Delayed Gratification Working Out Fine for Bond Trader Turned Black Fridays Novelist Michael Sears

Michael Sears

Jason Stafford, the hero of Michael Sears debut novel Black Fridays, is a Wall Street trader done wrong. After an accidentally mismarked trading ticket provides a boost to Stafford’s daily P&L, he makes a habit of concealing losses by outdating trades. Three years and half a billion dollars of hidden losses later, Stafford runs afoul of compliance officers and government regulators, and winds up in jail.

That’s all prologue: Upon his release from prison, Stafford finds himself in need of work and largely a pariah in the securities industry. With a young autistic son to support, he takes a consulting job at fictional Weld Securities, delving into the mysterious circumstances surrounding the death of a young trader.

For Mr. Sears, novel-writing is a third career. The Bellport, Long Island native, studied literature and theater at the University of Maryland, then embarked on a career off-Broadway, supporting himself by bartending and with a series of bit roles in soap operas such as All My Children, Guiding Light and One Life to Live.

He got to know some financiers—”I thought they’re smart people, but they’re not scary smart,” he told The Observer over salads at Broadways haunt Joe Allen on a recent afternoon—and, frustrated with his acting career, enrolled in Columbia Business School in the early-1980s. He got his start on Wall Street at Lasser Marshall, and after a stint at Chase, went to work at Paine Webber, where he stayed through the firm’s acquisition by UBS in 2000. After a couple of years working on private investments, Mr. Sears joined a new group at Jefferies & Co., before retiring from Wall Street for good.

Your hero, Jason Stafford, is a sympathetic figure. But are you sympathetic to his crimes?

A lot of people have fallen into the same trap. The foreign exchange trader at [First National] Bank of Maryland who lost gazillions doing the exact same kind of thing, hiding losses, posting dates back so trades couldn’t settle, than scrambling to make it up at the last minute. The fact that’s it’s so easy and so common doesn’t it make any less heinous. In that job, you’re given this incredible freedom, and in some cases you’re rewarded for doing well at it, but there’s an awesome responsibility as well.

Jason Stafford wasn’t talking money and putting it in his pocket, but his bonus was tied to his performance. The bigger issue really is the faith in the system, but every time one of those stories comes out, everyone in the industry gets washed with the same tar brush. For every Jason Stafford there are tons of people who play the game really straight. And for a Jason Stafford to turn out in their midst, it’s an unpleasant thing.

To what degree is writing novels a way to influence the conversation about financial regulation?

I hope it is. I do feel strongly about a lot of these issues. This a very regulated industry, and the vast majority of people in it are honest people. They’re not saints, they’re there to make a buck, but they’re not looking to steal it, and that great majority of those people are hurt financially by the people who are the crooks. It serves everyone’s interests to have a strong police force watching over us. It makes life a little uncomfortable for everyone at times, but in the end, it benefits all of us to some degree.

You started out on Wall Street in the early-1980s and finished your career twenty years later. What changed?

Technology is by far the biggest thing. When I started, people some people still had the yield books on their desk, because they were actually faster to work with than the Monroe calculator. Years later when we had the Bloomberg terminals and the IT was guy showing me that I could run the yield on the Bloomberg, and I told him, well I can do it faster on the Monroe! I couldn’t do 50 bonds at once, which the Bloomberg was real slick at doing. So technology was huge.

Transparency is the other obvious thing. When I started trading bonds, all of this information was still very, very closely guarded. There was a lot of resistance in getting traders to open up. I think certainly in government bonds, people got it. It hurt our margins, but it greatly improved liquidity, which in the end made everyone more profitable anyway. Once you got with the program, it made sense. But there was quite a bit of resistance.

Why novels?

I always enjoyed writing, I did it well, writing was about financial stuff, explaining step-up bonds to the sales force, I was the one that got those ideas down on paper. After I left, I took a couple of creative writing classes, with the intention of going on to get an MFA. That’s what you do, right? You get a degree and then you become a so-and-so. Half way through this process, I got invited into a private workshop, and that made all the difference.

We imagine that it required a different kind of effort than did your previous job.

By the time I was done with Wall Street, I was done with that kind of hard work. The muscles I had used were worn. There are guys who are my contemporaries who are still doing it, but there are a whole lot more who didn’t last 20 years. Every business is tough, but the stresses on Wall Street are very particular. I don’t miss getting a call from Tokyo at two in the morning saying we need to price this out, and sleeping with the phone next to my bed because I know the call is going to come.

Being in a trade for a couple of days or a week is an eternity in terms of waiting to see if it’s going to work in your favor or not. Writing a book took two years. We sold it a year and a half ago and it’s just coming out now. The whole process was interminable in Wall Street terms.

Delayed Gratification Working Out Fine for Bond Trader Turned <em>Black Fridays</em> Novelist Michael Sears