The Graduate Baruchian

November 17, 2011 Newman Library

Dean Elliot welcomed the audience to the 10th-annual Russel Banks lecture series.  It started in ’97 with Richard Grasso as the inaugural guest. Introductory remarks by distinguished Baruch Alumnus, Marty Kaplan of KR Capital

Elliot: In your view, what the role of education in leadership?

Grasso: Hired lots of people through in my 40 year career, from Ivy Leagues to “Fire Escape” University.  Invariably, the latter did far better. Those that are hungrier do better and go farther.

Being a kid from the “gutters” of Queens, I didn’t have family connections, a sponsor, or any network.  Only a desire to learn, to grow, and to take people with me.  Surround yourself with great people who have the same vision and drive.   Never forget how you felt when you walked in the door and didn’t know anybody.  Had some great mentors at the stock exchange.  Had some great customers too who supported the efforts we took on. I’m not happy that I never finished Pace, but it’s not too late and the Dean there still reminds me to come back.  If you don’t love what you are doing, get out.

Elliot: To what extent where you reliant on people to help you along?

In forming new ventures (e.g. options trading), we  brought in great people with a common vision. Example of leader:  Lewis Walt, Marine Corps general who would fly into a hot zone with a helicopter, sent the wounded out by that helicopter, grabbed a rifle and fought his way out.  That is a leader.  Once people were in the door, I didn’t care where they came from, but what they did and what they believed in.

Elliot: You refer to yourself as a salesman. How many of your ideas did you have to wait for and how many could you push up from your position?

A pivotal time was the Harley Davidson IPO.  I was stunned by the impact the HarleyD brand had on its customers.  From this I made the bell the NYSE brand and thus commentary from the floor. That humanized the brand and brought the NYSE into a 100 million homes.  That brand was the greatest contribution that I and many others contributed to the NYSE.

Elliott: What are you seeing today that is troublesome?

We have not done the service to the small 100-share investor.  What we’ve done by adopting multi-market price discovery is that the market has become too fractured.   Smart regulation is necessary so that the playing field is level.  Just look at the flash crash in May 2010. The result of 60 different trading venues with their own rules.  Decimal trading was good, but fractions of a penny is a mistake.  Price discovery should stop at a nickel.  The markets in financial instruments should not be regulated by two different agencies.  It makes sense in plain vanilla market, but not now.

The credit-default swap (CDS0 market is the tool of the volatility.  CDS should only be honored to the debt that is insured. There is far more CDSs than debt out there.  In the case of GM there are CDSs out there, but they have no debt.

The structure of the market has been allowed to denigrate to 60 or 70 markets.  The most amazing thing are dark pools.  With all the talk of transparency in Gov’t and in markets,a great amount is hidden in these pools.

Questions:

Steve Jobs and Jimmy Carter also met with success and near catastrophic changes in their careers.  They bounced back even stronger.  Can you speak to how you have changed and what is next?

Being fired from the job that I felt I could do best was not easy.  The process allowed me to show my children and others that you have to stand up for what you believe in.  It’s worn out cliche, but it’s true.  If you don’t stand up for something, you will fall for anything.  It’s also been a gift in that I’ve been able to spend more time with my family and be able watch two of my children come of age and grow up.  It’s a blessing to have been there for that.  More specific to your question, my background at the NYSE and experience makes me look at public office.  Depending on the field out there (i.e. Raymond Kelley), I may plan to run for Mayor.