By Nina Mehta

These days, most floor traders spend their free time worrying what they’ll do when electronic trading makes their jobs obsolete. Not Jonathan Hoenig and Rick Santelli. The two Chicagoans have recently transformed themselves into different types of media doyens. By drawing on knowledge honed in the pits, they hope to bring the wild and oft-maligned world of derivatives to the masses.

Hoenig, a bond futures and soybean futures trader at the Chicago Board of Trade, who will celebrate his 24th birthday next month, has created a small, ragged empire for himself—under the banner “The Capitalist Pig.” There’s a web site (www.capitalistpig.com), a book, a monthly financial column for the men’s magazine P.O.V. and regular financial reports for WNEW-FM, a New York rock station. His baseball-capped head has even found itself on the back of New York City busses, as part of a Forbes magazine promotion.

Hoenig offers Generation X investors financial advice and what could be dubbed low-tech finance without fear. He has also gained an added level of respectability as a regular commentator for “Marketplace,” the public radio show for suit-and-tie baby boomers. Capitalistpig.com is still hawking $9 T-shirts, but Hoenig has plans to launch a hedge fund in the next couple months. “Most of my listening audience and people buying my new book—which is called Greed Is Good, if you care—are interested in stocks,” he says. “I think that’s unfortunate. As someone who’s always been interested in derivatives, I think options and futures have a place in everyone’s portfolios.” Alas, he adds, the futures and managed futures industry “are stuck in the 1970s and have totally missed a great window of opportunity to attract a retail audience, especially a lot of younger, fresher faces.”

Young people today, says Hoenig, are “better informed, more aggressive and more tuned in to the markets than any generation past.” The reduction in commissions is one factor, but the main reason is technology. “You have a nation of young people who work saddled up to a T1 line,” he says. “That’s especially true in the high-tech area, where people sit and watch their companies’ net stock prices all day long.” Hoenig says the Chicago Mercantile Exchange has done well by pitching the e-mini and e-mini Nasdaq to a retail crowd, “but beyond coming out with the killer contract, the industry needs to assess its image with the investing public and take some positive steps to correct, like, this awful, crooked image it has unfortunately developed, at least since the late 1980s and early 1990s.” His hedge fund, he says, is one way he can help “legitimize managed funds and alternative investments to an extremely suspicious crowd.”

Rick Santelli, meanwhile, is constructing a different kind of media career. In mid-June, Santelli, a former vice president of institutional financial futures and options at Sanwa Futures in Chicago, became a financial reporter for CNBC, the financial news cable network. He reports up to five times daily on the health and status of the futures markets from a trading pit at the CBOT. According to CNBC, Santelli is part of the station’s search for practitioners who can explain the markets to viewers based on direct, hands-on experience. Santelli has provided spot reports on the Chicago markets for CNBC over the last three years, and doesn’t seem to mind leaving behind the sharp elbows of fellow traders in the pits. “My analogy,” he told the Chicago Tribune, “is that it’s like going from being a tackle on the field [and] getting bruised up, to watching the game and not getting in the middle of the fray.”

Nick Leeson, the famous rogue trader who brought down Barings Bank in 1995, was released from Tanah Merah prison in Changi, Singapore, on July 3. He immediately began recounting, with the help of reporter Rebecca Hardy, his experience in serialized articles in London’s Daily Mail.

Leeson began serving his sentence on December 2, 1995. He was strip-searched, issued prisoner number 38406-95, and handed a red box that contained two blankets, a straw mat, a cup, a toothbrush and a towel. The towel was changed once every three months, and a small bar of soap was expected to last for three weeks. His cell was an empty six-foot by 12-foot room with a Thai-style squat toilet at one end, behind a two-foot wall. He had two other inmates, one Indonesian, the other Sri Lankan.

Leeson found Singapore prison life “very hard, very tough.” He said some of the prisoners were given injections to calm them down and ended up with afflictions and nervous twitches that they had never had before. “[Prisoners] shuffle around like Jack Nicholson in ‘One Flew Over the Cuckoo’s Nest,’” he wrote. “People end up banging their heads against the wall. I’ve seen people smashing their heads open so many times [that] they end up in the sick bay, spread-eagled and shackled to an iron bed by their hands and feet for three or four days until the drugs calm them down.”

His meals consisted mostly of rice, which he could barely bring himself to eat. “I used to chew toilet roll instead when I was hungry, but after a time you get to realize you’ve done the crime, so you have to do the time and eat what was available,” he wrote.

Soon after he arrived, he was told by another prisoner that Chinese prisoners needed a lot of “face.” “He said,” wrote Leeson, “‘If you don’t give face, you going to have a lot of problems in a Singapore prison.’ That was the best piece of advice I was ever given. He meant you don’t joke with people, or try to belittle people. You have to act respectfully.”

Although Leeson was never flogged, he was well aware of the punishment. The people who administered the floggings were body builders who got two Singapore dollars for every stroke. The person being flogged was dressed in a leather thong that was supposed to protect the kidneys and expose the backside. “It causes an awful lot of trauma to the body. People shake and shake,” he wrote. “They can’t stop themselves. One stroke will break the skin. The inmates are not allowed to utter a sound when they’re flogged if they want to keep face. Five lashes basically leave no unbroken skin on the backside, so if you’re having 24 your backside is a mess. But you cannot scream.”

When Leeson entered prison, his wife Lisa told him she would wait for him faithfully until he was released. But when she visited him in prison four months after he pleaded guilty, he wrote, she seemed distant and told him she had found a job as a Virgin airline hostess. She flew on to Koh Samui in Vietnam for a 10-day break, but extended her stay instead of coming back to see him. Although he wrote her regularly, she stopped replying in March 1996.

Toward the end of his stay, he developed colon cancer, which was misdiagnosed for six months. His tumor grew so painful that he begged for a knife to cut out the growth himself. He was finally sent for an X-ray in shackles. “I was vomiting, I could barely stand up at the X-ray board because I was so short of breath with this thing pushing on my lungs, but they still shackled my legs and arms.” Within 15 minutes, doctors rushed Leeson into surgery for an emergency operation. The doctors removed a cancerous tumor the size of a large orange, as well as a some parasites that had caused dysentery.

Leeson’s wife Lisa is now married to Keith Horlock, a London banker, whom she married in August 1998, a few weeks after her divorce to Leeson. He learned of his wife’s wedding while still shackled in his hospital bed.

“I was doing hard time for my crimes and I accepted that, but to lose your wife and get cancer—I don’t think I deserved that,” he wrote. “I wish to God I’d been caught earlier, or that I’d put my hand up. I wouldn’t have lost my wife who was everything to me. I wouldn’t have gone to prison for four and a half nightmare years. And, who knows, I may not have contracted cancer.”

The famously bitter Senate confirmation hearings during the Clinton presidency have been known to intimidate and discourage many a Friend of Bill nominated to head a major federal agency. Not so for William Rainer, who was tapped by President Clinton on June 23 to be the next chairman of the Commodity Futures Trading Commission. Just after learning of his nomination, the former minor-league baseball player and Arkansas native made a trip to Washington to charm the Senate Agriculture Committee, the first hurdle in his confirmation journey.

The Senate Ag Committee must have liked what it saw. It approved his nomination on July 21, and the full Senate is expected to follow suit early this month.

It seems Rainer, 53, is as big a hit with Senate Republicans as he is with the Democratic National Committee. A major Democratic campaign contributor in years past, Rainer has slept in the Lincoln Bedroom during the Clinton presidency, and his friendship with the Commander in Chief is said to hark back to their Arkansas days. But Rainer’s resume also boasts impeccable Wall Street credentials, which many have found lacking in past CFTC chairpersons. After great success as a bond trader, he ascended to the role of managing director at Kidder Peabody in the 1970s, before co-founding Greenwich Capital Markets in 1981. Although a long-time Democrat, Rainer contributed to the Bush campaign in 1988.

This is not Rainer’s first brush with public service. In 1994, he was picked to head the U.S. Enrichment Corp., a government-owned company set up to sell the nation’s uranium stockpile. Rainer left in 1998 when the company was privatized, and has been living in Santa Fe, N.M., ever since.

Rainer’s experiences at the USEC may not be much help at the CFTC, which is in disarray after the departure of former chairperson Brooksley Born. There’s a growing consensus in the Senate and House Agriculture Committees—and elsewhere on Capitol Hill—that the time has come to strip the agency of many of its powers.

• MKIRisk, a business unit of Midas-Kapiti International, has named Simon Creed, former director of distribution at MKI, CEO. The firm also named Steven Gowers, former development director and an MKI board member, chief technology officer at MKIRisk.
• SS&C Technologies has announced a number of promotions. Donald MacLauchlan, vice president, will expand his responsibilities to head development for the firm’s asset management products. Norman Boulanger, a vice president in the professional services unit, will head the firm’s outsourcing business. Ward McGraw, formerly a senior director in the firm’s product development unit, has been named vice president in the professional services unit. SS&C has also appointed Gregory Wentworth, formerly an investment director at Massachusetts Mutual Life Insurance Co., a business analyst in its commercial real estate business unit.
• Joanne Rose has been named an executive managing director in Standard & Poor’s structured finance ratings unit. She had been general counsel for the firm’s ratings services unit. Vickie Tillman, former head of structured finance ratings, has been promoted to executive vice president and chief ratings officer.
• The Chicago Mercantile Exchange has announced four promotions. Edward Gogol will be vice president of clearinghouse systems development; Julie Holzrichter will be vice president of procedural oversight and technology integration; Robert Petrowski will be vice president of facility administration; and Thomas Tabisz will be vice president of enterprise computing operations.
• Edward Maher has been appointed managing director for Europe at Askari, a business unit of State Street Corp. He had been vice president and general manager in New York of Toronto-based Algorithmics.

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  Errata

  In our June Guide to Derivatives Technology, we incorrectly listed the pricing functions of the Numerix Time Library. The system provides pricing functions for the following: Black-Scholes-Merton, Cox-Ross-Rubinstein, Cox-Ingersoll-Ross, Garman-Kohlhagen, Brace-Gatarek-Musiela, Extended Vasicek, Hull-White, Ho-Lee, Black-Derman-Toy, Black-Karasinsky and Heath-Jarrow-Morton.

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