Move to L.A?

I have to really be not held on this one. I remember the meeting well, but the details and especially the date are hazy. I’m guessing 1978. It was announced that the Los Angeles and San Francisco floors would be combined with the San Francisco floors moving to Los Angeles. WTF? Options members said they hadn’t voted on anything like that! The PSE was not a democracy and there were provisions in the Constitution (Rule 6) that The Board could take any measures deemed necessary for the good of the Exchange. This still didn’t sit well with members who had just moved to S.F. “I never voted on it!” some insisted. I think the Exchange had the meeting to let members vent, and then they would go through with the move anyway.

The meeting was held in a ballroom at the Embarcadero Hyatt. PSE executives and Board members were on a small stage. Many of the members, especially on the Equity floor, had no problem with moving to L.A. Many of them were from L.A. and it would be a return home for them.

I had to admit that when I first moved to California I didn’t know that much about the rivalry between Los Angeles and San Francisco besides the Giants vs. Dodgers thing. Many of us were just getting used to living in S.F. and the idea of moving to L.A. was more repulsive than when we first arrived. I always remember a big trader I knew in L.A. asking me, “Why did you EVER move to San Francisco?” I reminded him that Chicago winters were not that pleasant.

There was a lot of animosity and tension between Exchange execs and members, especially the Market Makers. By now, there were more Market Makers from Chicago and New York. They were not used to PSE ways. An Exchange President, Dean Cluff, had once commented that PSE executives were used to telling employees and even members what to do. They were not used to being questioned.

At the meeting, the PSE executives laid out their rationale for the move. Having two floors was a bit absurd, even then. There was some discussion of the problems the Options floor was having.

It’s hard to remember exactly how it happened, but things became a bit heated. Exchange fees and executive salaries were brought up. Someone said that the Market Makers were really running the Exchange by risking capital. (I don’t think they used the “liquidity provider” term yet.) One executive said that market makers had made that career choice and should live with it. This set off some yelling from the Option members. There had been some talk on the Options floor of trying to “be cool” during the meeting. “They won’t listen if we’re all yelling at them.” Most of that went out the window as the meeting went on. I can’t remember all that spoke out, but there were two that stood out.

An unlikely ally spoke. Marvin Breen was usually at odds with the Market Makers, to say the least. So, it was surprising when he spoke up and said, “Despite my colleagues appearance, they are businessman.” He also mentioned that there were professionals among the Market Makers including honored academics. The point was that they were businessmen who also looked at the bottom line.

Stu Blackman had been an Independent broker on the CBOE and was relatively new to the San Francisco floor. Quite a character. There are many stories about him. To say the least he was frank. “I know how to talk to these fuckers.” He took center stage and told the executives, “Let’s face it gentlemen, money talks and bullshit walks!” I can’t remember the exact context. Those onstage really started to squirm.

I think Lee Wilson was a Board Member at the time. He was on the stage. He did yell, “Move back to Chicago!” It may have been aimed at Stu, but it was a bad time for the comment. The members opposing the move exploded.

The comment was revealing. It was typical of the split between Options and Equity members. From day one they called us “Option Scum” in that San Francisco provincial way. The Equity floor did stay open at least an hour after Options trading hours. They tried to stop Options members from crossing the Equity floor after the Options close. Too disruptive, or something.

Of course I remember the more dramatic highlights. The political background is hazy. I doubt it was because of the meeting, but of course the merger of the two floors did not take place.

Anyone out there with more details on this now ancient squabble?

Great Moments in PSE History

The first citation was given to Wayne Siepman for “running on the floor.” Wayne was a large man. Running on the floor for him was an absurdity. “Running on the floor” had been defined as moving in a manner that would displace other persons. John Brown Sr. was a buddy of Wayne’s from OTC days. He wrote the citation. I’m not sure, but I think he was the Chairman of the Floor Trading Committee that first year. He told me later that, “They had to break the ice.” The Committee didn’t want the first citation to be the result of some trading or political vendetta. It was still some of the fiendish JB Sr. humor at work.

The PSE had a party at the St. Francis Drake to celebrate the opening of the Options floor. What a different era that was. The Exchange paid to rent a ball room at the St. Francis for a party. The Chicago contingent, as usual back then, acted like a bunch of barbarians, even though many of us were employed by the Exchange at that time. There was some speechifying by PSE bigwigs. There was even a skit. (Have to wonder who’s idea that was.) Members played out a crowd scene. Sam Mora wore a fedora and played some sinister, bullying CBOE market maker. He had come West to rip everybody off. “I’ll do size!” It was an odd scene in a simpler time. There was some smoking of a smelly vegetable like substance. I saw some PSE executives leave in a huff. They had expected a more sedate scene.

It’s hard to remember how slow it was back then. It’s lost in the selective nostalgia. There was some trading. There was a lot of jockeying back and forth between market makers. There was some action at the Santa Fe Oil (SAF) pit, which also had ABC in the early days. Some of the stocks that were only listed on the PSE did OK, but the dual listings were largely a fiasco. There was some trading at the Teledyne (TDY) pit, even though it was a dual listing with CBOE and AMEX. It was slow though, like watching paint dry. During the slow, boring trading hours, Market Makers started comparing the size of their positions. “Oh yeah, I’m short a hundred!” They pulled out their sheets to prove the balance they had in their accounts. “Oh yeah, look at this!”There was some kind of financial macho thing going on. Let’s put it this way, they didn’t do that on the CBOE. There was an odd rivalry between those that cleared different clearing firms. First Options vs. Goldberg.

We watched the public trade through the PSE on almost every order of the dual issues. Market maker Sam Anderman was about 70, and he was dedicated to getting PSE Options off to a good start before he retired. He set every market in the stock options of Merrill Lynch a teeny or an eighth better than the other exchanges. The orders were still going to the other exchanges and getting filled at the worse price. I think there were excuses like, “We didn’t know if you were really there, so we sent it to the CBOE.” Most of us thought the PSE was doomed. We’d have a year in California and then go back to Chicago with our tails between our legs. But we’d have our California adventure first.

One slow day I was passing the Teledyne book on my way back from break. I knew something was up. Irv Bookspan was always looking to make some extra cash, usually by making some crazy bet.

I don’t know exactly how this bet started, but I’’m pretty sure Doug Berman was one of the instigators. The proposal: Irv Bookspan, then a member of the OBO staff would bite Kirk Mann, another OBO staff member, on the butt. On the floor. During trading. But, it’s got to be a real chomp. I’m not sure if the payoff was going to be $20 or $50. It didn’t matter.

Kirk Mann was a nice guy from Sonoma. I don’t know how he wound up at the PSE, but he was one of the few who didn’t either came from Chicago or had some kind of market experience. He was a laid back California guy who thought the whole Exchange thing was crazy. Irv was from San Diego. He later instigated a diet weight loss bet with about a dozen guys, even though he didn’t have much weight to lose. (Another story.) He had also gained some notoriety in his hometown for eating a cow’s eyeball to win a bet.

So, here’s this clerk standing there “checking the book” going over all the orders to make sure they’re filed in the right place and with the right size. He was updating the backup cards by writing the volumes and prices of the orders and making sure everything is filed correctly. (How’s this for ancient obsolete technology?) You’ve got to have clean, neat back up cards showing all the orders in case something actually trades and the next bid or offer can be entered and put on the screen by the OBTO. A few of us knew something was up, and watched. It was a slow day, so Irv had to use some stealth to get near his victim. He got down on his hands and knees and snuck up on Kirk Mann by going around the PRTO terminal that was behind the book.

Irv struck and made sure he got a real chomp, and leave no doubt that he deserved the cash. Kirk Mann jumped and let out a yell that was more like a yelp. You could hardly blame the guy. It had to be the last thing he expected while standing on the floor of a stock exchange. There was a quick explanation, and he took the joke with good humor. He thought we were all nuts anyway. He seemed all right with Irv making the money.

The bet was a big topic of conversation for years. KIrk Mann left the floor. It wasn’t the butt bite. He thought the business was too frantic and crazy for him. Irv worked on the floor for years. He was later the founder, with Doug Nunn, of The United Lunch Company. He made more crazy bets over the years, including one that he could memorize a page of the phone book.

Opening Day

After some delay, it was finally opening day. No more simulation. The trades would be real. Before the opening, the OBOs compared notes. “What do you have for the opening?” They all had orders to buy and sell ten calls on almost every stock on the floor. (It’s possible the orders were for less than ten lots.) Most of the orders were for the first series that would open. All the orders were from Sutro. They had done the first stock transaction on the PSE Equity floor (Or so we were told.) and desperately wanted to do the first Options trade.

Wally Conrad yelled, “Rowdy opening!” We at least wanted to start loud. He got the first trade, crossing ten Levi calls. Sutro had their historic opening trade. They also had orders all over the floor. They even had a booth and an employee on the floor at that time. He started running around trying to cancel all the other orders. The OBOs raced to fill as many of the orders as they could before the Sutro guy could get to their book and cancel the remaining orders. After that first rotation, the place went quiet. I remember a market maker saying, “They’re off and walking!” Looking back Sutro may have been painting the tape, maybe inadvertently. They really did want that first trade. Painting the tape would become a big issue later.

They gave the everyone on the OBO staff a jar of candy. It was a nice, glass commemorative jar. “PSE Options Opening Day.” We didn’t use it to store candy. It was typical of the Exchange’s attitude. Give the kids a jar of candy.

Simulation

How’s this for antiquity, this one goes back to before the floor opened in ’76. Before the floor opened there was simulated trading for three weeks. It might have been four weeks. The opening of the floor was postponed at least once. Simulated trading was bizarre. I was a member of the Book Staff and we trained doing these crazy drills where they’d fill “the shoe” with orders. Prioritize. What’s close? File them away. Really comic to think back. There were hundreds of hand written orders. We practiced these busy scenarios that didn’t happen in those early years.

The market makers stood around and traded. It was all fake, so the trades didn’t mean anything. The “trades” were put on the tape to test that system. The original market makers were some crew. There were a few CBOE veterans, but many were clueless. They didn’t know what they’d gotten themselves into.

One day a Market Maker, I think his last name was Tuck, came up to the book. He asked the OBO, Kathy Conrad, if it was important to be able to read the screens. She thought he was putting him on at first. “No, really, I mean, is it important to read the screens?” He was nearsighted and didn’t want to wear glasses on the floor.

Kathy pulled him to the side. I couldn’t hear what she said, but she talked him into leaving the business. It might have been the best advice this guy ever got, and I doubt anyone else would have told him. For some reason I can’t remember, there was a spike in seat prices. I heard the guy made 10 grand on the seat.

"I Went Down to the Demonstration"

“I went down to the demonstration”

This one goes back to the old floor. Protestors were always drawn to the Equity floor entrance on Pine street. The big pillars made it a better photo op. Belly of the Beast and all that. I don’t think they even knew about the Options floor at that time. It had to be the early Eighties. We had heard the demonstrators were there during the trading day. I was standing outside after the close. Maybe about fifty demonstrators were on Pine Street. There was a hard core that crowded around the door. I heard a couple of them yell, “We’re going in!” They rushed the door. After about a minute they came FLYING out. It was like a scene in a slapstick comedy. They were trying to enter just at the close when traders would be leaving through those doors. They made the mistake of trying to block traders leaving the floor for the day. Big mistake.

The demonstrators regrouped outside. They had expected the guards to react, but they hadn’t anticipated getting their butts kicked by “the stock brokers.” They recognized some of the traders who had just tossed them out the door. There were vague threats. “We’ll be back!” Bob Sandmeir assured them that “We’ll be here EVERY day!” I don’t remember them coming back.

Eventually they did learn about the Options floor and the capitalistic excesses that were committed there daily. I think a former floor employee tipped them off. There were other demonstrations, usually around Earth Day.

I had gone to an Earth Day celebration near the Marina on Crissy Field. I saw fliers encouraging people to show up at the PSE the next morning to demonstrate. I had long hair at the time. “Will you be there tomorrow?” one guy asked me. “Oh yeah, I’m sure I’ll be there tomorrow,” I told him. I remember wondering how many would show up at the ungodly hour that we started at.

I can’t remember exactly what was going on, but I had more than the usual motivation in making the opening that day. Maybe it was a takeover or something, but I HAD to be in for the opening. The Exchange had arranged to open a side door that was usually used for deliveries. It was hoped members and employees could slip in through that door. By the time I arrived, the demonstrators had figured it out and there was a crowd of people trying to block that door.

Again, I “didn’t look like a stockbroker” then. I just acted like I was a part of the demonstration and slowly worked my way to the entrance. This almost worked, but just as I got close, a couple of demonstrators realized what I was trying to do and linked arms to try and stop me from getting in. I bashed my way through them. Here my strategy backfired. There were some Exchange officials, SFPD and I think some private security guards standing near the door. The security just saw me as a demonstrator trying to push my way in. They were ready to pummel me. Dave the Guard jumped in just in time yelling “He’s all right!”

“Does he have a badge?” one of the security guards asked. They were still a little suspicious. Oh yeah, right here. It was the badge that said World Commander on it, so they had their doubts again. Kim Koppein assured them that yes, believe it or not, “He’s a member,” and I was allowed in.

The Duck Kidnapping

This goes way back to the early days of the old floor. When McDonnell Douglas was listed there were split opinions on what the stock would be called. This was important stuff because whatever name that was chosen would be used and heard maybe hundreds of times a day. Should it be Mad Dog or Duck? Duck somehow won. They got a cute stuffed animal duck as a mascot and displayed it prominently at the post. It was kidnapped after the close one day. Ransom letters were left with instructions. The whole crowd was to hop on one foot and do other stupid things to get the duck back. I was a big suspect and people grilled me daily to bring the Duck back. I had nothing to do with it, but suspected Bill Sinquefield. He repeatedly denied taking the Duck. Enraged traders said they were going to “get me” etc. if the Duck was not returned. If I didn’t do it, then I knew who did.

Another ransom note appeared with letters cut out from magazines, like in the movies. When the joke had seemed to get stale, pictures of the Duck in front of Big Ben and the Eiffel Tower were sent to the crowd. And finally one of the Duck’s webbed feet was cut off and sent in an envelope with a threatening message: “This is not a joke. I’ve got your Duck.”

Introduction Most Memorable Events

I have my doubts about FaceBook. I’m on it and I post, but I can see why people don’t want to be on it. Anyway, I’m reposting some of my Great Moments in PSE History for those who worked and traded on the floor, but don’t want to join FaceBook. I know you’re out there.

The first group I heard about was the Pacific Coast Stock Exchange Alumni, created by Josh Smith. “What is your most memorable event on the floor?” I posted the following post on this site. Later a group was started by Stephen Smith and Kellie Miller-Robb, Epic Stories of the PSE. This group has many posts about the strange subculture known as the floor.

Even though I have reservations about FaceBook, if you worked on the floor, you might consider joining to see the photos of the floor. People have posted great pictures of the past. There are sixty photos there now. There are also posts by people who reminisce on their experiences on the floor.

Kellie Miller-Robb has posted her diaries from the Eighties and Nineties online. It’s a unique, gutsy and revealing look at those days and nights. You can find “Real diary of a 30 something in the 80’s” at

http://diary8090.blogspot.com/

Some of my stories are from a long time ago. I’ve learned that “floor stories” often have as many versions as there are people telling them. So, I want to be “not held” on stories that in some cases are twenty five and thirty years old. If you have a different version, or corrections, you can post on the “comments” or e-mail me at Worldcommander2004@yahoo.com.

I must have had about fifty memorable events on the floor:

The Christmas parties that Wayne Siepman, the owner of Coast Options, threw on the old floor. A buffet of free food. Tubs of beer. The joke was that the first traders in line for free food were always the guys that screwed Coast Options the most. The amazing thing looking back is that it took place during trading hours, not that much was trading back then.

The day of the power failure in New York. July, 1977. They made us wait, but eventually closed for the day. Many of us reconvened at 1244 California and wound up on the roof singing God Bless America.

The Santa Fe takeover. A wild mind boggling event. Seemed like half the floor blew out. Someone had come in very early and hung a banner that said: “This whole industry stinks.” Can’t remember the whole story on the banner, but I know one of our colleagues on FaceBook knows the details.

The party for the opening of the new floor. Let’s just say we properly christened that place. They had rented a little R2D2 style robot. It buzzed around and had a little video camera in it. It was irritating. It rolled up to a group of us who had been discussing how to destroy the little rental robot. It took off fast.

Quicksilver. The movie starring Kevin Bacon that was partly shot on the floor. They were looking for people to be in the movie. You had to have “The Look.” Remember people stayed real late for shooting. Then they’d come back for the trading day. It was like they didn’t leave the floor for a couple of weeks. The trailer is on YouTube.

The Crash. Still the craziest day. I remember I was at Jay’s Hot Dog stand after the close. I was just starting to think things would be OK when a trader came by with a gym bag with $10,000 in gold bars in it. He’d just converted cash to the bars. “Money won’t be worth anything.”

The Quake. I went to the floor the next day. Weird to see it empty with only the emergency lights on. Heard they were sending stocks back East to continue trading. We thought that was it. The business would never go back West again. (Have to admit it did.)

There were many slow, boring days, but looking back there sure were some crazy days.