Junior brokers cold-call prospects for up to 14 hours a day, working from a memorized script that they rehearse by screaming pitches across the room to each other before the opening bell, a former employee of the firm told BuzzFeed. BuzzFeed obtained both that script, used by brokers of eery leel at the !""-employee firm, as well as another script known internally as the #$olden %itchbook,# which is gien only to a priileged few senior brokers at the firm. &onsidered a performance reward for top brokers, the #$olden %itchbook# is handed down from their mentors at the firm who hae also receied the elusie tome, the source said. #'t(s secret, priileged information,# said the source. #)ome people at the firm don(t een know about it.# *he book(s origins date to the 1+"s at Bear )tearns, and it has gone through arious iterations on its ourney into the hands of the lucky J*F broker who, after impressing superiors, is walked down the street to a inkos, where senior brokers superise the book(s copying and handoff. #'t(s a reward for senior brokers to gie to unior brokers on their team as an inestment in them,# the source said. #/nce they had it, they used it all the time.# *he book offers a rare behind-the-scenes look into the world of highpressure, hard-scrabble 0all )treet stock ockeying, featuring detailed scenarios and responses used to pitch stocks to prospectie clients. *he aggressie pitch tactics in the book and supporting J*F documents, such as what one scenario described by the source as #on(t %itch *he Bitch,# hae caught the attention of the FB', FB', the the )ecurities and 23change &ommission, and the Financial 'ndustry egulatory 5uthority. 5uthority. 'n 6arch, the )2& charged charged Belisis Belisis with fraud for a hedge fund scheme in which he steered bloated fees to J*F. 5 month later, Finra filed filed a a formal complaint against J*F regarding the firm(s actions in Februrary !"1!, when it allegedly pushed shares of 5merica 0est esources, 'nc. 750)8 common stock on inestors, thus inflating the price. Brokers at the firm also allegedly failed to e3ecute sale orders for clients in a timely manner but sold the maority of its proprietary shares for a more than 91 million profit. *he firm(s alleged failure to e3ecute at least 14 client sell orders lost inestors thousands, and 5merica 0est is now in bankruptcy. bankruptc y. 'n an een more outrageous twist, the Finra complaint accuses Belesis of
intimidating employees with threats of maligning their broker records and, in one case, running oer an employee with his car. 5gainst that backdrop, here are some of the techni:ues outlined in the #$olden %itchbook# used by J*F brokers. *he firm(s attorney, obert Bursky, in February told Bloomberg it did not use #high-pressure tactics.# ;e said at the time it doesn(t use scripts. Bursky did not respond to BuzzFeed(s re:uests for comment.
Scenario #1: "Speak to My Wife"/Don't Pitch the Bitch When a potential client (prospect) told a JTF broker he wanted to speak to his wife before placing an order, the broker would oer a series of rebuttals designed to pressure the prospect to buy immediately. ccording to a source familiar with the !rm, this method is referred to internally at JTF as "#on$t %itch the &itch," a bit of industry 'argon made famous in Boiler Room that discourages brokers from making sales pitches to women and implores male prospects not to inole their wies or girlfriends in stockbuying decisions. "(Prospect) if you want to call me back so you can ask your wife if you can buy the stock, I will call my wife and see if I can sell you the stock, come on! You make business decisions daily without your wife" "ets face it, if you #o home and tell your wife that you want to in$est with a broker whom you dont know $ery well, chances are you will be hit with a fryin# pan and spendin# the ni#ht on the couch %owe$er, once she sees my brochure from the &rm and a dossier that I send you in the 'ed packa#e with a buy con&rmation, what do you think she is #oin# to say* Besides, it is a lot easier to be# for for#i$eness than to ask for permission ri#ht*" "+hould I send it to your home where your wife will throw it out or to the oce where you will put it by your merchant banker book that you ne$er read either*"
Scenario #2: "Not Interested"/he S!ap and $ *f a prospect told a JTF broker +atout that he was not interested, the broker would use a techniue called "the slap and hug" to essentially belittle the prospect before building him back up through kindness or feigned concern. &rokers also used reerse techniue, "the hug and slap," at times.
"I ha$e ne$er in my life met anyone who wasnt interested in makin# serious money ('irm) is makin# more serious money for people than anyone out there It is not that you are not interested, somethin# else is botherin# you I am a problem sol$er Perhaps if you tell me what your actual concern is, I could help"
Scenario #%: he &on$er( )e!ationship JTF brokers want prospects to know that they are in this thing for the long haul, but they are de!nitely -T gay. "ets face it, your &rst step is the hardest I am not lookin# for a one ni#ht stand You married your #irlfriend ri#ht* et me ask you a -uestion, you met your wife, but you did not .ump into bed with her on the &rst ni#ht did you* /f course not!! 0aybe you held her hand or maybe e$en kiss 1ell look, I am not lookin# to .ump into bed with you or e$en #et a kiss, I simply want you to hold my hand with 233 shares and 4in5 678 months you are #onna (sic) want to #et into bed with me -uite frankly I am not that #uy 4lau#h5 +o do the 233 shares not because its #ood for me, but because it is #ood for you"
Scenario #*: his +o(pany Is ,oin$ to Be Bo$ht Soon So -o Need to By No. To coa/ a reluctant prospect into buying immediately, the script contains a boilerplate response scenario suggesting that whateer stock the broker is pitching is about to get acuired, likely for a premium. "0ore importantly, when I ha$e timed it with a near term e$ent I ha$e made a tremendous amount of money the e$ent here is a possible takeo$er 1e are not buyin# this stock for earnin#s9 we are buyin# it for a takeo$er, which I feel is eminent"
Scenario #: My +!ients 0re )ich and S(art n!ike -o333 ...nd the more you inest with JTF, the better your chances of becoming rich. "I want to say sincerely: I ha$e many clients with net worths ran#in# between ;<33= to ;<3 millionIf I could .ust show you what lies ahead in the future and the types of deals I #et in$ol$ed with, I know you would be $ery impressed"
"0y &rm has turned the a$era#e in$estor into millionaires and the millionaires into multi7millionaires >ot on one trade, but on a series of 67? transactions o$er a 27@ year time frame" "Are you familiar with eor#e +oros* Chis is the #uy you want on your sideets not let him make A the money!" 0cenario 123 4ou 5ae 6oney, 4ou Just #on$t Want to 7ie *t to 6e
client claiming to not hae money to inest is considered an insult, or an outright lie. 8iterally. ">o disrespect, but you tellin# me you are not li-uid is an insult to both you and me! A #uy with (amount) in the market has a couple hundred in the bank to back it up Chere is always an ecuse not to buy stock, but there is ne$er an ecuse not to make money!" "uys like you dont e$er let your bank accounts fall below 8 &#ures Its not that you cant do it, its that you wont do it I am #oin# to buy you (shares) of (stock) at (price), money is due in one week but make me a promise 1hen I am not .ust ri#ht but eactly ri#ht, net time out we work in siDe and you send me 6 of your #ol&n# buddiesE/=*" "(Prospect) if I oFered you a Rolls Royce in min4t5 condition today for ;23,333 could you come up with the money* /' G/HR+ Y/H G/H!! ets be candid, if you like my idea today, you could come up with ten times that amount" 0cenario 193 Trust :s, We #id the ;esearch for 4ou
The script takes pains to instruct brokers in ways to aoid sending additional information reuested by the client on the stock being pitched. "By the time you #et information or research reports, you are buyin# the stock < points hi#her Che way to make money in this business is to buy in to fundamentally sound companies that are timed with near term e$ents or catalysts 1ith this approach I ha$e made a fortune for a select #roup of indi$iduals" "/k (prospect) 'ine! I ha$e no problem with that, but let me ask you somethin# &rst, correct me if I am wron# 1hat youre tellin# me is that if I send you the information you want about the company and it mentions the merits I described, that you
will open an account* (>/) Chen ob$iously (prospect) the re-uest for information is not your real concern" 0cenario 1<3 &uy -ow or 4ou Will 6iss ut
"Please understand, the secret of our pro#ram is matchin# timin# opportunity If we thou#ht net month was the time to buy, I would not be callin# you today I would be callin# you net month You need to understand what we are doin# here I can appreciate now may be a bad time, but unfortunately the market is not #oin# to wait for you ets be honest, when I call you back you will ask me to call you back a#ain, then it will be ta time Co make eceptional returns, you must but on $alue and at the ri#ht timin# You know what sir* Your worst ni#htmare is to work with a broker who brin#s you a winnin# situation and is willin# to play phone and mail ta# with you 1e both dont ha$e time for it Che reason my clients retain a broker like myself is for my eact pricin# and timin# 1ithout these @ tools, you are tyin# my hands behind my back I may as well work at Gharles +chwab" &onus 0cenario3 6isusing the Term "Fiduciary"
ne response in the pitchbook says that JTF brokers hae a "!duciary responsibility" to call back indiiduals whom they hae spoken to. The use of the term "!duciary responsibility" is problematic in that it grossly misstates the broker$s professional standards of conduct when it comes to the relationship with a prospect. &y law, the 0=> does not reuire brokers to hae a !duciary duty to their clients, only !nancial adisers. *n fact, the commission has been pushing to change the laws pertaining to !nancial serices professionals and their !duciary responsibility to their clients, and has een acknowledged that inestors are confused by the leel of !duciary responsibility their !nancial planning professional has to them. The 0=> has formally recommended a rule that would "implement a uniform !duciary standard of conduct for broker dealers and inestment adisers when proiding personali?ed inestment adice about securities to retail customers." 8ike, say, customers who may hae 'ust bought the ne/t merica West from a broker at John Thomas Financial. 78#=- %*T>5 &@
