If I Were a Broker, Here's How I'd Sell Facebook

I’m not proud of everything I learned to do in my retail brokerage days.  I was almost too good at the job, which scared me and shook me to my core (which I like to think is a moral core).  Because the job is based on salesmanship over stewardship, subterfuge over transparency.

I exorcised all of my demons in the forthcoming book Backstage Wall Street, but today I have a little bonus for you.  There was an item in Registered Rep about how Morgan Stanley and Smith Barney advisors are fiending for their allocation of Facebook shares, the biggest piece of IPO product they’ve seen in like forever.

I have no idea how these brokers will parcel out the meager amount of shares they get, but if I were a broker, this is how I’d sell Facebook:

Step 1: I’d call all my best clients and tell them I have a limited amount of shares but my manager will only apportion Facebook IPO stock to the largest accounts.  I would then forward them incoming transfer paperwork and tell them they needed to send in their other brokerage accounts to be above level X.

Step 2: I’d call all my midsized accounts and say the same thing.  None of them would be getting any shares but I’d be able to raise a ton of assets with the longshot promise.

Step 3: I’d put my junior broker on the small accounts to do the same thing.  Then I’d have him call all qualified prospective leads morning, noon, and night – the pitch would be something like this:

“Now obviously, when a hot deal like Facebook comes along, the lion’s share goes to our biggest and best accounts.  But we always keep a small amount aside for newer clients as a show of good faith that we intend to grow this relationship and look out for you when opportunities arise.  If we can get you any of Facebook – and remember, we’re not promising for sure that we can – how would you like your new account to be titled?  Joint, individual or corporate?”

We’d open a slew of new accounts.  The day of the deal, we’d say “The bad news is I couldn’t get you any shares of Facebook, we had to take care of exisiting clients first.  The good news is, my analysts just came out with a conviction buy rating on NVidia, ticker symbol NVDA.  Pick up a thousand shares with me today and the next time a hot offering comes along, I promise I’ll be able to take care of you.”  With that spiel, we’ll convert probably 1 out of 5 of those new accounts to an actual trade, cowboy up!

Step 4: I’d go back to the all the other accounts the night before the deal and start breaking up what I was given by the selling group manager, even if it was only 5000 shares.  Literally, everyone would get a hundred shares – that way I could keep everyone happy with the fact that I did my best and at least I came through with something.

Step 5:  The day after the Facebook IPO went public, I’d call all the midsized accounts that didn’t send in new assets to qualify, point to the Facebook share price and show them how much money everyone made.  I’d ask for incoming transfers again.

The net result of this would be a few million bucks “new money” raised, the selling concession on the Facebook shares (figure 5% of however much I was given to book) and a slew of new clients opened based on the bait-and-switch pitch my junior broker closed them with.

Tada!  And that’s how it’s done, folks.

And don’t laugh…as we speak there are hundreds (thousands?) of guys doing exactly that right now.  I’m glad to be “reformed” 🙂

Get the book if this sort of thing is your bag, baby:

Backstage Wall Street

Read Also:

Fight for Facebook Shares May Be Messy (Registered Rep)

 

 

 

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. خرید وی پی ان commented on Sep 19

    vpn ایفون

    When I originally commented I clicked the “Notify me when new feedback are added” checkbox and now each and every time a comment is extra I get three e-mail with the very same comment. Is there any way you can get rid of me from that support? Thank you…

  2. خرید اکانت وی پی ان commented on Sep 20

    vpn ایفون

    We definitely love your weblog and uncover virtually all of your post’s to be what exactly I’m seeking for. Does one provide guest writers to publish content material for you? I would not thoughts composing a submit or elaborating on a lot of the topic…

  3. سرویس وی پی ان commented on Sep 21

    vpn ایفون

    Wonderful weblog! I identified it although surfing all around on Yahoo Information. Do you have any ideas on how to get listed in Yahoo News? I have been trying for a although but I in no way seem to be to get there! Cheers

  4. property for sale in lagos commented on Sep 21

    property for sale in lagos

    […]the time to read or pay a visit to the content or web sites we have linked to beneath the[…]

  5. خرید next vpn commented on Sep 22

    vpn ایفون

    right here are some hyperlinks to world wide web pages that we website link to for the explanation that we feel they could be really well worth visiting

  6. خرید وی پی ان پر سرعت commented on Sep 22

    vpn ایفون

    I was curious if you ever thought of modifying the format of your internet site? Its quite properly written I really like what youve acquired to say. But perhaps you could a minor much more in the way of material so individuals could connect with it mu…

  7. اکانت وی پی ان commented on Sep 23

    vpn ایفون

    Every single right after in a even even though we opt for weblogs that we read. Detailed under are the most present world wide web web sites that we opt for

  8. 사설토토 commented on Oct 16

    … [Trackback]

    […] Here you can find 17651 more Info on that Topic: thereformedbroker.com/2012/02/06/if-i-were-a-broker-heres-how-id-sell-facebook/ […]

  9. Digital Transformation Consultants in USA commented on Nov 04

    … [Trackback]

    […] Find More Information here to that Topic: thereformedbroker.com/2012/02/06/if-i-were-a-broker-heres-how-id-sell-facebook/ […]

  10. affordable wigs commented on Nov 28

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/02/06/if-i-were-a-broker-heres-how-id-sell-facebook/ […]

  11. rbc online commented on Dec 03

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2012/02/06/if-i-were-a-broker-heres-how-id-sell-facebook/ […]

  12. 토토사이트 commented on Dec 09

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2012/02/06/if-i-were-a-broker-heres-how-id-sell-facebook/ […]

  13. Audio-Technica U891RC manuals commented on Jan 23

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2012/02/06/if-i-were-a-broker-heres-how-id-sell-facebook/ […]