A couple of weeks ago I went to an auction preview for the assets of Thompson Kernahan, the brokerage firm brought down by 31 year-old Toronto native Mark Valentine, who was nailed somewhere in Germany two months ago offering $7.8m in kickbacks to an FBI agent posing as a mutual fund manager. The idea was that the mutual fund manager would buy inflated stocks in companies controlled by Valentine, presumably get fired for his bad decision-making, and spend a few years playing tennis with the $7.8 million in the bank while Valentine netted about $16 million on his side.
It is becoming increasingly clear from reading the business pages of the newspapers that this wasn’t Valentine’s only transgression. He’s been implicated in enough fiscal skullduggery since the initial charges to make it pretty clear he’d used Thompson Kernahan as a private abbatoir for unsuspecting stockholders. It’s making him the poster boy for why investors are scrambling to get their money out of the stock market, but he’s hardly Hannibal Lector let loose in a culture of sweet, white bunnies. There are enough poster boys and girls on Wall Street right now to fill a football stadium.
What’s most depressing about this is that there’s still a lineup waiting to get into the stadium. Despite the Bush Administration’s sabre-rattling about cleaning up American corporation accounting procedures and putting a leash on executive behaviors, the scumbags in the stadium lineup know that Valentine isn’t going to be subjected to serious punishment, and that the culture remains intact. He’ll spend a year or two in some country-club prison, and another decade playing tennis and squash on his private estate in Florida, protected by that state’s absurd "homestead" law and the inability of international law to capture criminal assets. Just how deep the sickness of which he’s the leading edge reaches into North American fiscal life, and what a crazed subculture it has become was in evidence at the asset auction, which covered three floors of a Bay Street tower and was generously attended by a startling number of snickering Valentine look-alikes. They were sifting through the rubble, presumably looking for bargains, but more likely, operational and lifestyle tips.
They weren’t getting any stock tips, because the computer array at the auction had been wiped of both data and software. This was interesting to me, because at most bankruptcy auctions, the assets are left in the as-is position, including the computer equipment. At an auction a couple of years back, I saw a crowd of about fifteen men huddled around an about-to-be auctioned laptop that had been abandoned jam-packed with the most lurid pornography I’ve ever seen. I picked up a laptop myself at another failed dot.com company’s bankruptcy auction last winter that contained the previous user’s entire e-mail archive on it. The user was female, so the machine was free of pornography aside from a few salacious jpeg shots of her boyfriend. But the machine’s Internet Explorer software contained a lifestyle profile that, incidentally, made it pretty clear why the company went under. Between the charity runs, weekend Spa visits and professional development seminars, music concerts, and email networking (little of which was business related) there wasn’t much time for company business.
The computers at Thompson Kernahan had not only been wiped of data, the system software itself had been removed, no doubt to prevent investigators from recovering the company’s records. The office decor was similarly revelatory. The entire office was decorated in black, silver and maroon, with large quantities of Krug-and beyond black and maroon leather, along with solid dark mahogany desks. Nothing in the offices was older than a few years, and most of the furnishings were more or less new. Stacked along the walls was a fortune in original art works, some of which were even in decent taste. For a bunch of guys running the financial equivalent of a chop shop, these guys weren’t denying themselves the slightest creature comfort.
One of the stranger things left behind was a display of charity award plaques and framed photos of the charity events Thompson Kernahan sponsored or participated in. All were recent, which struck me as a little odd for a fifty-year-old company. Maybe that was what made me stop to examine the photographs. Most were of trophy and plaque presentations, and the Thompson Kernahan employees in them were all young men, the sort of mid-level execs corporations send out to participate in charity golf tournaments and so on: part of their corporation socialization.
What struck me instantly about the young men in the photos was their demeanor. None of them seemed comfortable, and few were smiling. If they were the company’s young turks, they were the saddest flock I’d ever seen, closer to turkeys than Kamal Attaturk’s spiritual descendants. Nearly all looked to be in their early to mid-20s, likely the privileged sons of wealthy families from Forest Hills and Rosedale who’d been thrust into a culture so swift and confusing they were playing it without pleasure or comprehension. Like the generation who became university professors when the universities expanded in the early 1960s, these were men with the mental equipment to clerk in hardware stores or post-offices—although I have to qualify this by noting that the clerks at Wiener’s Hardware across the street from Dooney’s are brighter bulbs than these ones. If they looked lost and unhappy shaking hands with fund-raising slicks at a golf tournament, how did they feel wandering the hallways of Thompson Kernahan under the direction of Mark Valentine?
The point that needs to be emphasized is that the boys in the Thompson Kernahan photos were stockbrokers, not stockboys. They were part of the fiscal elite that may yet bring down the West’s system for assembling development capital for legitimate business ventures, which is, after all, the positive reason for the stock market’s existence. Mark Valentine may end up on a poster as the reason Thompson Kernahan went down, but the bewildered incomprehension in the eyes of these privileged boys might be a truer reflection of why the system has run amok, and why no one seems capable of blowing the whistle.
By the way, I didn’t buy any of Thompson Kernahan’s assets. I left the preview after a few minutes, and didn’t go to the auction. It wasn’t the prices, or the half-assed taste in office furnishing. It was the taint of Mark Valentine, the stink of amorality and incompetence, and the thought of those dull-eyed boys playing squash at their parents’ private clubs, waiting to be pushed toward their next unearned opportunity.
October 15, 2002 1100 words