Alan Breed – President, Edgewood Management
Peter Georgiopoulos – Chairman and CEO, General Maritime Corp.
Jane Gladstone – Senior Managing Director, Evercore Partners
Pam Goldman – Vice President, Invemed Associates
Joseph Goldsmith – Founder and Managing Partner, Goldsmith & Co.
Candace King-Weir – President, C.L. King & Associates
Steven Langman – Managing Director, Rhone Group
Robert Lindsay – Co-Managing Director, Lindsay Goldberg
Roberto Mingone – President, Bridger Capital
John Miller – Managing Director, Barclays Capital
Seth Novatt – Managing Director, Alliance Bernstein
Mitch Rubin – Managing Director, RiverPark
James Sampson – Senior Managing Director, Lebenthal & Co.
Peter Schulte – Managing Partner, CM Equity Partners
Michael Tennenbaum – Senior Managing Partner, Tennenbaum Capital Partners
Andy Walter – Managing Partner, Blue Orchid Capital
Meredith Whitney – CEO, Meredith Whitney Advisory Group
For members of Kappa Beta Phi, an exclusive, secretive Wall Street fraternity, plunging stock prices, the waves of layoffs and bank failures have yielded a dividend in punch lines.
“I feel like the mayor of New Orleans after Katrina,” quipped Alfred E. Smith IV, the group’s leader, or “Grand Swipe,” at the opening of its annual black-tie dinner last week. “Today, the FBI put out a warning that Al Qaeda was planning an attack to cripple the U.S. economy,” inductee Martin Gruss joked later in the evening. “I’ve got news for them, Congress has already done that.”
Though a number of the society’s luminaries — including former Bear Stearns Cos. Chief Executive James E. Cayne, Lehman Brothers Holdings Inc.’s Richard S. Fuld Jr. and ex-Merrill Lynch & Co. Chief Stanley O’Neal — have faced rebuke and were conspicuously absent, members still standing haven’t lost their sense of humor. This year’s attendees gave a rare standing ovation to a rendition of Don McLean’s “American Pie,” rewritten to read: “Bye, bye to my piece of the pie.”
Established before the stock-market crash in 1929, Kappa Beta Phi meets just once a year and always at the St. Regis, the more than a century-old Beaux Arts hotel on Fifth Avenue. The society, with its grandiose titles and playful rituals, dates back to a time before television when societies and clubs were big sources of entertainment. It also dates to when the term “Wall Street” referred to the warren of streets around the New York Stock Exchange and not to the complex, global network of hedge funds and structured derivatives it has become.
Kappa Beta Phi continued to meet through the depression — a 1932 Wall Street Journal story about the gathering carried the headline “Wall Street Chapter to Revive Ghosts of ‘Good Old Days’ Tonight” — but its annual dinner was suspended for a few years during World War II.
Kappa Beta Phi’s membership remains a roster of Wall Street power brokers past and present, including New York Mayor Michael Bloomberg and New Jersey Gov. Jon Corzine, two more no-shows at this year’s dinner. Mary Schapiro, President-elect Barack Obama’s nominee to head the Securities and Exchange Commission, is also a member, as is former Goldman Sachs & Co. Chairman John C. Whitehead. About 15 to 20 new members — eminent all — are inducted each year, having been nominated by members and approved by the group’s leaders.
But Kappa Beta Phi, whose name is a play on Phi Beta Kappa, the academic honor society, is more about cornball comedy than high finance. Its Latin motto “Dum vivamus edimus et biberimus” is freely translated as, “While we live, we eat and drink.” Like Phi Beta Kappa inductees, members of Kappa Beta Phi also receive a fob, or key. Phi Beta Kappa’s key includes a hand pointing at three stars that symbolize the society’s principles: morality, friendship and learning. Kappa Beta Phi’s key has images of a hand, a beer stein, champagne tumbler and five stars. The stars represent Hennessy cognac and the hand is there to hold a glass.
Under the painted clouds and gilt chandeliers of a room called the St. Regis Roof, this year’s attendees, including Alan Schwartz, the ex-Bear Stearns president and chief executive, and Sallie Krawcheck, the former head of Citigroup’s wealth-management arm, enjoyed an evening of ribald humor and old-fashioned hazing.
The material was choice, since in the year since the group last met, all five of Wall Street’s major independent investment firms have been taken over, have failed or have been transformed into commercial banks.
Society members, some wearing the society’s key on a red ribbon around their necks, started with cocktails then moved on to dinner of beef tenderloin and cheap wine — $10 bottles of Chilean cabernet sauvignon. About 150 members showed up, fewer than usual. Some, including BlackRock Inc. Chief Executive Laurence Fink and Gregory Fleming, who resigned as Merrill Lynch’s No. 2 executive the day of the dinner, only stayed for a drink.
Part Friar’s Club roast, part “Gong Show,” Kappa Beta Phi’s annual dinner is held for the official purpose of inducting new members, who sit at a long table with a black tablecloth at the front of the room. The inductees, “Neophytes” in Kappa Beta Phi parlance, must perform a variety show for the old crowd. Mr. Smith, a Wall Street veteran and great-grandson of legendary New York Gov. Al Smith, served as the evening’s master of ceremonies.
Neophyte Mr. Gruss poked fun at a fellow investor. “There’s Wilbur Ross over there,” Mr. Gruss said at one point, referring to the member who recently became the society’s “Grand Loaf,” one of Kappa Beta Phi’s four offices. “Doesn’t he look like a visitor from another planet? That’s the reason brothers and sisters shouldn’t marry.”
“There’s a need for Wall Street to have a little bit of humor,” Mr. Ross said this week. “If anything, people needed a little more cheering up this year.”
The group’s humor is anything but politically correct. One crude joke took aim at Rep. Barney Frank’s treatment of the U.S. taxpayer, with a reference to Mr. Frank’s sexual orientation. Mr. Frank is the first openly gay member of Congress.
Together with professional coaches, the Neophytes stage Wall Street’s version of pledge night. This year, at the suggestion of last year’s class, the male Neophytes appeared in falsies and pigtail wigs, some in gold and bright pink. The men, some sporting a dab of blush, also wore cheerleader skirts and shirts bearing the society’s Greek letters.
This year’s crop of 17 Neophytes included Don Donahue, chairman and chief executive of the Depository Trust & Clearing Corp., J. Tomlison Hill, vice chairman of the Blackstone Group, Peter Scaturro, former chief executive of U.S. Trust and Goldman Sachs Group Inc.’s private-wealth arm, and James S. McDonald, chief executive of Rockefeller & Co., a wealth-management firm that advises the Rockefellers and other families.
The female members of the class, dressed as male cheerleaders, wore short-hair wigs and tights. The three female Neophytes were Sarah Cogan, a partner of Simpson Thacher & Bartlett, the Wall Street law firm, Sara Ayres, managing director at New Providence Asset Management, and Marianne Brown, chief executive of OMGEO LLC, a firm that handles the post-trade details of securities transactions.
Backed by a five-piece band, the Neophytes performed renditions of musical standards, from Bing Crosby’s “White Christmas” to the Beatles. There was at least one attempt at rap, by Mr. Hill, who was quickly jeered offstage. Rockefeller’s Mr. McDonald tried to sing a version of “Joshua Fought the Battle of Jericho,” renamed “Treasury Fought the Battle of Lehman Bro.” and met a similar fate.
In one ditty, a play on Dr. Seuss’s “You’re a mean one, Mr. Grinch,” the performers took aim at several of Wall Street’s fallen stars. One target was Kappa Beta Phi member and former Grand Swipe Mr. Cayne, absent though he was. The song’s lyrics included the line, “You’re an odd one, Mr. Cayne,” and made light of his reported use of “ganja.” He has said he didn’t engage “in inappropriate conduct.”
Treasury Secretary Henry Paulson, a former Goldman Sachs CEO who is not a member, also made it into the Grinch tune: “Where’s the TARP money, Mr. Hank? Did any of it fall through the cracks? You let Lehman go under but not your beloved Goldman Sachs.”
The hit of the evening, however, was this new take on “American Pie” performed by Mr. Scaturro:
A long, long time ago…
I can still remember
How the Dow Jones used to make me smile.
And I learned my trade and had my chance
The music played I did my dance
And I made seven figures for a while.
I can’t remember if I cried when they pulled the plug on Countrywide…
It sucks that Iceland is out of ice….Bye, Bye to my piece of the pie…Now I travel coach whenever I fly…Maybe this will be the day that I die.