The Rise and Fall of Zoe Cruz

Although "best practices" have finally found their way to Wall Street, tribal warfare will never disappear. Wall Street firms are inherently unstable due to back stabbing politics and palace coups hatched over water coolers.

Openly challenging the wrong person can put you out on the street, as one male Morgan Stanley employee found out when he questioned Zoe Cruz's strategy:

....she was not taken at all seriously by a number of her male colleagues: “She’d give these speeches, and the eyes would roll,” says one former executive. The attitude toward attending meetings headed by Cruz was “take [the] pain and move on,” says a current Morgan Stanley employee. During a year-end management meeting in 2004, one mid-level executive interrupted Cruz’s speech to ask, “Are you high? Because I really don’t know what you’re talking about.”

“High?” Cruz asked. “You mean stoned?”

“Yeah, exactly,” he said. “Smoking it.”

Everyone in the room laughed—except Cruz. (She fired the man for unrelated reasons six months later.) New York Magazine

On Wall Street, what goes around, comes around. Did Zoe have it coming to her? New York Magazine's blow by blow account of her final years, and days, at the firm is a compelling read.

And Morgan Stanley employees are not the only ones who might benefit from reading it.

The women of Citgroup might want to take a peek as well. although Vikram Pandit’s unflattering profile is only a side-show.  But if you are interesting in risk management on Wall Street, one guy offers up his take on the difference between Goldman Sachs and Morgan Stanley, circa 2007:

Jay Dweck, a former Goldman Sachs executive who had recently joined Morgan, was heard by three people to say, “At Goldman, this isn’t happening. When they say get out, they get out. At Morgan Stanley, when Zoe says get out, people start negotiating.”

Zoe saw the storm clouds approaching before most, but ultimately went down as hard as anyone on the Street. But at least women know what they are up against:

Wall Street women, by and large, were not surprised. In tough financial times, female executives tend to be the first to go. “In a bull market, women are fine,” says Janet Hanson, a former Goldman Sachs executive who runs the women’s networking group 85 Broads. “When the shit hits the fan, these guys probably don’t even trust each other. Could you theorize that more women get chucked when things start going deadly? They sacrificed her.” Women got slaughtered during the dot-com bust in 2001, says Linda Bialecki. The gender breakdown of the Wall Street workforce, according to a Securities Industry Association study, went from 43 percent women in 1999, just before the peak of the tech boom, to 37 percent in 2003, after the layoffs.

If you are looking for a good read on a slow day, here it is. On Wall Street you can lose $5 billion before your job becomes a stop loss:

And the arguments over the trades got so heated that nearby secretaries “put their heads down and looked at their feet,” says a person familiar with the situation. “Right now, that’s a billion-dollar loss,” Cruz would yell at Shear. “If it turns into a $5 billion loss, that’s your job.”

Too bad for Morgan Stanley’s shareholders.
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Only the Men Survive
New York Magazine
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. NP

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