Free Confessions of a Wall Street Analyst by Dan Reingold Page B

investment bank—anyone from traders to research analysts to even the cafeteria workers—someone could use that information to buy or sell the stocks involved, making an unfair and illegal profit. This was what Ivan Boesky and bankers from Drexel Burnham Lambert and Kidder Peabody had been convicted of just a few years before. I knew all about the Chinese Wall, of course, but I had had no idea until that moment that there were exceptions to this rule for analysts. Apparently bankers didn’t have all the answers when it came to deals. In some cases, analysts could provide some added perspective that might never have occurred to the bankers and company executives.
    My first reaction was frustration. I had just spent two months learning everything there was to know about Centel, and my own bank couldn’t even tell me it was being sold. This deal also meant that I’d now be “restricted” from publishing my report while Morgan Stanley’s bankers handled the auction, which could take several months. And if the bankers did manage to sell the company, the report would become irrelevant anyhow, so I’d essentially wasted two months of my life.
    But Ed had done the right thing by keeping quiet, I soon realized. This was the way the game was played, and if I lost a few weeks but managed to avoid the temptation of insider information, well, that was just fine by me. At the same time, the more I thought about this over-the-Wall stuff, the more intrigued I became. I was fascinated—and wondered if my views would ever be respected enough to be asked to come over the Wall one day.

2. AROUND THE WORLD IN SEVEN DAYS (OR LESS)
    1992–1993
    Most people would have seen a 30 percent increase in pay as a pretty fantastic raise. I would have, too, if I hadn’t had that sizzling offer burning a hole in my pants pocket. I had no intention of staying at this point, but this game had rules and I had to play it out.
    Climbing Over the Wall
    T HIS MYSTERIOUS CONCEPT of going over the Wall quickly receded into the back of my mind. But one day in November 1992, it suddenly reappeared. Ed strode into my office, closed the door, and said “Get up. We’re going upstairs to a meeting of the Corporate Finance Executive Committee in the Morgan Stanley boardroom. There’s a deal that Jeff [Williams, Morgan Stanley’s head of telecom banking] and Paul [Taubman, its head of telecom and media mergers and acquisitions] want us to react to.”
    I exhaled with irritation. Yeah, this over-the-Wall stuff had sounded intriguing at the time, but now that intrigue had been buried under a pile of paperwork. I had almost a dozen phone calls left to return that afternoon and he wanted me to go to some banker meeting?
    “Huh? How long will this take?” I griped. “Where the hell is the boardroom and what the hell am I going to do in there?”
    “I’ll do most of the talking,” said Ed. “Just come with me.”
    Still muttering, I hopped on the elevator and walked into the boardroom, where I felt an instant jolt of electricity. Someone handed me a three-page outline, and I quickly scanned it. AT&T was about to purchase a bigpiece of McCaw Cellular, the country’s largest independent cell phone company. McCaw had received a lot of attention in recent months when it won a bidding war against BellSouth for Lin Broadcasting’s cellular assets. In my world, it was a seismic event, as if IBM bought a portion of Apple. No wonder these guys, some of the top bankers in the firm, looked as if they had ants crawling around inside their Brooks Brothers pants.
    “Here’s the deal,” said one banker. “Tomorrow morning, AT&T is going to announce that it’s buying 33 percent of McCaw Cellular. AT&T is paying $42 a share for 47 million new shares of McCaw, a 57 percent premium over its trading price, and $49 per share for 38.5 million shares held by British Telecom. That makes the transaction worth about $3.7 billion. Ed and Dan, what do you think of this