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Wall Street Watchdog

With a take-no-prisoners attitude and an eye to protecting the common investor’s interest, Charles Gasparino of FOX Business Network is the financial reporter who makes people listen
Mervyn Rothstein
From the Print Edition:
Ernie Els, November/December 2012

It’s a little after 1:15 on a summer afternoon in Midtown Manhattan, and Charles Gasparino is on the move. He’s racing down a studio hallway at FOX Business Network, where since February 2010 he has been a senior correspondent covering Wall Street. He’s there to talk about yet another exclusive story, one of many in his notable, and often combative and controversial, career.

“Am I late?” he asks.

“Yes” is the reply, but it doesn’t matter. Gasparino is always on the move, and Gasparino is a star, hired away from dominant CNBC to help the young Fox network in the cable ratings race. He has been quoted as saying that his job at Fox is to “rip the lungs out of the competition”—to “come up with a scoop” every day and “promote that scoop.” And here he is, doing just that.

An aide fits him with a microphone, and he walks through the brightly lighted studio—its floor largely a very appropriate Republican red—and joins the coanchors for his three or so on-air minutes of trademark Gasparino.

MarketWatch, the financial information website, has called him “Fox’s Rocky Balboa.” He once said that his CNBC colleagues considered him “a pain in the ass”—but that it was a good thing. He is respected, sometimes feared, maybe occasionally even hated. As the cliché goes, he takes no prisoners.

When he’s reporting a story, when he’s doing a TV interview, he’s tough and persistent. “You come on the air, and I’m there, I’m going to break your chops,” he says. “I’m going to be an asshole. A lot of times, TV invites these people on and they’re considered guests. I don’t look at you as a guest.”

Despite, or because of, this no-nonsense attitude, the emphasis is on respected. When Gasparino was with CNBC, Lucas van Praag, then the chief spokesman for Goldman Sachs, the powerful investment banking and securities firm, was quoted as saying, “Most trading floors have CNBC on with the sound turned down, but when Charlie comes on, they listen.” Charlie has a knack for making people listen.

One thing that has helped him in his coverage of the imperfections of the Financial District is his love of cigars—which he has used to gather sources and scoops.

“Wall Street guys love cigars,” he says. “As I became more and more a Wall Street reporter, I started going to cigar bars, and smoking cigars became a huge thing. Back then you used to be able to smoke at restaurants. I used to smoke at Elaine’s and Campagnola,” restaurants (Elaine’s is no longer there) on the Upper East Side of Manhattan. “At Campagnola you could smoke up front. I smoked a lot of cigars at both places up front. It was a way of getting stories and hanging out with sources.”

The Grand Havana Room, a lavish members-only club in Midtown Manhattan, “where a lot of Wall Street guys belong” and visit to enjoy the pleasures of cigar smoking in a collegial atmosphere, is “one of the best places to meet sources” nowadays, according to Gasparino.

This afternoon’s exclusive concerns Knight Capital Group, the giant stock-trading firm whose software glitch on August 1 roiled the stock markets, cost it $440 million and nearly led to its demise. Several days afterward, six firms put a total of $400 million into the company to rescue it, in exchange for securities convertible into Knight common stock at $1.50 a share. Gasparino reveals that Scottrade Inc., another major financial services company, has now been given some of that pie. And he explains what this means to the middle-class investor.

“Understand how it works,” he says, sitting in his office a few minutes after his report to the nation. He speaks rapidly and precisely, like a man in a hurry who knows where he wants to go. And that’s what he is. “You have to get the zeitgeist of how it works, like on this story in particular. What you had with Knight was six firms came in, bailed out Knight Capital. Sounds good. But you’re a shareholder in Knight Capital. That screw-up, that trading error, destroyed the firm, and even with the bailout your shares fell to almost nothing”—the stock lost 70 percent of its value—“because with the bailout you were completely diluted, because they had to issue more shares. The new investors will make out like bandits. It’s a no-lose situation.” (As he speaks, Knight Capital Group’s shares are at a price of $2.75.)

“Here is what I found out last night—they cut in at the last minute, after the deal was made and everybody knew the firms involved with it, they cut in another firm, so it can be part of this no-lose proposition. It’s called Scottrade, a big online retail brokerage. Why did they do that? Because Scottrade sent business Knight’s way in the past. They also helped Knight” by giving it business after the disaster, when its continued existence was doubtful. “So Knight went to all the other firms and said, will you please cut them in? Now, why would the other firms agree to give up some of their winnings?”

The reason was “they all do business with them. It’s just a little insight into the convoluted, conflicted ways Wall Street works. How they kind of take care of themselves. The upshot is, they don’t necessarily take care of you. And it’s just something you should keep in mind. And once you kind of get the idea of how this works, I think the average person will be better off.”

He’s written books about this and similar situations, he says “about the conflicted nature of Wall Street. That’s what gets me going—the conflicts of interest that involve Wall Street, and how it’s such an incestuous business. It’s interesting and important and necessary for the average guy to understand.”

Gasparino is 50 now, and gray is creeping slowly across his close-cropped and otherwise black hair. He maintains his rugged and very Italian good looks, and is in prime physical shape—he works out and runs regularly. He is dressed in his TV costume of dark gray suit, light blue shirt and blue and red striped tie. His office, however, runs counter to his consummately neat appearance—it is disheveled, with papers and books scattered randomly about, as though there are much more important things in his life than the need to keep his desk in order. He has offered a visitor a seat, but the chair must first be cleared of its contents, including a suit, similar to the one he is wearing but perhaps patiently awaiting a voyage to the dry cleaners.

Gasparino is swift to attack anyone he feels is doing ill, harming or ignoring the common investor—taking them, so to speak, to the cleaners. He boxed as a youth—he has said that one of his few regrets is that he didn’t take part in the Golden Gloves—and his ring experience is in keeping with his pugnacious reputation.

He has been offering his insights throughout his more than two decades covering Wall Street. As his official Fox biography proudly notes, before moving to the network he was an on-air editor at CNBC and broke major stories involving the financial crisis, including the government bailout of AIG, details on the Lehman Brothers collapse, changes at Morgan Stanley and Merrill Lynch, and the government bailout of the financial system—the Troubled Asset Relief Program. He helped cover the demise of Bear Stearns. He was a reporter at Newsweek, where he gained major exclusives on Wall Street and corporate America, the New York Stock Exchange under Richard Grasso, and the battle against corporate crime by then-New York State Attorney General Eliot Spitzer. At The Wall Street Journal, he won the New York Press Club award for best coverage of the Wall Street research scandals.

Indeed, the titles of the books he has authored explain fully where Gasparino comes from: Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors (2005); King of the Club: Richard Grasso and the Survival of the New York Stock Exchange (2007), including the reaction to Grasso’s nearly $140 million deferred compensation pay package; The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed America’s Global Financial System, a New York Times bestseller that won the Investigative Reporter and Editors award for best book of 2009; and Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street (2010).

A man of all media, he doesn’t confine himself to Fox, or books. There’s The Huffington Post, The Daily Beast, The New York Post and FoxBusiness.com, and he tweets on Twitter. Which makes him a journalist of the future as well as the present, an example of what the ever-changing media world may hold in store, where it may be necessary to be active and on top of all media platforms in order to survive.

He leans noticeably to the right, but he has no favorites, he says, despite his criticism of the president. Republican or Democrat, liberal or conservative, no matter how influential, he will take them on, he says, when he feels they need taking on. When he was reporting last year on whether and when the mighty Lloyd Blankfein, chairman and CEO of the powerful Goldman Sachs investment banking and securities firm, might be leaving his position, Blankfein (who is still there) said, “I’m tired of Gasparino; I wish he would quit.” Yet many Wall Street execs prefer to curry Gasparino’s favor—do lunch, act as sources, ask him to phone.

He didn’t vote for John McCain in 2008, nor did he vote for Barack Obama. He says he refused to vote—“I reserve my right not to vote—which I didn’t do last time.” He is, he says, “a registered independent.”

These days, especially in his New York Post columns, he roundly criticizes the president as a failure when it comes to the economy and says he plans to vote for Mitt Romney. “I don’t think that Obama really gets economics,” he says. “I think that’s the scary thing about him. And on top of that, he kind of surrounds himself with people that don’t. And the people he surrounds himself with that do, he just pushes them aside.”

His focus, though, he says, is Wall Street, not politics. “Yes, I do stories that help people decide where to put their money. I did a big story for The Huffington Post and on air too about why I thought the Facebook [initial stock offering] was a piece of shit, and stay the fuck away, and here are the five reasons you want to stay away. I do some stuff like that. But I generally stay away from stock picking. I thought the Facebook thing was bigger because it was much more of an institution. It represented a lot more than just a stock. Here was this heavily hyped thing with an unproven business model. Facebook hired a lobbying firm to pitch the story to reporters, and if it was that good why do you have to hire a lobbying firm? There were a lot of red flags, and that was a window into how Wall Street works. That’s what I try to do. Average investors need the Street now to save for retirement, through 401(k)s, and you buy stocks. You need Wall Street. It’s a necessary evil.”

Despite his less-than-rosy depictions of the ingrained establishment of the financial world, Gasparino wants to make it clear that he’s “pretty much a capitalist, not an Occupy Wall Street dude. I think where Occupy Wall Street sort of veered wrong, besides the violence and some of the other stuff, and the lack of a real message, is they tried to equate Wall Street with capitalism. Capitalism would allow Wall Street to go under. Wall Street’s about crony capitalism. Once you understand that dynamic, you understand this is not the free market here. This is big business with connections to government, that government needs for a lot of reasons—for the very fact that they need banks to control the money supply. The Federal Reserve increases or decreases the money supply by selling or buying Treasury securities from the big banks. It needs them around. That’s why they bail them out. This is a very incestuous thing with government, and I don’t think people get that. Clearly the Occupy Wall Street people didn’t get it, because they thought that was capitalism unfettered, screwing everybody. It wasn’t. It was a business that has close ties to government, and benefits from government largess, and still does to this day.”

Gasparino didn’t come to business and economics at an early age. He was born in the Bronx and grew up in Yorktown Heights, New York, in the northernmost suburbs of upper Westchester County, in a working-class Italian-American family, his father an ironworker. “I liked to write,” he says, “and I started working for the Pace University newspaper as an undergraduate. I got good enough at it that one day I went to my hometown weekly newspaper in Westchester, the North County News, and I said I’d like to be a freelance writer. I made $20 a story. In the early and mid ’80s, I used to cover high school sports, community meetings.”

His parents, though, “didn’t want me anywhere near this profession. There was a UPS plant behind our house, and if I could have gotten a job there and made $15 an hour as a teamster they would have been pretty happy. Journalism was foreign to them.”

He has said that his father hated journalists because his dad was a fervid supporter of Richard Nixon, and was furious at what they did to him.

His parents would also have been happy if he had gone into law, he says—“That was more concrete. My brother is a doctor, by the way. Working on Wall Street—very concrete. Being a journalist was pie in the sky.”

But he went to graduate school for journalism at the University of Missouri. “I also did something else. Because my parents hated journalism so much, it was ingrained in me that I needed a job coming out of journalism school, so I started taking a lot of business courses. I thought at the very least I could get a job as a PR guy and rewrite press releases for IBM. That’s why I got into business journalism. I never thought it would be what it is today, which is maybe the most important part of journalism. It’s very big. And just when I got into it, it was starting to become a big thing.”

Newspaper internships led to The Tampa Tribune, which led to Bond World and The Bond Buyer, then to The Wall Street Journal, Newsweek, CNBC, and Fox. (The five-year-old Fox still trails the much older CNBC—which is available in 30 million more homes—in the ratings battle, but there have been recent indications that Fox is making some inroads.)

Through it all, cigars have been part of Gasparino’s life. “My boxing coach—I boxed as a kid—used to smoke sometimes, sometimes even in the gym. My Uncle Al smoked. And I liked the smell of them.” And then came their usefulness in his career.

He is smoking less now. “What I used to do, and what I still occasionally like to do, especially, for some reason, when it’s cold out, I have a house in Connecticut, and I’ll just sit in my backyard and smoke a cigar. If it’s a crisp winter night, sitting in the yard with a glass of wine and a cigar is not a bad thing.”

When he does smoke, his cigar choices include Macanudos, of any shape or size, though he often selects coronas or Churchills. At times, he picks a Romeo y Julieta, “and I used to do Upmanns, once in a while. But I kind of stick with Macanudos.” He still goes to cigar bars. “I go to Bar and Books on Lexington Avenue” on the Upper East Side. “Club Macanudo” on East 63rd Street “is a big place.

“I give some time, though not as much as I should, to the Marine Corps Law Enforcement Foundation,” which benefits, among others, children of Marines and Federal law enforcement employees killed on duty, “and they always have a smoking room after [an event]. I’ll do cigars then.”


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