I Fought ACME9 and ACME9 Won: Part 16 Who Wants to Make a Really Crappy Deal?

The next three weeks were extremely dreary. It seemed like no one ever laughed any more, and the partners were nowhere to be found, seemingly planning the big reorganization that was about to made. In the meantime, we were all given small accounts to mess with, but were told that they essentially wanted us to trade very little before the restructuring. They wanted us to come to work for three weeks and basically do nothing, which to me was just a miserable experience. Aside from the sheer boredom and the general bad vibe around the place, I couldn’t help but get the feeling that Orange had somehow bailed on me and that my future was in doubt.

Orange’s account had lost about the same percentage as mine had, which was to be expected. His account was much larger than mine, though. It soon became pretty clear, that the rest of the partners were suddenly not so happy with his satellite group. Of course, Orange had made a ton of money in the previous year and a half, but people have short memories. Orange’s satellite group was gone, and he had himself to look out for. He didn’t have time to stick up for me.

Finally, the big reorganization meeting happened. We were told by various partners numerous times about how excited we should be about this great opportunity we were being given! Here’s the breakdown.

1. Some traders (all the ones they really liked) were going to be trading the “house” accounts and would continue as before.
2. All the rest of the traders (most of them new hires and me) would be trading “field” accounts.

For the field traders, teamwork time was over. It was now every man for himself. Our total compensation would be 20% of what we earned, with 5% deferred for three years. We would also have expenses that would come out of our earnings, such as seat fees, research costs, tool costs, etc, etc, etc. Additionally, they’d come up with a ton of new risk measures that we had to conform to that made it almost impossible to trade. For instance, under the new system, the amount of risk that I could now take in a certain issue was a full 60% lower than I had been previously allowed, even when I was only trading my one million dollar account.

We were also told that any additional work that we did for the firm, like the classes that I taught, would be compensated with a direct payment that they would soon reveal to us (they never did).

Perhaps, I was the only one with enough experience to think this way, but I was definitely not excited. The standard in the industry for backing a trader was a 50-50 split. At one time, I earned 70% of my profits. Sure the business had changed, but not to the extent that 20%, 5% diverted, and a bunch of fees made any sense. I was so appalled that I wanted to quit immediately. I told myself that any trader with any sense of self respect would quit, but I didn’t have any, I really needed this job. The big problem was that it probably didn’t matter. The new deal was so bad that it seemed fairly impossible to succeed with it. I felt like a doomed sacrificial lamb.

Shortly thereafter, I had a meeting with Orange and Freddie to discuss the new system. Again Orange had tons of spreadsheets showing me how much money I would be making. My capital was being cut from 5 million dollars to 2 million dollars. Only this new 2 million had a fraction of the capabilities that I used to have. The new risk rules made it nearly impossible for me to actually take any risk. They were essentially asking me to dig a hole with a spoon instead of a shovel.

I told Orange that I found the new system unfair, and the amount of capital I had insufficient. I asked him how they apportioned the capital in the new system and he said, “We did it solely on P&L.” So much for Marsellus’ claim that he never made decisions this way.

Orange told me that the firm needed to see who could and couldn’t trade. He noted that they’d often given big bonuses away to traders who made a lot of money and then been burned when their incompetence had been revealed. What? Hadn’t he assured me two months earlier that he knew that I was a solid trader? Now I had to prove myself all over again? The new system actually gave encouragement to future Spivey’s rather than point them out. It made zero sense.

Floyd and his account had actually lost many times what I had, wasn’t my account supposed to mirror theirs? Orange denied that he had ever told me this. Floyd, despite their losses, had been put in the house, essentially he’d been promoted!

What happened to the long term, I asked? Hadn’t he encouraged me to put more risk on, because it would work in the long term? I get to trade a big account for one month. They, mangle it with an insane hedging strategy, then take it away right before it’s about to recover, and I have to answer for the all of the downside? It was absurd.

My long term had lasted one month! I was a guy who had performed solidly in a low dollar poker game. I had been promoted to a higher dollar game and after having one bad night, the whole carpet had been pulled out from under me.

Orange might have had some sympathy for me, but it was clear with his ass in a sling due to his recent losses, he wasn’t going to be able to save me. I knew that it was only a matter of time. I was doomed. Every day from here on in was agony. I wanted to quit so bad, but I was equally afraid of being fired, and no one was willing to sit down and make their beefs known to me.

I Fought ACME9 and ACME9 Won: Part 17 I am Malcolm X!