the cold call

1976

“Play it straight and roll with the punches.” Kevin Grady

One of the most difficult things in any business is getting clients, and the most formidable two-headed dragon guarding the treasure of success is the cold call. One in a hundred can do it well. One in a thousand enjoys doing it. One in a million loves it. The cold call is the civil equivalent of diving down a lightless dirt tunnel in Vietnam with a knife in your teeth, a flashlight in one hand, and a .45 in the other. It’s not quite that of course, but it feels like it if you do it for a living, like it or not.

One afternoon, in a quiet market while happily employed at the Standard Bank located on Park Avenue in NYC—a tony branch of the esteemed Standard Bank of South Africa in Johannesburg and often called the JPM of Sub-Saharan Banking—I was bored and decided to do some cold calls. I have always been an artfully gifted ice-breaker in any setting. Calling girls for dates and hustling business has always been second nature to me.

I hit on a few hedge funds and corporates and stealthily worked my way past the guardians of decision-makers for an hour. I met a portfolio manager working at CALPERS, who is to this day one of my best friends. I met a head trader for Waddell and Reed in Kansas City that afternoon. I never got his business because we couldn’t find a fit but I made friends with him and we had dinner together a few times when I was working In Chicago. All because of a few calls on a dull afternoon. Fwiw, Wadell and Reed is, according to legend the firm that sold 14,000 S&Ps on the opening of October 19, 1987, the ostensible tipping point of the crash. I did ask him.

I would say at least half of the business I’ve gotten in my career has been from cold calling. However, no cold call was ever more productive than one I made to Jack Hetenna at the Republic National Bank in October of 1976.

I had just been approved by the CFTC to solicit business for Conti Commodities as a Series 3 account executive. I got a phone, a desk in the trading room, no salary, a 33% payout of gross, and six weeks to live or die. I went at it like a starving wolf. I called every banner and tombstone in the Wall Street Journal. I chatted up every office girl, flattered every secretary, had beers with every clerk, trader, or boss that would talk to me. After the close I walked up and down 47th Street in midtown shaking hands with the refiners and jewelers. I made as many friends as I could, as fast as I could, all of them somehow connected to gold and I started opening accounts.

A few weeks into the journey, I noticed a small ad offering Krugerrands on the commodity futures page of the Wall Street Journal. I called the number and Jack Hetenna at The Republic National Bank answered the phone. I went with a straight forward approach and said I was just getting started, totally committed to gold, and asked him if I could do some orders for him. I could tell he liked me but he said, “I deal directly with the floor.” We talked about gold, and I held my own because I was a voracious reader, and whatever I didn’t know from experience, I had consumed by taking the entire wheel of the day’s Dow Jones news tapes home every night. He said, “You should go to the floor, kid. You’ll be good on the floor.”

Before we hung up, he asked where I thought gold was going. I said up. He laughed and said, “It’s going down.” So, I offered him a bet: “Dec. gold is trading at $125. I’ll bet you it trades at $135 before it trades at $115.” He asked me how much, the sage trader to the rookie. I said, “You decide.” I kidded him, “Make it easy on yourself. You’re going to lose.” He said, “OK, wiseass. How about a Krugerrand?” I said, “You’re on.”

When I put the phone down, I was so out of body I had no awareness of where I was. It was like I was dreaming. I just made a bet for a Krugerrand with Jack Hetenna, head of gold trading at The Republic National Bank, the biggest gold trader in New York.

By the middle of November, gold hit $135, and I called him. I had to hold for a few minutes. When he finally came on the line, he was curt. I said, “Hey it’s me, JJ from Conti. Dec gold just traded at $135. I won the bet! I want to come up after the close and get the gold coin.”

He said, “What? Who the fuck is this??” I reminded him of our conversation and the bet. There was a lot of noise in the background. I was thinking maybe I didn’t pick the right time to call him, but it was too late. “Fuck you, kid,” he said. “I don’t have time for this shit, and I’m not giving you a Krugerrand just because we were shooting the shit a few weeks ago.” I said, “Hey, wait a minute. You can’t welch on me. I would’ve paid you.”

The line went quiet for a few seconds. No way he was going have it going around that he welched. He said, “OK. This is what I’ll do. Call this number and ask for Kaspar Lipps.” I started to complain, but he said, “That number is worth a lot more than a Krugerrand.” He hung up. Click.

I was completely bummed, my idealism shattered. But I had the number, and there was no going back. So, I called it. A heavy Swiss accent picked up. “Suisse Bank, Kaspar Lipps speaking.” As it happened, and Hetenna knew it, Swiss Bank had days ago opened a gold desk at their NY branch. I was the first broker to call them. Kaspar said, “Very good. Very good. Please come over today.” Swiss Bank was a block away. I courted them for a year, got the clearing and execution business, and the relationship lasted for many years. However, there was a twist at the end of this story.

Not long after Kaspar started trading gold with me, I’d made enough money to buy some gold for myself. I called Kaspar and said I’d like to buy 10 coins. “Ya, ya,” he said. “OK, ya.” He gave me the total due with tax and I dropped off the cash on the way home. The next day, I asked when I could pick up my coins, and he said I had to wait a few days for them to come in. A week went by, and I called him after work to mention it again, but his assistant Alain, he was from France, said Kaspar had just left on vacation for two weeks. I said I wanted to come over get my coins and Alain said, “I don’t know anything about 10 coins but Kaspar just sold me10 Krugers before he left on vacation and took the cash with him.”

I hung up and walked over to speak to him in person. He said the gold desk didn’t deal in retail quantities, that Kaspar probably thought the coins were a “gift.” He smiled at me as if I should know these worldly things and shrugged. “In any case it’s not my business. You’ll have to talk to Kaspar when he gets back.” The implication being if I wanted to keep the business I should suck it up and forget it. I asked Alain to get in touch with him and have him call me, but he never did.

This really got under my skin. The Hetenna bet went my way, sort of, but I would much rather he paid the bet fair and square. Yes, I was making a lot of money and Kaspar knew it so he was obviously squeezing me for my gold. The future looked equally obvious and I wanted no part of it.

The next day, I called Swiss Bank in Zurich and asked for the head of gold. I said I was the broker in charge of the clearing business in NY, so I got to him straight away. His name was Freddy Schneider. I said I had something confidential and important to tell him and asked if I could come over and meet him the following day. He said yes, so I took a flight that evening.

The next morning at the Pradeplatz in Zug, I sat with Freddy in an anteroom and put my cards on the table. I said, “I don’t want to make big deal out of this, Mr. Schneider. I paid for 10 coins and all I want is my 10 coins. If you and your bank want another clearing broker that’s ok with me.” Freddy referred me to an elegant hotel on the Bahnhofstrasse, and asked me to come back the following morning. The bank paid for my room.

The next morning I met with Freddy and some senior guys in an elegant conferece room. They gave me 10 Krugerrands and apologized profusely for my trouble in stern but dignified tones. The meeting was brief, five minutes or fewer. Then Freddy gave me a tour of the dealing room and allowed me to sit in for the morning fix. There was a lot of hand shaking, introductions as “our broker in New York” and genuine courtesy. It was probably the best day of my life. That evening, I went to an early dinner with Freddy and another trader about my age at a very nice restaurant.

When I got home Kaspar was gone. My idealism was restored but its soul had been tempered. I keep it under lock and key now and I never use it in battle or business. I started dealing with Zurich directly and I bought seats on the exchanges. In the following years, I got business from most of the gold banks in Zurich and London, private banks in Geneva and the Russians in Moscow. Conti Commodities went out of business in 1980 because my boss was a kingpin in the silver squeeze. However, by then it didn’t matter. I had my own fish to fry. But that is a story for another time.

I never spoke to Hetenna again.