1 00:00:02,720 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:08,440 --> 00:00:12,240 Speaker 2: Two things. I'm wearing glasses you are, which does not 3 00:00:12,360 --> 00:00:15,160 Speaker 2: matter to our listeners. I kind of feel like I 4 00:00:15,200 --> 00:00:16,200 Speaker 2: am wearing a costume. 5 00:00:16,400 --> 00:00:19,280 Speaker 1: I don't know, totally different person wearing feels like it. 6 00:00:19,520 --> 00:00:21,560 Speaker 2: The other point that I wanted to make is that 7 00:00:21,760 --> 00:00:23,680 Speaker 2: I'll be wearing these glasses at a party tonight. 8 00:00:23,760 --> 00:00:25,880 Speaker 1: A party, Yeah, specific party. 9 00:00:26,040 --> 00:00:29,160 Speaker 2: No, at your party. I'm going to your party. 10 00:00:28,920 --> 00:00:32,279 Speaker 1: Party having Yeah, I'm hofually stopping by my party. The 11 00:00:32,320 --> 00:00:33,880 Speaker 1: time this airs, the party will have happened. 12 00:00:33,960 --> 00:00:39,640 Speaker 2: That's true, soup, Yeah, exactly. Things go dramatically south. This 13 00:00:39,680 --> 00:00:41,479 Speaker 2: will not be included in the podcast, but if you're 14 00:00:41,479 --> 00:00:42,920 Speaker 2: hearing it, assumed that it went well and we had 15 00:00:42,960 --> 00:00:43,480 Speaker 2: a great time. 16 00:00:43,560 --> 00:00:44,800 Speaker 1: It was great. What a great party. 17 00:00:44,840 --> 00:00:47,519 Speaker 2: This is sort of a birthday party, right in that 18 00:00:47,600 --> 00:00:49,440 Speaker 2: sense for money Stuff, which turned ten years old. 19 00:00:49,560 --> 00:00:52,720 Speaker 1: Right, it's not my birthday, not even really, money says 20 00:00:52,720 --> 00:00:54,600 Speaker 1: Earth there. It's just like a month ago. And even 21 00:00:54,640 --> 00:00:56,960 Speaker 1: that is like the accounting is a little fuzzy. But 22 00:00:57,600 --> 00:01:00,280 Speaker 1: we're going to say it's the tenth anniversary of money Stuff. Yeah, 23 00:01:00,400 --> 00:01:04,640 Speaker 1: sh anniversary observed, anniversary party. What a great time it 24 00:01:04,680 --> 00:01:09,319 Speaker 1: has been. Hello, and welcome to the Money Stuff Podcast. 25 00:01:09,600 --> 00:01:12,160 Speaker 1: You're a weekly podcast where we talk about stuff related 26 00:01:12,160 --> 00:01:16,240 Speaker 1: to money. I'm Matt Levin and I write the Money 27 00:01:16,240 --> 00:01:17,760 Speaker 1: Stuff column for Bloomberg Opinion. 28 00:01:18,000 --> 00:01:20,440 Speaker 2: And I'm Katie Greifeld, a reporter for Bloomberg News and 29 00:01:20,480 --> 00:01:21,920 Speaker 2: an anchor for Bloomberg Television. 30 00:01:22,920 --> 00:01:24,479 Speaker 1: What are you talking about today, Katie? 31 00:01:24,959 --> 00:01:27,760 Speaker 2: The Fattest Fingers in the World twenty three and me 32 00:01:28,520 --> 00:01:31,680 Speaker 2: and Wheaton, Illinois, Wheaton, Illinois. 33 00:01:31,760 --> 00:01:33,360 Speaker 1: I have a funness for whet In Illinois because I 34 00:01:33,400 --> 00:01:35,760 Speaker 1: have a wheatened tarrier. But oh, that's not really really 35 00:01:35,760 --> 00:01:41,200 Speaker 1: at all. No, never mind, all right, fat fingers. 36 00:01:41,959 --> 00:01:44,440 Speaker 2: Yeah, man, what is going on over at City Group? 37 00:01:44,480 --> 00:01:45,400 Speaker 2: It seems incredible. 38 00:01:45,680 --> 00:01:47,720 Speaker 1: Yeah, I don't know. Like City Group has had a 39 00:01:47,760 --> 00:01:51,600 Speaker 1: series of like very public and very comical, like mistaken 40 00:01:51,680 --> 00:01:55,600 Speaker 1: payments of which the greatest, honestly was a few years 41 00:01:55,600 --> 00:01:58,560 Speaker 1: ago in twenty twenty they sent out nine hundred million 42 00:01:58,600 --> 00:02:00,800 Speaker 1: dollars to some hedge funds and they're like, sorry, we 43 00:02:00,840 --> 00:02:02,680 Speaker 1: didn't mean to do that. In hutch Ones we're keeping it, 44 00:02:02,720 --> 00:02:05,520 Speaker 1: and there's a court case peal that was great. But 45 00:02:05,600 --> 00:02:07,800 Speaker 1: recently there's been reporting on like a couple of times 46 00:02:07,880 --> 00:02:11,480 Speaker 1: last year, they sent out like extremely comical mistake and payments, 47 00:02:11,880 --> 00:02:14,760 Speaker 1: but they got those back. That was fine. That was 48 00:02:14,800 --> 00:02:18,079 Speaker 1: like a typo. It was like in one case they 49 00:02:18,120 --> 00:02:20,639 Speaker 1: meant to pay two hundred and eighty dollars to some 50 00:02:20,720 --> 00:02:23,320 Speaker 1: customers ask crow account like theyk in Brazil, and they 51 00:02:24,800 --> 00:02:28,480 Speaker 1: put in eighty one trillion dollars, which is much much 52 00:02:28,520 --> 00:02:31,640 Speaker 1: more money than the City group has. So you can't 53 00:02:31,680 --> 00:02:34,320 Speaker 1: do that. But you know, it's not like then the 54 00:02:34,400 --> 00:02:38,000 Speaker 1: money left and like the customer fled. It's like they 55 00:02:38,080 --> 00:02:40,000 Speaker 1: reversed the payment like the next day, and they told 56 00:02:40,080 --> 00:02:42,239 Speaker 1: regulators it was a near miss. So they had some 57 00:02:42,320 --> 00:02:45,680 Speaker 1: near a near miss. It's an internal transfer right like 58 00:02:46,240 --> 00:02:49,040 Speaker 1: on cities books and records. They briefly credited the customer 59 00:02:49,080 --> 00:02:51,320 Speaker 1: with eighty one trillion dollars. We like the money left 60 00:02:51,320 --> 00:02:53,400 Speaker 1: the bank and then they took it back the next day. 61 00:02:53,720 --> 00:02:56,919 Speaker 1: So you know, City has gotten grief from regulators about 62 00:02:56,919 --> 00:03:00,760 Speaker 1: like it's systems and processes and techno, and it's been 63 00:03:00,800 --> 00:03:03,880 Speaker 1: sort of like understandably. So yeah, it's been like trying 64 00:03:03,919 --> 00:03:05,920 Speaker 1: to kind of turn the page and be like we're 65 00:03:06,120 --> 00:03:09,639 Speaker 1: really good at not making mistake in payments. So when 66 00:03:09,639 --> 00:03:13,200 Speaker 1: they very publicly make or almost make mistaken payments, and 67 00:03:13,240 --> 00:03:16,919 Speaker 1: when they are very comically large, that's embarrassing for them. 68 00:03:17,000 --> 00:03:19,240 Speaker 1: It like sort of puts them in an ill light 69 00:03:19,360 --> 00:03:22,160 Speaker 1: with regulators. But they it's not like they lost eighty 70 00:03:22,160 --> 00:03:24,280 Speaker 1: one trillion dollars would amazing. 71 00:03:24,440 --> 00:03:26,959 Speaker 2: Well, there was eighty one trillion dollars, which was amazing 72 00:03:27,160 --> 00:03:30,720 Speaker 2: in and of itself. That actually made the six trillion 73 00:03:30,760 --> 00:03:33,919 Speaker 2: dollar fat finger that came six billion the next day. 74 00:03:35,120 --> 00:03:37,720 Speaker 1: The next day, Bloomer reported on a six billion dollar 75 00:03:38,400 --> 00:03:41,080 Speaker 1: mistake and transfer that they had actually done like a 76 00:03:41,120 --> 00:03:43,600 Speaker 1: week before the eighty one trillion dollar one. So like 77 00:03:43,840 --> 00:03:46,200 Speaker 1: they had this private wealth customer. They had to send 78 00:03:46,280 --> 00:03:48,920 Speaker 1: this customer, my impression is like a few million dollars, 79 00:03:49,160 --> 00:03:54,920 Speaker 1: but they typed the account number into the amount field. 80 00:03:55,240 --> 00:03:57,520 Speaker 1: So instead of typing like three million dollars, they typed 81 00:03:58,360 --> 00:04:01,800 Speaker 1: ten digit account number began with the six, and they 82 00:04:02,080 --> 00:04:04,600 Speaker 1: sent six billion dollars to this customer instead of a 83 00:04:04,640 --> 00:04:07,360 Speaker 1: few million dollars. And then again quickly discovered that it 84 00:04:07,400 --> 00:04:09,080 Speaker 1: was a mistake and took it back and it was 85 00:04:09,120 --> 00:04:11,560 Speaker 1: all fine, but you know, it's like it's a near miss. 86 00:04:11,560 --> 00:04:13,840 Speaker 1: They had to report it to regulators and the Bloomberg 87 00:04:13,840 --> 00:04:16,320 Speaker 1: story reported that the head of wealth management, who like 88 00:04:16,360 --> 00:04:17,320 Speaker 1: kind of just started. 89 00:04:17,040 --> 00:04:19,040 Speaker 2: It, provoked audible frustr vote. 90 00:04:18,839 --> 00:04:21,680 Speaker 1: Audible frustration, which is a great way to describe swearing. 91 00:04:24,080 --> 00:04:26,919 Speaker 1: But so they were pretty sad about that until like 92 00:04:26,960 --> 00:04:29,520 Speaker 1: a week later when they did the eighty one trillion 93 00:04:29,520 --> 00:04:31,680 Speaker 1: dollars things, and they're like, ah, six billion is nothing, 94 00:04:31,760 --> 00:04:33,040 Speaker 1: not so bad. 95 00:04:33,160 --> 00:04:35,400 Speaker 2: I tweeted a joke that, you know, a great way 96 00:04:35,440 --> 00:04:37,520 Speaker 2: to make this stop happening is just not let city 97 00:04:37,520 --> 00:04:40,360 Speaker 2: get the money back, and several people brought up Revlon 98 00:04:40,440 --> 00:04:41,960 Speaker 2: that they tried, they really didn't. 99 00:04:41,720 --> 00:04:43,800 Speaker 1: Get the money. Well, they did, but they could. 100 00:04:44,200 --> 00:04:47,640 Speaker 2: I actually forget how Revlon ended. I remember the headline 101 00:04:47,880 --> 00:04:48,360 Speaker 2: they got. 102 00:04:48,200 --> 00:04:51,719 Speaker 1: The money back. They did. So Revlin was interesting because 103 00:04:51,960 --> 00:04:53,919 Speaker 1: first of all, it wasn't an internal transfer. They actually 104 00:04:53,960 --> 00:04:56,320 Speaker 1: sent the money out of a bank right to people's 105 00:04:56,360 --> 00:04:59,480 Speaker 1: accounts at other banks. But secondly, like the accidental payment 106 00:04:59,600 --> 00:05:02,520 Speaker 1: was like part of an actual intended transaction that was 107 00:05:02,520 --> 00:05:05,200 Speaker 1: a sort of aggressive debt restructuring by Revlon that was 108 00:05:05,240 --> 00:05:08,039 Speaker 1: like basically hosing some of its creditors, and so the 109 00:05:08,080 --> 00:05:12,000 Speaker 1: creditors who were getting hosed randomly got nine hundred million 110 00:05:12,040 --> 00:05:14,400 Speaker 1: dollars and we were like, sweet, we're keeping this. And 111 00:05:14,400 --> 00:05:15,800 Speaker 1: then City's like no, no, I have to go back and 112 00:05:15,800 --> 00:05:18,120 Speaker 1: they're like nope, we're not giving back because like you 113 00:05:18,160 --> 00:05:20,720 Speaker 1: were trying to restructure this debt in a way that 114 00:05:20,800 --> 00:05:23,039 Speaker 1: was bad for creditors, and so they sued or they 115 00:05:23,120 --> 00:05:25,279 Speaker 1: kept the money and City sued them and they defeended 116 00:05:25,320 --> 00:05:27,840 Speaker 1: themselves saying we were actually owed this money because like 117 00:05:27,880 --> 00:05:31,120 Speaker 1: they were, the money is not right then and City 118 00:05:31,160 --> 00:05:33,679 Speaker 1: made the payment on behalf of Revlon and we're keeping 119 00:05:33,680 --> 00:05:36,280 Speaker 1: it and they actually won in the trial court, but 120 00:05:36,320 --> 00:05:38,120 Speaker 1: then it was her first on appeal. It was like 121 00:05:38,160 --> 00:05:40,080 Speaker 1: the right answer. But yeah, it was like fun for all. 122 00:05:40,320 --> 00:05:43,320 Speaker 2: So we weren't around when Revlon happens. But I was 123 00:05:43,320 --> 00:05:46,200 Speaker 2: trying to remember, why have we discussed City fat fingers 124 00:05:46,240 --> 00:05:48,880 Speaker 2: on this podcast before? And then I reminded of a 125 00:05:48,880 --> 00:05:51,760 Speaker 2: different type of fat finger incident that was uncovered back 126 00:05:51,760 --> 00:05:55,360 Speaker 2: in May. Do you remember that fat finger stock trade 127 00:05:55,560 --> 00:06:00,000 Speaker 2: were fined by the UK like sixty two million years 128 00:06:00,200 --> 00:06:03,120 Speaker 2: if you round up. In that situation, a trader had 129 00:06:03,120 --> 00:06:05,240 Speaker 2: intended to sell a basket of equities that was valued 130 00:06:05,279 --> 00:06:07,719 Speaker 2: at fifty eight million dollars but made an error while 131 00:06:07,720 --> 00:06:10,880 Speaker 2: inputting that value, and as a result, the basket was 132 00:06:10,880 --> 00:06:14,040 Speaker 2: actually valued at four hundred and forty four billion dollars 133 00:06:14,480 --> 00:06:15,880 Speaker 2: being created instead. 134 00:06:15,960 --> 00:06:18,080 Speaker 1: So this is the thing. All these things, it's like 135 00:06:18,160 --> 00:06:22,520 Speaker 1: screens with like a big box with like seventy five 136 00:06:22,520 --> 00:06:25,760 Speaker 1: different fields. You can fill in different fields. So if 137 00:06:25,800 --> 00:06:27,880 Speaker 1: you want to sell fifty eight million dollars worth of stock, 138 00:06:27,920 --> 00:06:29,760 Speaker 1: there's some field that's like sell fifty eight million dollars. 139 00:06:29,800 --> 00:06:31,480 Speaker 1: If you want to sell fifty eight million shares, there's 140 00:06:31,480 --> 00:06:33,560 Speaker 1: a different field that's like sell this many shares. And 141 00:06:33,600 --> 00:06:35,960 Speaker 1: this person, I think, put like the dollar number in 142 00:06:36,000 --> 00:06:38,080 Speaker 1: the shares field, so like the shares are worth like 143 00:06:38,320 --> 00:06:40,720 Speaker 1: hundreds of dollars, and so you multiply the amount by 144 00:06:40,760 --> 00:06:45,080 Speaker 1: hundreds of dollars. But it was just like going fast 145 00:06:45,120 --> 00:06:47,120 Speaker 1: in a complicated interface and just put it in the 146 00:06:47,120 --> 00:06:49,799 Speaker 1: wrong box. Same thing with the account number person who 147 00:06:50,160 --> 00:06:53,239 Speaker 1: put the six billion account number into the amount field 148 00:06:53,240 --> 00:06:55,400 Speaker 1: and sent out six billion dollars. It's just like there's 149 00:06:55,440 --> 00:06:56,480 Speaker 1: too many things on the screen. 150 00:06:56,800 --> 00:06:59,520 Speaker 2: Well, if I had prepped better for this podcast, I 151 00:06:59,520 --> 00:07:01,640 Speaker 2: would have gone back and listen to the episode we 152 00:07:01,680 --> 00:07:04,839 Speaker 2: recorded in May, because I recall fuzzly that at the 153 00:07:04,880 --> 00:07:07,680 Speaker 2: time we talked about how there were a bunch of 154 00:07:07,720 --> 00:07:09,600 Speaker 2: warnings that popped up, at least when it came to 155 00:07:09,640 --> 00:07:10,400 Speaker 2: the stock trade. 156 00:07:11,120 --> 00:07:11,800 Speaker 1: There are too many. 157 00:07:11,960 --> 00:07:13,480 Speaker 2: There are too many, and you kind of get numb 158 00:07:13,520 --> 00:07:15,640 Speaker 2: and you just click down. How do you fix this? 159 00:07:15,800 --> 00:07:19,560 Speaker 2: It seems to happen uniquely often at City, so I 160 00:07:19,560 --> 00:07:23,520 Speaker 2: don't know if their processes differ greatly from some of 161 00:07:23,560 --> 00:07:24,160 Speaker 2: their peers. 162 00:07:24,360 --> 00:07:26,560 Speaker 1: One thing they seem to have done is like this 163 00:07:26,640 --> 00:07:29,000 Speaker 1: is in the six billion dollar story, the wealth management 164 00:07:29,080 --> 00:07:31,920 Speaker 1: group has a new set of Actually I think the 165 00:07:31,920 --> 00:07:33,560 Speaker 1: whole firm has a new set of warnings, where like 166 00:07:33,840 --> 00:07:36,680 Speaker 1: there's some threshold of like large anomalist transfer, where like 167 00:07:37,240 --> 00:07:40,840 Speaker 1: someone not pressing the button gets an alert. Like the 168 00:07:40,840 --> 00:07:44,200 Speaker 1: head of wealth management gets like, hey, we're sending six 169 00:07:44,240 --> 00:07:45,760 Speaker 1: billion dollars to someone for no reason. 170 00:07:45,760 --> 00:07:48,360 Speaker 2: I sure expressed the audible so much I said, it. 171 00:07:48,400 --> 00:07:50,559 Speaker 1: Might not actually be him. But like someone gets a warning. 172 00:07:50,560 --> 00:07:52,520 Speaker 1: So it's not just the person pressing the button ignoring 173 00:07:52,560 --> 00:07:54,680 Speaker 1: the mornings, but someone gets a You know, you gotta 174 00:07:54,680 --> 00:07:56,560 Speaker 1: do it judicially, right, Like you can't pop up two 175 00:07:56,640 --> 00:08:00,200 Speaker 1: hundred warnings for every transaction because then everyone's gonna ignore them. 176 00:08:00,200 --> 00:08:02,840 Speaker 1: But like you know there's some level of like it 177 00:08:02,840 --> 00:08:05,480 Speaker 1: should not be possible for anyone at city to wire 178 00:08:05,640 --> 00:08:08,360 Speaker 1: or to send eighty one trillion dollars to anyone because 179 00:08:08,360 --> 00:08:11,480 Speaker 1: that's more than they have. Yes, but even six billion dollars, 180 00:08:11,480 --> 00:08:13,120 Speaker 1: like there should be someone checking that. 181 00:08:13,280 --> 00:08:16,680 Speaker 2: Maybe I want someone to ask Jane Frazier about this. 182 00:08:16,800 --> 00:08:19,120 Speaker 2: I want this. I don't think it necessarily will come 183 00:08:19,200 --> 00:08:20,800 Speaker 2: up on the next earnings call, but I want to 184 00:08:20,800 --> 00:08:22,520 Speaker 2: see this in an earnings transcript. 185 00:08:22,840 --> 00:08:25,800 Speaker 1: It's very funny to imagine these big material risks to 186 00:08:25,880 --> 00:08:28,720 Speaker 1: the bank, right, like a bank going bankrupt because it 187 00:08:28,800 --> 00:08:31,640 Speaker 1: accidentally wired out eighty one trillion dollars. But they're not 188 00:08:31,760 --> 00:08:35,320 Speaker 1: really like they're symbolic risks. They're like you should have 189 00:08:35,360 --> 00:08:37,600 Speaker 1: better tech so that you don't mess stuff up. But 190 00:08:37,600 --> 00:08:41,800 Speaker 1: it's not like any one of these was like that serious. 191 00:08:42,200 --> 00:08:44,200 Speaker 1: The Redlin was bad, but like not that happening. 192 00:08:44,640 --> 00:08:46,800 Speaker 2: You have to imagine that this is certainly a symptom 193 00:08:47,080 --> 00:08:49,400 Speaker 2: of something that maybe. 194 00:08:49,360 --> 00:08:52,240 Speaker 1: Is like a symptom of like bad computer screens, like 195 00:08:52,559 --> 00:08:55,080 Speaker 1: the eighty one trillion dollar transaction. The reporting on that 196 00:08:55,160 --> 00:08:57,559 Speaker 1: is wild. That wasn't like putting the wrong thing in 197 00:08:57,600 --> 00:08:59,960 Speaker 1: the wrong field. That was they use some sort of 198 00:09:00,080 --> 00:09:04,160 Speaker 1: rarely used backup screen to make the payment that was 199 00:09:04,200 --> 00:09:07,240 Speaker 1: prepopulated with fifteen zeros, so you had to delete the 200 00:09:07,240 --> 00:09:10,280 Speaker 1: fifteen zeros to type in the amount, and if you 201 00:09:10,320 --> 00:09:12,000 Speaker 1: just type in the amount, you like override some of 202 00:09:12,040 --> 00:09:14,400 Speaker 1: the zeros and you sent out trillions of dollars and 203 00:09:14,440 --> 00:09:17,600 Speaker 1: that's what happened, which is just like you could just 204 00:09:17,640 --> 00:09:20,280 Speaker 1: not do that, You just not have it automatically populate 205 00:09:20,320 --> 00:09:23,560 Speaker 1: with fifteen zeros and then like you've saved yourself a 206 00:09:23,640 --> 00:09:25,839 Speaker 1: problem right there. So it is just like a lot 207 00:09:25,880 --> 00:09:28,640 Speaker 1: of it I think is like software design. Yeah, and 208 00:09:29,360 --> 00:09:31,920 Speaker 1: it's not always a priority for the CEO of a 209 00:09:31,960 --> 00:09:35,720 Speaker 1: bank to be like we need the like internal software 210 00:09:35,800 --> 00:09:38,959 Speaker 1: to be more user friendly, but you know it might 211 00:09:39,000 --> 00:09:40,280 Speaker 1: be for Jane Fraser at. 212 00:09:40,200 --> 00:09:42,880 Speaker 2: This point, you know, I would imagine it's moved up 213 00:09:42,920 --> 00:09:44,560 Speaker 2: the priority list a few notches. 214 00:09:45,040 --> 00:09:47,920 Speaker 1: Like someone is asking Jane Fraser about the you know, 215 00:09:48,040 --> 00:09:49,920 Speaker 1: user interfaces on the payment software. 216 00:09:50,000 --> 00:09:53,480 Speaker 2: Maybe we'll get some answers regulator, maybe like, yeah, I 217 00:09:53,480 --> 00:09:55,280 Speaker 2: do love the point that you made in Money Stuff 218 00:09:55,320 --> 00:09:58,199 Speaker 2: that maybe this is a reason actually to bank with City. 219 00:09:58,240 --> 00:10:01,199 Speaker 2: You're basically by opening up a with them, buying a 220 00:10:01,240 --> 00:10:02,000 Speaker 2: lottery ticket. 221 00:10:02,720 --> 00:10:06,719 Speaker 1: Stereotypically, banks sometimes make mistakes. Yeah, I write about a 222 00:10:06,720 --> 00:10:08,920 Speaker 1: bank doing some error, and people be like, I think 223 00:10:08,920 --> 00:10:11,040 Speaker 1: you're being too generous to the bank. They never make 224 00:10:11,200 --> 00:10:13,560 Speaker 1: errors in the customer's favor. It's always in favor of 225 00:10:13,600 --> 00:10:15,520 Speaker 1: the bank. It's like, well, no city makes yours in 226 00:10:15,559 --> 00:10:18,479 Speaker 1: the customers faver all the time. They don't like, necessarily 227 00:10:18,559 --> 00:10:22,120 Speaker 1: get to keep the money. You probably shouldn't try to 228 00:10:22,280 --> 00:10:25,120 Speaker 1: bank with a bank that makes mistake in payments all 229 00:10:25,160 --> 00:10:27,560 Speaker 1: the time. That's more likely to end badly for you. 230 00:10:27,640 --> 00:10:28,920 Speaker 1: But it would be kind of fun to get eighty 231 00:10:28,960 --> 00:10:30,199 Speaker 1: one trillion dollars in your account. 232 00:10:30,200 --> 00:10:32,160 Speaker 2: And what if it's like a really small amount, you know, 233 00:10:32,480 --> 00:10:36,360 Speaker 2: language a casual like half million dollars that they would 234 00:10:36,360 --> 00:10:37,560 Speaker 2: they even notice. I don't know. 235 00:10:39,520 --> 00:10:41,920 Speaker 1: Just thinking about my account number by bank, which has 236 00:10:42,040 --> 00:10:43,360 Speaker 1: nine digits, it should be nice. 237 00:10:44,000 --> 00:10:46,679 Speaker 2: Do you want to say them here? Should be cool? 238 00:11:03,120 --> 00:11:04,160 Speaker 1: My account number. 239 00:11:04,080 --> 00:11:12,720 Speaker 2: Is twenty three and me, uh, segue this is I 240 00:11:12,800 --> 00:11:15,880 Speaker 2: really like this story, mostly because when we were talking 241 00:11:15,880 --> 00:11:18,880 Speaker 2: about this at my desk before we recorded this podcast, 242 00:11:18,960 --> 00:11:20,880 Speaker 2: then I was like, you know what, don't talk to me, 243 00:11:20,960 --> 00:11:23,280 Speaker 2: We'll just talk about it. In nineteen twenty three and 244 00:11:23,360 --> 00:11:27,559 Speaker 2: meters is a really fascinating story because I think it's 245 00:11:27,600 --> 00:11:29,320 Speaker 2: still a household name. 246 00:11:29,480 --> 00:11:30,080 Speaker 1: It kind of is. 247 00:11:30,120 --> 00:11:31,840 Speaker 2: And the last time I thought about it, it was 248 00:11:31,920 --> 00:11:34,680 Speaker 2: going public via spack. It was twenty twenty one. Things 249 00:11:34,679 --> 00:11:37,600 Speaker 2: were great, the market was frothy, and I didn't realize 250 00:11:37,600 --> 00:11:40,240 Speaker 2: that it's been slowly in a death spiral since then. 251 00:11:41,160 --> 00:11:44,040 Speaker 1: Yeah. I don't entirely understand it, but my impression is 252 00:11:44,080 --> 00:11:47,280 Speaker 1: that like the recurring revenue of selling genetic dusts to 253 00:11:47,320 --> 00:11:49,560 Speaker 1: be like you kind of only need to find out 254 00:11:49,600 --> 00:11:50,480 Speaker 1: your ancestry once. 255 00:11:50,679 --> 00:11:52,920 Speaker 2: Yeah, but there's so many people in the world people, 256 00:11:52,920 --> 00:11:53,160 Speaker 2: But like. 257 00:11:53,160 --> 00:11:56,120 Speaker 1: I also think that it's become less popular as people 258 00:11:56,160 --> 00:12:00,280 Speaker 1: get worried about like privacy concerns and like they were hacked. Yeah, 259 00:12:00,280 --> 00:12:02,800 Speaker 1: she took a bad databaseically get hacked, you know. 260 00:12:02,920 --> 00:12:05,840 Speaker 2: Yeah, specifically in twenty twenty three, they were hacked. 261 00:12:05,600 --> 00:12:08,559 Speaker 1: And I think the time before then they've never made money. 262 00:12:08,920 --> 00:12:11,720 Speaker 2: Yeah, that's true. Yeah, And I was I was searching 263 00:12:11,760 --> 00:12:14,920 Speaker 2: for a reason why because you think about I feel 264 00:12:14,960 --> 00:12:18,000 Speaker 2: like it was really peak twenty seventeen, twenty eighteen, they 265 00:12:18,000 --> 00:12:21,440 Speaker 2: were really popular as as gifts around the holidays. Remember 266 00:12:21,480 --> 00:12:25,600 Speaker 2: Elizabeth Warren took a genetic test to prove that she 267 00:12:25,640 --> 00:12:29,600 Speaker 2: had Native American heritage. That was basically the peak actually, 268 00:12:29,640 --> 00:12:32,520 Speaker 2: because apparently twenty three and me and also their competitors, 269 00:12:32,600 --> 00:12:35,679 Speaker 2: Ancestry being one of them, have just seen sales steadily 270 00:12:35,720 --> 00:12:36,520 Speaker 2: declined since then. 271 00:12:37,440 --> 00:12:41,760 Speaker 1: Yeah, and to their credit, they went public at the 272 00:12:41,800 --> 00:12:42,199 Speaker 1: top and. 273 00:12:42,920 --> 00:12:44,959 Speaker 2: The halcyon days in public in. 274 00:12:44,920 --> 00:12:50,280 Speaker 1: Like twenty twenty one, a three point five billion dollar valuation. 275 00:12:50,480 --> 00:12:52,120 Speaker 1: Oh know, anyway, I think they did this back mar 276 00:12:52,200 --> 00:12:54,880 Speaker 1: journally twenty twenty one, and they had like a three 277 00:12:54,920 --> 00:12:59,120 Speaker 1: point five billion dollar valuation. It's currently in the ballpark 278 00:12:59,160 --> 00:13:03,439 Speaker 1: of one percent of that, so not great. 279 00:13:03,559 --> 00:13:06,559 Speaker 2: I mean the shares are treating hundred two dollars right now. 280 00:13:06,679 --> 00:13:09,880 Speaker 2: I think the absolute high was well above three hundred. 281 00:13:10,440 --> 00:13:13,840 Speaker 1: Yeah stocks, but yes, that's right. Yeah. But so anyway, 282 00:13:14,120 --> 00:13:18,680 Speaker 1: the founder and CEO and forty nine percent shareholder and 283 00:13:18,840 --> 00:13:22,520 Speaker 1: Majiski wants to take it private. I don't actually know 284 00:13:22,520 --> 00:13:24,960 Speaker 1: how much she cashed out of this, but like took 285 00:13:24,960 --> 00:13:27,800 Speaker 1: it public at three point five billion dollars. Wants to 286 00:13:27,800 --> 00:13:31,520 Speaker 1: take a private at not zero dollars, but like quite 287 00:13:31,559 --> 00:13:34,720 Speaker 1: close to zero. She wants to pay public shareholders something 288 00:13:34,760 --> 00:13:37,240 Speaker 1: like ten million dollars for the company, which is like 289 00:13:37,240 --> 00:13:42,280 Speaker 1: forty one cents per share. And that is an interesting 290 00:13:42,480 --> 00:13:46,800 Speaker 1: negotiation because she's the controlling shareholder, and you know, the 291 00:13:46,800 --> 00:13:49,360 Speaker 1: board of directors is in charge of negotiating with her 292 00:13:49,640 --> 00:13:51,920 Speaker 1: and trying to get a fair price for the public shareholders. 293 00:13:52,320 --> 00:13:54,439 Speaker 1: I don't know what they think about the future of 294 00:13:54,480 --> 00:13:58,000 Speaker 1: the business. Like she clearly thinks it's worth something because 295 00:13:58,000 --> 00:13:59,360 Speaker 1: she wants to buy it and like put some more 296 00:13:59,400 --> 00:14:02,880 Speaker 1: money into it. But she's offering ten million dollars to 297 00:14:02,920 --> 00:14:05,280 Speaker 1: the public shareholders. By the way, that's much less than 298 00:14:05,440 --> 00:14:07,560 Speaker 1: the current trading price of the stock. She's offering forty 299 00:14:07,600 --> 00:14:09,160 Speaker 1: one cents per share it now at like a buck 300 00:14:09,200 --> 00:14:11,560 Speaker 1: fifty or something like that. So she's offering a take 301 00:14:11,600 --> 00:14:14,320 Speaker 1: on her you know, she's saying shareolders are diluted about 302 00:14:14,320 --> 00:14:15,599 Speaker 1: the value of this company. I want to pay you 303 00:14:15,720 --> 00:14:17,760 Speaker 1: much less. Part if I were a director, I'd have 304 00:14:17,760 --> 00:14:20,000 Speaker 1: a really hard time accepting a deal like that, because 305 00:14:20,040 --> 00:14:23,760 Speaker 1: like you're gonna get sued. You're saying, I want to 306 00:14:23,760 --> 00:14:26,080 Speaker 1: sell this company for you know, a big discount. Not 307 00:14:26,120 --> 00:14:27,880 Speaker 1: only too, it's like all time, Hi not only did 308 00:14:27,920 --> 00:14:31,040 Speaker 1: Sie to its price today, it's like a tough deal 309 00:14:31,080 --> 00:14:33,880 Speaker 1: to take, and so she offered not that deal but 310 00:14:33,960 --> 00:14:37,800 Speaker 1: a similarly sort of like loaded negative premium deal last year, 311 00:14:38,400 --> 00:14:42,440 Speaker 1: and the directors said no, and then they all quit 312 00:14:42,640 --> 00:14:46,880 Speaker 1: because she's the controlling shareholder and like she could fire them, 313 00:14:46,960 --> 00:14:48,200 Speaker 1: and so they were like, well, we're not going to 314 00:14:48,240 --> 00:14:51,440 Speaker 1: take this deal, and so there's the only thing you 315 00:14:51,680 --> 00:14:54,280 Speaker 1: really can do here as directors, and so they all quit, 316 00:14:54,320 --> 00:14:55,880 Speaker 1: and so she was the only director of the company, 317 00:14:55,960 --> 00:15:00,120 Speaker 1: and she went and appointed new independent directors and for 318 00:15:00,280 --> 00:15:02,560 Speaker 1: a new much lower price to take the company private, 319 00:15:03,080 --> 00:15:04,840 Speaker 1: and they all said no again this week, so they're 320 00:15:04,880 --> 00:15:06,360 Speaker 1: back to the square one. They have it resigned. 321 00:15:06,560 --> 00:15:08,760 Speaker 2: I was thinking she shouldn't, you know, do any elon 322 00:15:08,840 --> 00:15:11,640 Speaker 2: musk and just get really friendly board members who maybe 323 00:15:11,680 --> 00:15:12,560 Speaker 2: are related to her. 324 00:15:13,120 --> 00:15:18,000 Speaker 1: Well, right, when all of the directors quit, she got 325 00:15:18,000 --> 00:15:22,000 Speaker 1: to appoint the new directors. And there are two ways 326 00:15:22,000 --> 00:15:25,240 Speaker 1: you can go with that. You can appoint your relatives 327 00:15:25,640 --> 00:15:27,640 Speaker 1: who will then sell you the company at forty one 328 00:15:27,680 --> 00:15:30,360 Speaker 1: cents a share and get sued. Or you can to 329 00:15:30,440 --> 00:15:35,200 Speaker 1: point like reputable independent directors who like you know, you've 330 00:15:35,200 --> 00:15:37,920 Speaker 1: had conversations with you hope that they will take your 331 00:15:37,960 --> 00:15:42,200 Speaker 1: proposal seriously. You hope that they will see the reasons 332 00:15:42,240 --> 00:15:44,640 Speaker 1: behind you're wanting to pay much less than the current 333 00:15:44,720 --> 00:15:47,560 Speaker 1: price of the company and will take your deal. But 334 00:15:48,680 --> 00:15:51,360 Speaker 1: you haven't specifically signed up to that because that looks bad. 335 00:15:51,600 --> 00:15:53,760 Speaker 1: And so then if they agree to your deal, you 336 00:15:53,840 --> 00:15:55,600 Speaker 1: look good, right, Like when you get sued, you can 337 00:15:55,640 --> 00:15:58,120 Speaker 1: say no, no, these independent directors like really did their 338 00:15:58,200 --> 00:16:01,120 Speaker 1: due diligence and accepted my deal. So I think that's 339 00:16:01,120 --> 00:16:03,520 Speaker 1: what was happening here, is like these directors are not 340 00:16:03,560 --> 00:16:07,360 Speaker 1: her relatives. They come from real places, Like they look 341 00:16:07,480 --> 00:16:10,480 Speaker 1: like good independent directors who could consider her deal and 342 00:16:10,800 --> 00:16:12,840 Speaker 1: if they signed off on it, it wouldn't be a rubber stamp. 343 00:16:13,000 --> 00:16:14,760 Speaker 1: But then they didn't sign off on it. So oops. 344 00:16:15,160 --> 00:16:17,560 Speaker 2: Yeah, And I mean, I don't know where this company goes. 345 00:16:17,640 --> 00:16:21,200 Speaker 2: Obviously there's some deep fundamental flaws here. 346 00:16:21,440 --> 00:16:23,720 Speaker 1: You occasionally see these take hunters. You see these deals 347 00:16:23,720 --> 00:16:27,160 Speaker 1: where a company is not viable and someone will buy 348 00:16:27,160 --> 00:16:28,920 Speaker 1: it for like much less than at stock price and say, 349 00:16:28,920 --> 00:16:30,960 Speaker 1: we're gonna put a little bit more cash on the 350 00:16:31,000 --> 00:16:33,240 Speaker 1: balance sheet, We're gonna keep the company alive. But like 351 00:16:33,480 --> 00:16:36,000 Speaker 1: the shareholders are diluted and they're not getting that much 352 00:16:36,000 --> 00:16:38,600 Speaker 1: money and the board will be like, yes, that's true. 353 00:16:39,120 --> 00:16:41,040 Speaker 1: It sucks for the shareholders, but we're doing it. But 354 00:16:41,080 --> 00:16:43,600 Speaker 1: it's like, that's a tough thing for a director to do, 355 00:16:43,680 --> 00:16:45,960 Speaker 1: particularly if you were just apported to do the deal right. 356 00:16:46,440 --> 00:16:48,760 Speaker 1: So it's it's like a tough spot, Like if she's 357 00:16:48,840 --> 00:16:51,080 Speaker 1: right that it's kind of a melting ice cube and 358 00:16:51,120 --> 00:16:53,560 Speaker 1: it's not worth what the public shaholders are paying for it, 359 00:16:53,600 --> 00:16:56,760 Speaker 1: Like it's gonna be hard for her to persuade directors 360 00:16:56,800 --> 00:16:58,880 Speaker 1: of that, even if it's true. And then like, you know, 361 00:16:58,880 --> 00:16:59,480 Speaker 1: where do you go? 362 00:16:59,720 --> 00:17:00,520 Speaker 2: Yeah? 363 00:17:00,520 --> 00:17:03,520 Speaker 1: I think they're exploring other strategic alternatives, right, but it's 364 00:17:03,520 --> 00:17:04,760 Speaker 1: tough to do that when you have a forty five 365 00:17:04,800 --> 00:17:05,480 Speaker 1: percent shareholder. 366 00:17:05,800 --> 00:17:08,480 Speaker 2: Yeah, I was thinking maybe they could pivot into dog 367 00:17:08,600 --> 00:17:11,080 Speaker 2: DNA test kits. I know that that's still a very 368 00:17:11,119 --> 00:17:14,199 Speaker 2: popular market. I think the company has warned that it 369 00:17:14,240 --> 00:17:17,040 Speaker 2: needs to raise cash or find some solution or else 370 00:17:17,080 --> 00:17:19,480 Speaker 2: it won't be around for much longer. So I know 371 00:17:19,560 --> 00:17:22,080 Speaker 2: it'll be fascinating to follow. I mean, it just feels 372 00:17:22,080 --> 00:17:24,359 Speaker 2: like a company that would naturally want to go private 373 00:17:24,440 --> 00:17:27,119 Speaker 2: right now. And also I was surprised the question is the. 374 00:17:27,119 --> 00:17:30,399 Speaker 1: Price you know and like? And it was just he 375 00:17:30,440 --> 00:17:33,000 Speaker 1: does not think it's worth forty million dollars. 376 00:17:33,280 --> 00:17:35,680 Speaker 2: Yeah, for a little bit. I mean she had a partner, 377 00:17:35,880 --> 00:17:38,840 Speaker 2: and that's also part of the problem. Yeah, a new mountain, 378 00:17:39,000 --> 00:17:40,920 Speaker 2: and I think like the bid that she offered the 379 00:17:40,960 --> 00:17:43,920 Speaker 2: forty one cents a share, wasn't that eighty four percent 380 00:17:44,119 --> 00:17:45,200 Speaker 2: or something below. 381 00:17:45,359 --> 00:17:47,879 Speaker 1: The new Mountain bod which in turn was lower than 382 00:17:47,880 --> 00:17:50,600 Speaker 1: the bid last year that the director's resigned over her. 383 00:17:50,640 --> 00:17:54,760 Speaker 1: Bids have been getting lower, probably for reasons. Yeah, yeah, 384 00:17:54,800 --> 00:17:57,400 Speaker 1: it looks bad. It's a bad process. Normally the board 385 00:17:57,440 --> 00:18:00,200 Speaker 1: like negotiates you up here they're negotiating or down. Uh 386 00:18:01,480 --> 00:18:01,840 Speaker 1: not great. 387 00:18:02,040 --> 00:18:06,160 Speaker 2: I don't know. I mean I hope that the genetic 388 00:18:06,520 --> 00:18:11,240 Speaker 2: testing universe continues to exist and perhaps thrive. Is because 389 00:18:11,480 --> 00:18:13,480 Speaker 2: you think about true crime. I listen to a lot 390 00:18:13,520 --> 00:18:18,160 Speaker 2: of true crime podcasts, and there have been instances where 391 00:18:18,760 --> 00:18:21,320 Speaker 2: like these sort of kits where you can find your 392 00:18:21,400 --> 00:18:25,160 Speaker 2: family members, long lost family members have been uncovered through 393 00:18:25,359 --> 00:18:26,160 Speaker 2: little kids like this. 394 00:18:27,080 --> 00:18:30,199 Speaker 1: I think I read an interview with her or she 395 00:18:30,280 --> 00:18:35,199 Speaker 1: talked about that as a negative for sales because like 396 00:18:35,320 --> 00:18:41,160 Speaker 1: you know, serial killer for sure, a little genetic testing 397 00:18:41,160 --> 00:18:43,080 Speaker 1: and then like your cousin gets arrested in the serialcular. 398 00:18:43,400 --> 00:18:44,680 Speaker 1: I wish I hadn't bought that Kip. 399 00:18:44,800 --> 00:18:48,639 Speaker 2: It's good for society, maybe bad for sale. But again 400 00:18:48,800 --> 00:18:51,320 Speaker 2: as someone who I don't know, maybe I am related 401 00:18:51,320 --> 00:18:53,720 Speaker 2: to a serial killer, but I think that these should 402 00:18:53,760 --> 00:18:56,359 Speaker 2: exist in some form. I think it was the Golden 403 00:18:56,400 --> 00:18:59,440 Speaker 2: State killer who was found through something like this, which 404 00:18:59,480 --> 00:19:02,879 Speaker 2: was wild. Yeah, it definitely didn't help the share price, right. 405 00:19:02,760 --> 00:19:06,800 Speaker 1: It's not like a good advertisement for like the privacy 406 00:19:06,840 --> 00:19:09,600 Speaker 1: practices of the genetic testing industry, you. 407 00:19:09,640 --> 00:19:14,840 Speaker 2: Wouldn't offer up your saliva to potentially help capture a murderer. 408 00:19:14,840 --> 00:19:18,639 Speaker 1: Even depends how close a family member this murderer is cousin. 409 00:19:20,359 --> 00:19:23,840 Speaker 1: I feel like I don't know an advance with family 410 00:19:23,880 --> 00:19:25,639 Speaker 1: member of mine did this murder. 411 00:19:25,680 --> 00:19:29,040 Speaker 2: I mean, you'd probably have some suspicions, honestly, if you 412 00:19:29,080 --> 00:19:32,080 Speaker 2: were in this scenario. I mean, I could probably guess 413 00:19:32,720 --> 00:19:33,280 Speaker 2: you know what. 414 00:19:33,200 --> 00:19:36,600 Speaker 1: You are you most likely to I don't have a 415 00:19:36,600 --> 00:19:38,520 Speaker 1: problem with it, but I'm guessing none of my family 416 00:19:38,520 --> 00:19:42,359 Speaker 1: members about everyone's like that. I can't till their cousin 417 00:19:42,440 --> 00:19:43,440 Speaker 1: is the Golden stateuler. 418 00:19:43,600 --> 00:19:46,399 Speaker 2: I can't wait to revisit the next city fat Finger 419 00:19:46,560 --> 00:20:06,800 Speaker 2: where twenty three amigos when one of your cousins gets arrested. Yeah, 420 00:20:06,840 --> 00:20:12,160 Speaker 2: moving swiftly along. I love this story from Emily Grafeo 421 00:20:12,200 --> 00:20:14,159 Speaker 2: and Max Abelson. I know that they've been working on 422 00:20:14,200 --> 00:20:17,240 Speaker 2: it for a long long time. A really great deep 423 00:20:17,320 --> 00:20:21,359 Speaker 2: dive into First Trust, which is an ETF issuer based 424 00:20:21,359 --> 00:20:25,959 Speaker 2: in thet This one actually you led money stuff with it, 425 00:20:26,040 --> 00:20:27,560 Speaker 2: so this wasn't even my influence. 426 00:20:28,119 --> 00:20:31,840 Speaker 1: Love an ETF story. ETF sales channels, right. One is advisors. 427 00:20:32,200 --> 00:20:35,720 Speaker 1: Like a financial advisor has a client and the advisor says, 428 00:20:35,920 --> 00:20:37,840 Speaker 1: this is the menu of stuff that I'm going to 429 00:20:37,920 --> 00:20:40,080 Speaker 1: put you in, and the client is like, sure, whatever, right, 430 00:20:40,320 --> 00:20:42,359 Speaker 1: And so the advisor just picks the ETFs, and the 431 00:20:42,400 --> 00:20:44,800 Speaker 1: advisor is a fiduciary for the client and has an 432 00:20:44,800 --> 00:20:47,440 Speaker 1: obligation to try to put the client and ETFs that 433 00:20:47,480 --> 00:20:49,920 Speaker 1: are good, right, But like the advisor's pick media. And 434 00:20:49,920 --> 00:20:52,040 Speaker 1: then the other kind is like Robin Hood right, Like 435 00:20:52,440 --> 00:20:55,760 Speaker 1: there's an enormous mass of self right that investors, A 436 00:20:55,800 --> 00:20:59,520 Speaker 1: lot of them buy vanguard s and P five hundred 437 00:20:59,560 --> 00:21:02,200 Speaker 1: at ets right, Like, yeah, huge business of self directed 438 00:21:02,280 --> 00:21:06,280 Speaker 1: investors buying cheap index ETFs. But also clearly a huge 439 00:21:06,320 --> 00:21:10,919 Speaker 1: business or some business of like Robinhood people buying triple 440 00:21:11,000 --> 00:21:14,480 Speaker 1: lever at ETFs and like weird stuff to make weird pets. 441 00:21:14,520 --> 00:21:16,000 Speaker 1: And I don't really know how that gets sold. I 442 00:21:16,040 --> 00:21:20,000 Speaker 1: don't know if that's like you're like searching Robinhood for 443 00:21:20,080 --> 00:21:22,480 Speaker 1: fun tickers, or if it's like you're on Reddit reading 444 00:21:22,520 --> 00:21:24,800 Speaker 1: about the latest cool ETF. But I don't have a 445 00:21:24,840 --> 00:21:26,800 Speaker 1: great sense of like what the split is like away 446 00:21:26,800 --> 00:21:28,879 Speaker 1: from like the vanguard s and P five hundred, like 447 00:21:29,200 --> 00:21:32,720 Speaker 1: a weird ETF. Is that like always mostly an advisor product, 448 00:21:32,800 --> 00:21:35,760 Speaker 1: or is that like reddit boards are selling that to 449 00:21:36,040 --> 00:21:36,800 Speaker 1: robin Hood people. 450 00:21:36,880 --> 00:21:40,720 Speaker 2: A weird ETF like the triple triple lever the buffers 451 00:21:41,240 --> 00:21:42,800 Speaker 2: buffer feels like an advisor. 452 00:21:42,480 --> 00:21:43,199 Speaker 1: Product, but I don't know. 453 00:21:43,280 --> 00:21:45,160 Speaker 2: Yeah, I think that that's fair to say that buffers 454 00:21:45,160 --> 00:21:48,479 Speaker 2: are popular with advisors, but sort of the shiny stuff, 455 00:21:48,520 --> 00:21:50,200 Speaker 2: the funky, high octane, the. 456 00:21:50,200 --> 00:21:52,160 Speaker 1: Thing that's like we double lever you and you put 457 00:21:52,200 --> 00:21:53,680 Speaker 1: like one times your money in gold and one times 458 00:21:53,680 --> 00:21:56,200 Speaker 1: your money in bitcoin, crazy product that seems like it 459 00:21:56,240 --> 00:21:57,280 Speaker 1: could sell in Robinhood. 460 00:21:57,680 --> 00:22:00,199 Speaker 2: Yes, that's probably where you're finding it. And even I 461 00:22:00,200 --> 00:22:02,320 Speaker 2: mean some of the bitcoin your advisor's. 462 00:22:01,880 --> 00:22:03,480 Speaker 1: Not doing that well your advisors. I don't know. 463 00:22:03,520 --> 00:22:07,199 Speaker 2: But for example, I mean I wrote up Blackrock added ibit, 464 00:22:07,400 --> 00:22:10,199 Speaker 2: their bitcoin ETF to their model a portion of their 465 00:22:10,240 --> 00:22:13,440 Speaker 2: model portfolios for the first time. That was really advisor 466 00:22:13,520 --> 00:22:17,840 Speaker 2: driven financial advisors asking Blackrock to add it because I 467 00:22:17,920 --> 00:22:20,040 Speaker 2: want to put my clients in this. 468 00:22:20,240 --> 00:22:22,280 Speaker 1: I understand that, Like I can see an advisor wanting 469 00:22:22,320 --> 00:22:24,760 Speaker 1: to put their clients and IBT, but like when they 470 00:22:24,840 --> 00:22:26,919 Speaker 1: launched ibet it was a but I'm saying. 471 00:22:26,680 --> 00:22:29,720 Speaker 2: Like their clients, if they couldn't get it through their advisors, 472 00:22:29,760 --> 00:22:32,959 Speaker 2: they would then they would probably go to a platform 473 00:22:33,040 --> 00:22:33,959 Speaker 2: to buy it, right. 474 00:22:34,000 --> 00:22:36,760 Speaker 1: I think of of a bitcoin ETF as being in 475 00:22:36,800 --> 00:22:40,880 Speaker 1: the first instance a product for self directed retail because 476 00:22:40,920 --> 00:22:43,359 Speaker 1: the first instance of like people want to buy that, 477 00:22:43,400 --> 00:22:44,920 Speaker 1: they'll buy it on robin Hood and then like you know, 478 00:22:45,000 --> 00:22:46,600 Speaker 1: later an advisor might add it in. But it's not 479 00:22:46,600 --> 00:22:48,600 Speaker 1: like an advisor product. Yeah, the buffer I can see 480 00:22:48,600 --> 00:22:49,600 Speaker 1: being an advisor. 481 00:22:49,280 --> 00:22:53,439 Speaker 2: Product, yeah, big time, and an endowment product apparently first 482 00:22:53,480 --> 00:22:55,359 Speaker 2: Trust first Yeah, get. 483 00:22:55,280 --> 00:22:58,240 Speaker 1: Us distracted, but like First Trust that makes advisor products. 484 00:22:58,280 --> 00:23:03,040 Speaker 2: Yea exactly. They have about the last I checked, about 485 00:23:03,080 --> 00:23:06,920 Speaker 2: two hundred billion dollars in AUM their average fee though 486 00:23:07,240 --> 00:23:11,800 Speaker 2: is seventy eight basis points, which is pretty high. The 487 00:23:11,840 --> 00:23:15,399 Speaker 2: industry average is fifty eight the industry average. So that 488 00:23:15,480 --> 00:23:18,960 Speaker 2: includes all the funky expensive leverage stuff in addition to 489 00:23:18,960 --> 00:23:23,880 Speaker 2: the stuff that costs like three basis points. It's not no, no, 490 00:23:24,240 --> 00:23:26,119 Speaker 2: it's just pure Yeah, it. 491 00:23:28,880 --> 00:23:29,200 Speaker 1: Funds. 492 00:23:29,840 --> 00:23:31,879 Speaker 2: I prefer this podcast like an hour before I have 493 00:23:31,920 --> 00:23:37,120 Speaker 2: time to do that. But the point being that, yeah, 494 00:23:37,280 --> 00:23:41,119 Speaker 2: well yeah, the point being that it's a relatively small issuer, 495 00:23:41,240 --> 00:23:44,959 Speaker 2: but it makes a lot of money for its size 496 00:23:45,000 --> 00:23:47,639 Speaker 2: because it has a pretty high fee. And there's just 497 00:23:47,680 --> 00:23:50,399 Speaker 2: great quotes in here about the sales tactics that have 498 00:23:50,440 --> 00:23:54,320 Speaker 2: been employed by First Trust, which, according to our own 499 00:23:54,359 --> 00:23:57,440 Speaker 2: reporting and some other outlets, is actually under investigation by 500 00:23:57,440 --> 00:23:59,399 Speaker 2: friendra for them. 501 00:23:59,160 --> 00:24:03,159 Speaker 1: Right, because like the way you sell advisor products is 502 00:24:03,200 --> 00:24:07,040 Speaker 1: some combination of like to give the advisor something cool 503 00:24:07,119 --> 00:24:09,520 Speaker 1: to show to their client, like a buffer ETF is like, oh, look, 504 00:24:09,560 --> 00:24:12,439 Speaker 1: I've given you stock upside with no downside. How nice? Right, 505 00:24:14,240 --> 00:24:16,800 Speaker 1: But the other way is to like take the advisor 506 00:24:16,840 --> 00:24:19,439 Speaker 1: out to dinner and be like, hey, why don't you 507 00:24:19,520 --> 00:24:25,639 Speaker 1: sell my ets instead of Vanguard's ets? Because Vanguard doesn't 508 00:24:25,640 --> 00:24:27,720 Speaker 1: take you out to dinner. Maybe they did probably not 509 00:24:27,720 --> 00:24:32,080 Speaker 1: that much. And the implication of the Finner investigation and 510 00:24:32,160 --> 00:24:36,040 Speaker 1: of the Bloomberg reporting is that First Trust leans heavily 511 00:24:36,440 --> 00:24:39,520 Speaker 1: on entertainment. They are like quotes from the First Trust 512 00:24:39,560 --> 00:24:43,040 Speaker 1: salespeople saying, this company was built on entertaining. It was 513 00:24:43,119 --> 00:24:45,359 Speaker 1: and still is the one leg up on our competition. 514 00:24:45,840 --> 00:24:49,120 Speaker 1: And another guy says, you're selling the most expensive ETF 515 00:24:49,200 --> 00:24:52,080 Speaker 1: with mediocre performance, you better do something different. And that's 516 00:24:52,080 --> 00:24:54,320 Speaker 1: what we did. And something different is like, so they 517 00:24:54,680 --> 00:24:58,560 Speaker 1: took them at dinner. They had like conferences in nice places. 518 00:24:59,000 --> 00:25:01,520 Speaker 1: So if you're in a advisor who like sold a 519 00:25:01,560 --> 00:25:03,240 Speaker 1: lot of their atfs, you could go to the nice 520 00:25:03,240 --> 00:25:05,600 Speaker 1: conference and they'd pay for you to go to a 521 00:25:05,680 --> 00:25:06,280 Speaker 1: nice conference. 522 00:25:06,359 --> 00:25:10,240 Speaker 2: Also, performance coach, performance came performance. Yeah, I'm not familiar 523 00:25:10,359 --> 00:25:14,200 Speaker 2: with the concept. What is a performance coach in this context? 524 00:25:14,840 --> 00:25:17,560 Speaker 1: Like one like negative mean way to characterize what's going 525 00:25:17,560 --> 00:25:19,560 Speaker 1: on here is like they're like bribing the financially right, 526 00:25:19,560 --> 00:25:22,160 Speaker 1: They're like giving the financial advisors stuff for the financial 527 00:25:22,160 --> 00:25:25,159 Speaker 1: advisors that benefits the financial advisors, and then the financial 528 00:25:25,200 --> 00:25:27,879 Speaker 1: advisors are putting the clients into like these ETFs that 529 00:25:27,960 --> 00:25:30,120 Speaker 1: charge very high fees and don't have like amazing performance. 530 00:25:30,960 --> 00:25:33,840 Speaker 1: But that's like to mean, like, what's kind of going 531 00:25:33,840 --> 00:25:35,800 Speaker 1: on here is you're a financial advisor. You're sort of 532 00:25:35,840 --> 00:25:38,399 Speaker 1: like holistically trying to be good at it, right, Like 533 00:25:38,480 --> 00:25:40,639 Speaker 1: one thing that being good at it means is like 534 00:25:41,600 --> 00:25:44,600 Speaker 1: putting your client and investments that go up or whatever 535 00:25:44,680 --> 00:25:46,920 Speaker 1: that you expect to go with. But there are other things, right, 536 00:25:47,000 --> 00:25:48,600 Speaker 1: and like one of them is like sales and like 537 00:25:49,200 --> 00:25:52,879 Speaker 1: being personable and answering your clients questions and they have 538 00:25:52,960 --> 00:25:56,280 Speaker 1: questions and just being like a good effective financial advisor 539 00:25:56,760 --> 00:25:59,520 Speaker 1: and how do you do that or a variety of things. 540 00:25:59,560 --> 00:26:01,600 Speaker 1: But like they're coaches who can tell you how to 541 00:26:01,600 --> 00:26:02,960 Speaker 1: do that, right, who can tell you how to get 542 00:26:02,960 --> 00:26:05,520 Speaker 1: better at your job. And so First Trust will go 543 00:26:05,600 --> 00:26:07,640 Speaker 1: to the advisors and be like, we have this performance 544 00:26:07,680 --> 00:26:10,560 Speaker 1: coach who will help you be a better financial advisor. 545 00:26:10,640 --> 00:26:12,600 Speaker 1: And the financial advisors that's great. That's great for me. 546 00:26:12,920 --> 00:26:15,320 Speaker 1: It's good for my clients if I'm better, right, if 547 00:26:15,359 --> 00:26:21,680 Speaker 1: my performance is better. So they take the coaching, And 548 00:26:22,040 --> 00:26:24,800 Speaker 1: is it possible that a condition forgetting the coaching is 549 00:26:24,800 --> 00:26:27,280 Speaker 1: that they put their clients into the First Trust CTS. No, 550 00:26:27,640 --> 00:26:30,359 Speaker 1: that's not what you're that's regulatorily is not allowed, but 551 00:26:30,400 --> 00:26:33,159 Speaker 1: like through some implication, some internal emails that maybe there 552 00:26:33,160 --> 00:26:35,720 Speaker 1: are some hint of that. But like the coaching, like 553 00:26:36,080 --> 00:26:38,760 Speaker 1: if you're a financial advisor, you're not like experiencing that 554 00:26:38,800 --> 00:26:40,760 Speaker 1: as like I am taking a bribe, right, Like you're 555 00:26:40,800 --> 00:26:42,520 Speaker 1: experiencing that. It's like I'm trying to do a good 556 00:26:42,560 --> 00:26:44,359 Speaker 1: job for my clients, and one way to do a 557 00:26:44,359 --> 00:26:46,600 Speaker 1: good job is this coach will coach me. And like 558 00:26:47,160 --> 00:26:49,600 Speaker 1: you know, like as part of doing a good job 559 00:26:49,600 --> 00:26:51,680 Speaker 1: for my clients, I'm putting them in this expensive ETF. 560 00:26:51,680 --> 00:26:53,480 Speaker 1: But it gets me this coaching that makes it so good. 561 00:26:53,640 --> 00:26:55,200 Speaker 2: Yeah, don't worry about the performance. 562 00:26:55,640 --> 00:26:59,160 Speaker 1: We've talked about this actually, like like Vanguard cutting fees, right, 563 00:26:59,200 --> 00:27:04,040 Speaker 1: and you have mentioned there are people the financial advisors, yeah, 564 00:27:04,119 --> 00:27:08,200 Speaker 1: or like I don't like Vanguard cutting fees because they 565 00:27:08,200 --> 00:27:11,280 Speaker 1: don't invest in having a good website, right, answering questions 566 00:27:11,280 --> 00:27:13,840 Speaker 1: Like that's a real legitimate concern for a financial advisor, right, 567 00:27:14,160 --> 00:27:17,359 Speaker 1: is like my clients are in the CTF, Like if 568 00:27:17,400 --> 00:27:19,320 Speaker 1: I have questions about the ETF, they have questions about 569 00:27:19,320 --> 00:27:21,720 Speaker 1: the ETF. If I can't get an answer, like that's bad. 570 00:27:21,880 --> 00:27:25,159 Speaker 1: Whereas a really expensive ETF like they've got customer service people. 571 00:27:25,320 --> 00:27:28,200 Speaker 1: They answered the phone when the advisors call. That could 572 00:27:28,280 --> 00:27:30,359 Speaker 1: arguably be good for the clients. That's expensive. The clients 573 00:27:30,400 --> 00:27:32,480 Speaker 1: are paying for it, but like, right, you could imagine 574 00:27:32,520 --> 00:27:35,720 Speaker 1: an advisor making a fiduciary decision saying, I want the 575 00:27:35,800 --> 00:27:38,520 Speaker 1: client in this more expensive thing because the customer service 576 00:27:38,600 --> 00:27:40,920 Speaker 1: is better, and like the client needs that too. 577 00:27:41,200 --> 00:27:43,959 Speaker 2: Yeah. No, it's a it's a super fair point and 578 00:27:44,119 --> 00:27:47,520 Speaker 2: easy to use, intuitive website goes a long way with 579 00:27:47,560 --> 00:27:49,400 Speaker 2: some of the folks that are in these ETFs. 580 00:27:49,520 --> 00:27:52,680 Speaker 1: I should say the Bloomberg story talks a little trash 581 00:27:52,680 --> 00:27:54,600 Speaker 1: about the website for First Trust too, but that's not 582 00:27:54,680 --> 00:27:54,960 Speaker 1: the point. 583 00:27:55,040 --> 00:27:57,480 Speaker 2: It looks like a pixel hasn't changed since you know, 584 00:27:57,520 --> 00:27:59,640 Speaker 2: it was first put up. This story is a joy 585 00:27:59,640 --> 00:28:01,880 Speaker 2: to read the because it's so deeply reported. So let's 586 00:28:01,880 --> 00:28:04,919 Speaker 2: talk about some of the emails that Max and Emily 587 00:28:05,160 --> 00:28:08,399 Speaker 2: dug up. I liked this one in particular. I was 588 00:28:08,400 --> 00:28:11,200 Speaker 2: thinking of you as I read this. Apparently, in one 589 00:28:11,240 --> 00:28:15,160 Speaker 2: email five to six years ago, a managing director chided colleagues, 590 00:28:15,400 --> 00:28:19,200 Speaker 2: writing that pay to play is obviously illegal, but we 591 00:28:19,280 --> 00:28:24,560 Speaker 2: have wholesalers, which means salespeople doing it repeatedly, So there 592 00:28:24,600 --> 00:28:25,000 Speaker 2: you have it. 593 00:28:25,520 --> 00:28:27,840 Speaker 1: I wrote about this with some sympathy because, like, if 594 00:28:27,880 --> 00:28:31,080 Speaker 1: you're a person at a financial firm and you notice 595 00:28:31,080 --> 00:28:34,040 Speaker 1: that your colleagues are doing bad stuff, it's very tempting 596 00:28:34,280 --> 00:28:36,959 Speaker 1: to email your colleagues to say you're doing bad stuff, 597 00:28:37,000 --> 00:28:39,640 Speaker 1: please stop it. It's illegal, right, Yeah, Like that's a 598 00:28:39,680 --> 00:28:42,000 Speaker 1: good email to send, but it's not really because like 599 00:28:42,040 --> 00:28:43,760 Speaker 1: then you have an email you have a record of, 600 00:28:43,800 --> 00:28:45,720 Speaker 1: like your colleagues are doing bad stuff. Even if they 601 00:28:45,760 --> 00:28:47,720 Speaker 1: knock it off immediately, it's a bad thing to have 602 00:28:47,760 --> 00:28:49,600 Speaker 1: an email, And if they don't knock it off immediately, 603 00:28:49,640 --> 00:28:50,280 Speaker 1: it's much worse. 604 00:28:50,440 --> 00:28:51,240 Speaker 2: Yeah, I hope I. 605 00:28:51,320 --> 00:28:53,680 Speaker 1: Uh on the phone and you say, hey, guys, knock 606 00:28:53,720 --> 00:28:54,040 Speaker 1: it off. 607 00:28:54,240 --> 00:28:56,120 Speaker 2: I always think, like I would hate to get my 608 00:28:56,160 --> 00:28:59,200 Speaker 2: email searched for so many reasons, but also like for 609 00:28:59,320 --> 00:29:02,400 Speaker 2: telling my auditor it's illegal for you to edit my 610 00:29:02,400 --> 00:29:07,640 Speaker 2: piece this much. It's a crime actually to limit yes, exactly, 611 00:29:08,160 --> 00:29:11,680 Speaker 2: but you know, some things look different under different lights. 612 00:29:11,920 --> 00:29:13,560 Speaker 2: I don't think that this email was a joke. 613 00:29:13,360 --> 00:29:16,080 Speaker 1: Though I don't think it was a joke either. Yeah, 614 00:29:16,840 --> 00:29:20,280 Speaker 1: I think the the rest of the reporting. 615 00:29:20,000 --> 00:29:22,320 Speaker 2: Is, like, you know, I'm not saying it's a joke, 616 00:29:22,480 --> 00:29:24,200 Speaker 2: just to be clear, just to draw I'm just drawing 617 00:29:24,240 --> 00:29:27,880 Speaker 2: a contest between what I said and what this email said. 618 00:29:28,400 --> 00:29:31,800 Speaker 2: I think geography is really important here. I think it 619 00:29:31,800 --> 00:29:34,160 Speaker 2: came through in the piece as well. But certainly, you know, 620 00:29:34,440 --> 00:29:36,640 Speaker 2: talking to Emily about this, we sit back to back 621 00:29:36,680 --> 00:29:39,880 Speaker 2: and a lot of the ogs in the ETF world 622 00:29:40,320 --> 00:29:43,800 Speaker 2: happened to come from Wheaton, Illinois or around it. And 623 00:29:43,880 --> 00:29:47,320 Speaker 2: I think that is also very important too. As that 624 00:29:47,360 --> 00:29:50,720 Speaker 2: person who quoted said, we've always been about entertainment. The 625 00:29:50,760 --> 00:29:54,080 Speaker 2: fact that First Trust was located in sort of a 626 00:29:54,080 --> 00:29:58,960 Speaker 2: flyover zone allowed First Trust to just really run this 627 00:29:59,120 --> 00:30:02,640 Speaker 2: industry wh it comes to places like Dayton, Ohio, Whichita, Kansas, 628 00:30:02,680 --> 00:30:04,600 Speaker 2: et cetera, which I think is interesting. I think about 629 00:30:04,600 --> 00:30:07,480 Speaker 2: geography a lot because also the vanguards of the world, 630 00:30:07,520 --> 00:30:09,520 Speaker 2: like Vanguard specifically isn't on Wall Street. 631 00:30:10,080 --> 00:30:14,720 Speaker 1: Yeah, but like again, like the thing they're doing is 632 00:30:14,800 --> 00:30:18,160 Speaker 1: covering the financial advisor in Dayton, right. Yeah, they're like 633 00:30:18,640 --> 00:30:21,040 Speaker 1: going to that person and they're buying them stake or whatever, 634 00:30:21,080 --> 00:30:22,720 Speaker 1: but they're also like talking to them and being like, yeah, 635 00:30:22,720 --> 00:30:25,920 Speaker 1: how can we help you? And that advisor is going 636 00:30:25,920 --> 00:30:29,920 Speaker 1: to naturally be in cliented to put their clients into 637 00:30:30,440 --> 00:30:33,400 Speaker 1: the ets of a firm that talks to the advisor 638 00:30:33,400 --> 00:30:36,920 Speaker 1: and listens to their concerns. Then a Vanguard fund where 639 00:30:36,960 --> 00:30:38,960 Speaker 1: Vanguard never talks to him, but like, you know, they 640 00:30:39,040 --> 00:30:41,080 Speaker 1: charge one basis plan, so it's. 641 00:30:40,920 --> 00:30:43,600 Speaker 2: Like yeah, or you know, black Rock isn't flying out. 642 00:30:43,440 --> 00:30:47,320 Speaker 1: To It's like the coverage is not a straightforward like 643 00:30:47,400 --> 00:30:49,400 Speaker 1: pay to play, right, It's like something a little different. 644 00:30:49,440 --> 00:30:52,200 Speaker 1: It's like coverage. It's like paying attention to the advisors 645 00:30:52,600 --> 00:30:56,040 Speaker 1: and like creating good feelings that the advisors like. Arguably 646 00:30:56,080 --> 00:30:58,480 Speaker 1: that's bad, right, Like arguably the advisors of producie for 647 00:30:58,520 --> 00:31:01,400 Speaker 1: the client they should only be concerned with, like very 648 00:31:01,440 --> 00:31:04,560 Speaker 1: specifically what is the best ETF for the client's portfolio. 649 00:31:04,560 --> 00:31:07,280 Speaker 1: But like they could take a more holistic view and 650 00:31:07,320 --> 00:31:09,840 Speaker 1: be like, well, you know, I'm getting service that allows 651 00:31:09,840 --> 00:31:12,040 Speaker 1: me to help my client, and so I'll put them 652 00:31:12,040 --> 00:31:13,320 Speaker 1: in the more expensive ETF. 653 00:31:13,440 --> 00:31:15,080 Speaker 2: I don't know, Well, we'll see. 654 00:31:15,480 --> 00:31:17,720 Speaker 1: I do want to say a reader email. The three 655 00:31:17,720 --> 00:31:21,160 Speaker 1: remind me of a Charlie Munger anecdote. Charlie Munger would 656 00:31:21,160 --> 00:31:24,160 Speaker 1: ask business school students, is it possible for a company 657 00:31:24,200 --> 00:31:27,720 Speaker 1: to like raise the price of its service and thereby 658 00:31:27,800 --> 00:31:30,880 Speaker 1: increased sales. And you know, people think about it and 659 00:31:30,920 --> 00:31:33,080 Speaker 1: they'll be like, well, you know, raising the price can 660 00:31:33,120 --> 00:31:36,000 Speaker 1: signal higher quality and so people might buy more of it, 661 00:31:36,040 --> 00:31:38,680 Speaker 1: and like there's examples of that, like in like, you know, 662 00:31:38,800 --> 00:31:41,960 Speaker 1: beer marketing. But I think Charlie Munger points out also 663 00:31:41,960 --> 00:31:43,800 Speaker 1: that like raising the price can give you more money 664 00:31:43,840 --> 00:31:46,440 Speaker 1: to like effectively bribe the sales channel to like pay 665 00:31:46,520 --> 00:31:49,560 Speaker 1: more to sales people, pay more to intermediaries who will 666 00:31:49,560 --> 00:31:51,960 Speaker 1: then put the ultimate buyer into the product. And you 667 00:31:52,000 --> 00:31:54,160 Speaker 1: see that here, right, Like Vanguard has a good business 668 00:31:54,440 --> 00:31:57,840 Speaker 1: of selling ETFs at like very very low prices, but 669 00:31:58,040 --> 00:32:00,600 Speaker 1: like there's also a business to sell ats at very 670 00:32:00,640 --> 00:32:03,479 Speaker 1: high prices and invest the money into a sales process. 671 00:32:03,480 --> 00:32:05,560 Speaker 1: And that's kind of what's arguably happening here. 672 00:32:05,680 --> 00:32:07,719 Speaker 2: Well that's the thing. If there's one takeaway from this 673 00:32:08,000 --> 00:32:11,920 Speaker 2: other than maybe don't you pay to play, also don't 674 00:32:11,920 --> 00:32:14,480 Speaker 2: get divorced. The reason that this came to light the 675 00:32:14,520 --> 00:32:16,600 Speaker 2: man who runs First Trust, his name is Jim Bowen. 676 00:32:16,800 --> 00:32:20,040 Speaker 2: He got divorce and it came to light in his 677 00:32:20,120 --> 00:32:25,720 Speaker 2: ex wife's lawyers asking for more money that he's apparently 678 00:32:25,880 --> 00:32:29,240 Speaker 2: making a ton of money like Jamie Diamond level money, maybe. 679 00:32:28,960 --> 00:32:31,520 Speaker 1: Like thirty four point eight million dollars in twenty twenty two. 680 00:32:31,520 --> 00:32:34,400 Speaker 1: It's the thing that's like wild money, like in weird 681 00:32:34,400 --> 00:32:35,600 Speaker 1: pockets of asset management. 682 00:32:35,640 --> 00:32:38,360 Speaker 2: So apparently her lawyers honed in on his expenses at 683 00:32:38,360 --> 00:32:41,680 Speaker 2: restaurants in Naples, Florida in twenty twenty one, asking about 684 00:32:41,720 --> 00:32:44,000 Speaker 2: more than one hundred and forty seven thousand dollars spent 685 00:32:44,080 --> 00:32:46,880 Speaker 2: at Sea Salt, an additional one hundred thousand dollars spent 686 00:32:46,920 --> 00:32:52,440 Speaker 2: at Continental steakhouses, also seventy thousand dollars spent at seafood places, 687 00:32:52,480 --> 00:32:56,200 Speaker 2: and he explained that I'm dining, I'm entertaining in twenty 688 00:32:56,240 --> 00:32:59,400 Speaker 2: twenty two in a court appearance, and then his ex 689 00:32:59,520 --> 00:33:02,200 Speaker 2: yfe attorneys asked him on the stand in the same 690 00:33:02,280 --> 00:33:05,760 Speaker 2: year whether that's seventy thousand dollars alcohol bill at the 691 00:33:05,840 --> 00:33:09,200 Speaker 2: Naples Ritz Carlton was related to First Trust. He answered, 692 00:33:09,480 --> 00:33:12,480 Speaker 2: mm hmm, Is that a yes? The lawyer asked, that's 693 00:33:12,520 --> 00:33:17,000 Speaker 2: a yes. The judge asked yes. Bowen said, so that 694 00:33:17,160 --> 00:33:19,560 Speaker 2: was kind of the smoke around this fire. 695 00:33:20,400 --> 00:33:22,120 Speaker 1: That's going to be like the alcohol bill for the 696 00:33:22,160 --> 00:33:25,320 Speaker 1: money stuff party from so my favorite expense from the 697 00:33:25,320 --> 00:33:28,920 Speaker 1: divorce proceedings. Yeah, he spent like forty eight hundred dollars 698 00:33:28,920 --> 00:33:31,960 Speaker 1: at ar Mez one year on a hall. It included scarves, 699 00:33:31,960 --> 00:33:34,720 Speaker 1: he said were for workers in Chicago's hotels and restaurants, 700 00:33:35,200 --> 00:33:39,200 Speaker 1: so not for financial advisors. No, this is like he 701 00:33:39,280 --> 00:33:43,480 Speaker 1: takes financial advisors out to dinner at hotels and restaurants 702 00:33:43,480 --> 00:33:47,520 Speaker 1: in Chicaio and he says, some of my best customers 703 00:33:47,560 --> 00:33:49,880 Speaker 1: are high maintenance, and these people, meaning the hotel and 704 00:33:49,920 --> 00:33:53,000 Speaker 1: restaurant workers, are the ones that handle the high maintenance issues. 705 00:33:53,040 --> 00:33:56,120 Speaker 1: So like basically he takes like high maintenance customers to 706 00:33:56,160 --> 00:33:59,479 Speaker 1: like fancy restaurants in Chicaio, and the waiters take care 707 00:33:59,560 --> 00:34:02,720 Speaker 1: of these people, and then he gives the waiters as scarves. 708 00:34:03,000 --> 00:34:05,840 Speaker 1: It's like a third level business expect It's very generous. 709 00:34:05,960 --> 00:34:06,800 Speaker 2: Gotta give it to him. 710 00:34:06,880 --> 00:34:09,360 Speaker 1: No, it's like it's very smart. It's like it's like, Okay, 711 00:34:09,480 --> 00:34:14,640 Speaker 1: I want to sell ETFs to retail investors in Dayton, Ohio. 712 00:34:15,000 --> 00:34:17,880 Speaker 1: How should I do that? I should buy fancy scarves 713 00:34:18,320 --> 00:34:22,000 Speaker 1: for waiters in Chicago because I'm going to take the 714 00:34:22,040 --> 00:34:24,680 Speaker 1: advisors of those people in Dayton to restaurants and I 715 00:34:24,719 --> 00:34:27,439 Speaker 1: want them to be well treated and so like. It's 716 00:34:27,440 --> 00:34:29,880 Speaker 1: like the sort of third level of paying for like 717 00:34:30,000 --> 00:34:33,080 Speaker 1: the people to that will ultimately trickle down to like 718 00:34:33,120 --> 00:34:34,000 Speaker 1: the ETF sales. 719 00:34:34,719 --> 00:34:36,520 Speaker 2: I'm not much of a seafood gal, but I would 720 00:34:36,560 --> 00:34:38,200 Speaker 2: have loved to be at one of these dinners. Sounds 721 00:34:38,200 --> 00:34:40,520 Speaker 2: like a blast, really good service. 722 00:34:44,120 --> 00:34:45,600 Speaker 1: And that was The Money Stuff Podcast. 723 00:34:45,719 --> 00:34:47,800 Speaker 2: I'm Matt Livian and I'm Katie Greifeld. 724 00:34:48,080 --> 00:34:50,160 Speaker 1: You can find my work by subscribing to The Money 725 00:34:50,160 --> 00:34:52,640 Speaker 1: Stuff newsletter on Bloomberg dot com. 726 00:34:52,360 --> 00:34:54,839 Speaker 2: And you can find me on Bloomberg TV every day 727 00:34:54,880 --> 00:34:58,000 Speaker 2: on Open Interest between nine to eleven am Eastern. 728 00:34:58,200 --> 00:34:59,839 Speaker 1: We'd love to hear from you. You can send an 729 00:35:00,239 --> 00:35:03,439 Speaker 1: to Moneypod at Bloomberg dot net. Ask us a question 730 00:35:03,480 --> 00:35:04,600 Speaker 1: and we might answer it on air. 731 00:35:05,160 --> 00:35:07,360 Speaker 2: You can also subscribe to our show wherever you're listening 732 00:35:07,440 --> 00:35:09,440 Speaker 2: right now and leave us a review. It helps more 733 00:35:09,480 --> 00:35:10,360 Speaker 2: people find the show. 734 00:35:10,960 --> 00:35:13,719 Speaker 1: The Money Stuff Podcast is produced by Anna Maserakus and 735 00:35:13,840 --> 00:35:15,000 Speaker 1: Moses and on Ar. 736 00:35:15,040 --> 00:35:17,040 Speaker 2: Theme music was composed by Blake Maples. 737 00:35:17,200 --> 00:35:19,920 Speaker 1: Brandon Francis Nunham is our executive producer. 738 00:35:19,719 --> 00:35:21,880 Speaker 2: And Stage Ballman is Bloomberg's head of Podcasts. 739 00:35:22,080 --> 00:35:24,440 Speaker 1: Thanks for listening. To the Money Stuff Podcast. We'll be 740 00:35:24,520 --> 00:35:26,040 Speaker 1: back next week with more stuff. 741 00:35:37,000 --> 00:35:39,760 Speaker 2: I have a party to go get ready for. Actually, 742 00:35:40,360 --> 00:35:41,000 Speaker 2: so you do too. 743 00:35:41,520 --> 00:35:42,359 Speaker 1: I'm not gonna make it.