American Consequences - October 2017


Surprising even himself, Kimelman left the office that day with an offer contingent on taking the Series 7 exam and becoming a licensed trader. His timing was sublime. When he passed the Series 7, the dot-com boom was just beginning... The markets only went up, and he had success almost immediately. When he wasn’t courting his soon-to-be wife, he was out networking and building his career. He loved trading – everything about it. And as his career grew, he started to move around looking for higher payouts or better trades. With prop trading, the talent and information surrounding you can raise your own game. In 2008, Kimelman teamed up with a friend, Emanuel Goffer, to set up their own proprietary trading shop called Incremental Capital. The idea was to have all of the potential upside of a hedge fund, with the added benefit of making money off of ticket charges from their own traders. It wasn’t foolproof, but it’d be incremental money that hedge funds couldn’t make. And when it came time to look for seed money, they had Emanuel’s brother, Zvi, who at the time was working for Raj Rajaratnam at the Galleon Group. Building any business from the ground up is a difficult task, but starting a financial firm in the middle of the 2008 financial collapse seems almost crazy. But Kimelman and his partners saw this as a once-in-a-career opportunity. Very talented people were out of jobs and looking for work. So while they continued to raise capital, they were slowly trying to hire a money-making roster of all-stars.

He’d mentioned his firm was linked to the notorious Galleon Group. As a former Galleon trader, I had firsthand knowledge of their improprieties. My onetime boss, Raj Rajaratnam, is currently serving an 11-year sentence for insider trading. His company was a prop shop – considered “fast money.” Here he was, a white guy wearing a cashmere coat and nice shoes, who probably had just got an $80 haircut, and he was convicted of insider trading. Of course he’s guilty... But then I read an advance copy of his book and started researching his case. Had I been too quick to judge? Did I make a mistake? These are the questions that swirled in my head. A large shadow had been cast and its name was doubt. Trading Jobs In the late '90s, Michael Kimelman visited a friend who was a prop trader. He was immediately lured by the flashing red and green lights of the market... and by the large P&L number on his friend’s computer screen. But on this day, his resume was more useful as a paper airplane than in getting a job. Despite working for the prestigious law firm Sullivan & Cromwell, and attending Lafayette College and USC law school, his friend’s firm hired people like they picked their stocks – all gut.

34 | October 2017

Made with FlippingBook Online document