Ex coke-snorting, gambling-addicted broker.....

Ex coke-snorting, gambling-addicted broker: 'It was the natural environment to unleash my inner beast'

Seth Freedman just can't wait to tell you whether his former life was like that of the monstrous City cliche we all love to hate

 

Seth Freedman fell into a coke habit six months into his brokerage job. Supplying clients with drugs was ‘a wonderful way to bond'. Photograph: Mark Fagelson/Alamy

"These aren't junkies huddles under railway bridges begging for loose change, but their entrapment is no less acute – quitting is as hard for a trader as it is for a heroin fiend"

This is from today's interviewee Seth Freedman, who worked as a broker in the City between 1999 and 2005. His time there inspired a novel called Dead Cat Bounce and the nonfiction account, "Binge trading – the real inside story of cash, cocaine and corruption in the city".

Yes, I know. For a hack in need of page views nothing works better than a portrait of bankers as coke-snorting gambling addicts. I have discovered as much on this blog, and so have publishers. Witness the slew of books with titles like: Gross Misconduct: my year of excess in the City; City boy: beer and loathing in the Square Mile; City girl: the devil wears pinstripes.

The interviews on this blog strongly suggest that the idea of finance as one big nightclub-slash-casino is wildly skewed, just like I have found little support for the belief that investment banks are rife with psychopaths. Which doesn't mean there aren't any coke-snorting gambling addicts in finance. For six years, Seth Freedman was one of them.

I met Seth for a long interview – and he will come in on the thread below to respond to your comments and questions. So everything you always wanted to know about coke, gambling and finance but were too angry to ask ... below is your chance. Seth can't wait.

Most traders in brokerages act as middlemen between traders in banks, pension funds, hedge funds and so on, executing their orders and taking a commission. In Freedman's case, "We did a hybrid job. Sometimes we were middlemen for banks wanting to trade, other times it was dealing for private clients who gave orders to buy from the market, or left me a fund and gave me discretion over how to trade."

Brokerages do not risk their own money, never required bailouts and enjoy no implicit government subsidies. Paradoxically, they seem the most degenerated places in finance. Freedman writes about how the environment changed him: "The market felt like the most natural of environments in which to unleash my inner beast." And: "Your personality begins to be moulded around the macho image you portray during trading sessions."

Freedman describes the bullying where "the weak are preyed upon by those seeking to establish themselves as alpha males". He mentions in passing how his gay colleagues were never given clients who liked "whoring" – brokers take out traders for "client entertainment" in the hope of winning and keeping their business. And Freedman scoffs at the charity activities put on by brokerages: "they serve only to legitimise hypocrisy. Everybody knows it's the interns doing the work."

Trading is about confidence, he says, and in that sense brokers and traders are like journalists and writers: all must have confidence in themselves. "Look at me and you, how cocky are we to tell people: 'come see me, on my pedestal'."

The kind of trading Freedman did, involved taking bets on the direction of prices on the market and that constituted, effectively, gambling. But it was socially acceptable gambling and for him this "unlocked the door of addiction". How could he resist, with his addictive personality, when it was legal and even brought enormous status?

Making money from a trade brings instant gratification, he remembers, but also the immediate craving for an even stronger high.

He had been smoking pot since he was 13. "I skipped a grade when I was six years old and always got high grades without having to do any work. I suppose being stoned just filled the void."
He fell into a coke habit six months into his brokerage job. Supplying clients with drugs is a wonderful way to bond, and with a cold eye Freedman analyses the initiation rituals at the firm: your colleagues "will judge you far more on your performance on a night out than they will on your first day's trading".

"This idea that people trade on coke is nonsense," he emphasises. "You can't trade on coke, you become far too nervous and your confidence just goes". But after-hours was a different story. You get a sense of the addict's isolation when Freedman talks about gambling as a means of "artificially inducing a feeling that other people have naturally".

He has thought a lot about Freud's suggestion that some gamblers love to lose. "I know that feeling. Beating yourself up after losing money in the market. What it comes from, I think, is the gratifying idea of 'at least I took part'. And more strongly, 'at least I am strong enough to take this'. This then leads to the idea 'I am also strong enough to come back from this loss', meaning you double down and often increase your losses even further."

Tied up with the addiction is the competitiveness of trading, and the validation that comes from knowing "I'm better than him," as he puts it. He stresses it's all about the competition, not the prize – a claim echoed by most interviewees on this blog. Elsewhere he writes: "I trade to prove a point, to prove myself, to prove I'm right and the next man's wrong."

This is what he loves about chess. "There's no gambling there, it's just my brain versus your brain. When I beat someone at chess a feeling of calm comes over me: I did it." He recounts how the thrill of a win at an early game of internet chess can keep him going for hours afterwards.

Freedman also noticed in himself a "lust to trade, to feel connected to a bigger picture". He remembers waking up every two hours wanting to check prices in the Asian markets that had already opened.

In his novel he writes: 'I never walk alone, my BlackBerry's always by my side … during dinner, in the theatre, at an exhibition, on a walk to the park. Even in bed. Especially in bed, because that's when I need to know most. Before I shut my eyes, I need to check one last time, snatch one last glimpse, grab one for the road. Where did the market shut, where will it open tomorrow?'

You lose touch with reality if you're trading in the market day in, day out, he says, and he is convinced things would be very different if for every, say, £5 million trade a broker had to hand over a stack of bills worth that amount – physically count it out and hand it over.

This is what makes online gambling so dangerous, he adds. "In the old days at least you had to walk to a bookie, take your money out, wait for the result … Now it's a click. Compare it to the difference between online pornography and a porn magazine."

Gamblers can't be alone with their thoughts, Freedman thinks, and they remind of him of the ultra-orthodox Jews he saw on the bus in Jerusalem: endlessly, obsessively saying prayers. "Take God out of the equation and these people are simply mad."

Interestingly, after crashing out of the City, Freedman joined the Israeli army, only to abandon that a few years later and return to London. He sees parallels between the initiation rites for frontline brokers and soldiers. "Both recruit people at 18 and brainwash them, selling them the dream 'you'll survive, you'll be OK'." He continues: "There is something very attractive and nice about being a clone. Finance is like the army, everyone wearing the same thing, believing the same things."

Freedman's Dead Cat Bounce is written as an interior monologue and puts you right into the brain of an addict like himself. That stream of consciousness taps a rich vein. He wrote large parts of the book in the same way he would trade, Freedman says, blocking out the world with loud music on his headphones and just work that computer keyboard. The most intriguing bit I found this passage: "I don't wanna be left alone to think – wanna be left alone to drink, to snort, to bet, to spiral out of control and back into insanity's loving arms. Want madness to tuck me under its wing, want lunacy to draw me in close to its bosom and let me nestle there forever ... "

Loving arms, tucking under a wing, drawing close to a bosom and forever nestling – Many passages in Freedman's books suggest a drive towards oblivion and self-obliteration. But if I were a hippie psychologist, I'd say that in that final passage we have a child desperate for some place of safety.

Read on

This banking blog features interviews with more than 80 insiders across the world of finance. Here is a guide to help you find your way. For insiders there is this index of interviewees ranked by activity. Are you by any chance working in human resources in a bank, or trading government bonds? Please help this blog. Anonymity guaranteed.

This so-called compliance officer at a brokerage has to make sure brokers follow the rules. It's not easy: "Sometimes a broker will rise, hold up a magazine with a photo of a beautiful woman and shout: "'Shag? Marry? Kill?'"

This broker gives a good summary of how it works in more detail: "I am one of those shouting and wildly gesticulating guys on a trading floor with two phones pressed to his head."

 http://www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog/2013/may/30/seth-freedman-ex-trader