a plan to invest. It’s all been agreed to by senior management in New York. I’m not doing anything wrong», I pleaded.

After the Treasury bond scandal that had nearly destroyed its business, Salomon wasn’t taking any chances. «Sorry. Pack your desk», he said gruffly, nodding to the security guards. «You can no longer stay in the investment bank».

As I packed up, the guards stepped forward and crossed their arms, enjoying a rare opportunity to be tough. They then escorted me through the door that separated the investment bank from the trading floor. On the way we passed one of the young guys from the Hungarian team. He winked at me before silently mouthing, Fuck you . No mystery about who turned me in.

Once we were on the trading floor, the security guards asked me to hand over my investment-banking entry pass and left me with my boxes on the floor. Traders walked by, staring at me. I was totally humiliated and felt like I did on my first day at boarding school. I had no idea what to do, so I pushed my boxes under a nearby desk, found a phone, and called Bobby.

«Bobby», I said breathlessly. «Compliance just kicked me out of the investment bank! I’m on the trading floor with no place to sit. What should I do?»

He didn’t seem at all concerned by my dilemma, exhibiting the same total lack of empathy that he’d demonstrated when I’d presented the Russian idea the week before. «I don’t know. Find another place to sit, I guess. I’ve got another call». He cut me off and hung up.

I gazed across the vast trading floor. It was as big as a football field. Hundreds of people sat at row upon row of desks, shouting into phones, waving their arms, and pointing at computer screens, all trying to eke out small discrepancies in the prices of every kind of financial instrument imaginable. Amid this beehive of activity were occasional empty desks, but you couldn’t just pick one and sit. You had to have permission from someone.

I tried to hide my discomfort and walked to the emerging-markets bond desk because I knew the head of that desk. I described my problem and he was sympathetic, but he simply didn’t have any room, so he referred me to the European equities desk. Same story.

I then tried the derivatives desk, since it had a few empty seats. I walked up to the head of the team as confidently as I could and introduced myself, dropping Bobby Ludwig’s name. The man didn’t even turn as I spoke. I had to address the back of his bald head.

When I was done, he swiveled around and leaned back. «What the fuck?» he blurted. «You can’t just walk over here and ask me for a desk. That’s fucking ridiculous. If you need a place to sit, go to management and sort something out». He snorted as he turned his chair back to his screens and grabbed a call on his blinking phone.

I walked away in a daze. Traders aren’t known for their manners, but still. I called Bobby back. «Bobby, I’ve tried. Nobody will give me a desk. Can you please do something?»

This time, Bobby was annoyed. «Bill, why are you bothering me with this? If they won’t give you a desk, then just work from home. I don’t care where you work. This is about investing in Russia, not desks».