To Wall Street Analysts:
During my years at Crazy Eddie, I found that securities analysts often did not know how to ask intelligent questions. When they asked intelligent questions, they did not know how to formulate the proper follow up questions to our deceptive answers. Most Wall Street analysts were too trusting of the answers that they received from us.
Good questioning will often result in irritable behavior from company management. However, you are not doing your job to be in management's good graces. Your job is to obtain not readily apparent facts, analyze them properly, and communicate them accurately and effectively to your readers. Top notch financial journalist Herb Greenberg advises that you consider "what many companies don't say as they spin the story their way."
For example, be careful of corporate managements that:
- accentuate positive information and spin and deflect negative information
- blame others for their company's problems
- attempt to intimidate you.
Beware of companies that exclude critics and provide “selective” access to management. Too often, Wall Street analysts in their quest to gain access to management end up corrupting their required professional skepticism and cynicism. I played this game very well with Wall Street analysts, as the CFO of Crazy Eddie.
It’s not about gaining access at the cost of your professional integrity. It’s about understanding what is really happening and communicating it accurately and effectively to your readers.
I played you analysts very well by rewarding you with selective access as the CFO of Crazy Eddie. I had you eating out of my hand with “selective” disclosures and “favored” access. While you craved for access and wrote your glowing reports in gratitude for your coveted access, you unwittingly helped make the frauds that we perpetrated at Crazy Eddie easier.
If you had any backbone, you would all boycott any presentation that excludes the more skeptical professionals among you. Frankly, after reading many transcripts lately, you guys look like amateurs with your lack of questioning skills, your inability to ask proper follow through questions, and obtain straight, clear, unambiguous, and honest answers.
You seem like hand picked patsies as I read your unchallenging questions and the lame answers that management gives you without any challenge or follow up. You never seem to learn as you compete with one another for the affections of management and let access to them rule your work at almost any cost.
Eventually you will run into a guy like I was. You will wish you asked the proper questions and follow up questions too. You will wish that your other peers attended the meetings and asked questions you would not ask or could not ask. The questions that will never be asked by you and others will cause you to miss detecting the lies and deceit being spun upon you.
When the “earnings surprises” eventually come out, your previous work will be considered negligent and amateurish. Your future work will always be under a cloud of suspicion. You will be remembered for the glowing reports you made as management ran circles around you. Do you want people to think you are fools?
The managements that spread deceit and lies to the selective few who gain coveted access are not your friends. They are using your humanity against you as a weakness to be exploited in furtherance of their crimes. They know about how your efforts at coveted access end up corrupting your professionalism. They don’t care about what happens to you as a result of their actions. As a criminal, I never cared about you, too.
You have been warned.
Respectfully,
Sam E. Antar (former Crazy Eddie CFO & convicted felon)
PS: I see that nothing much has changed since my time. Keep it up. When a company that you wrote a glowing report on ends up a train wreck will these same managements rescue you?
For additional information, please read the following posts in this blog:
06/02/07: Advice about Trust from a Convicted Felon
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