Sitting in a midtown Manhattan hotel sipping a cup of coffee, Turney Duff explained the similarity between insider trading and snorting cocaine.
"You have these moments of, 'This might not be right,' " he said. "It didn't smell good, but it felt really good."
These days, Mr. Duff doesn't look like a master of the universe – a trader who once earned $2-million (U.S.) a year, lived in a loft in Tribeca and took private jets to the Super Bowl.
His hair is a little long at the back. He sports a few days of stubble. And he displays not one iota of swagger. If anything, he seems earnest and slightly broken when telling the story of his hedge-fund career and plunge into alcoholism and drug addiction.
Now sober, Mr. Duff, 43, has just published a tell-all memoir that offers an inside look at the dark side of Wall Street. His book, The Buy Side, is a portrait of a place where breaking the rules was just another way to gain an edge and the appetite to spend knew no limits.
Mr. Duff had a front-row seat for some of the worst the era had to offer: from 1999 to 2001, he was a trader at Galleon Group, the giant hedge fund founded by Raj Rajaratnam. Mr. Rajaratnam was arrested in 2009 and later sentenced to eleven years in prison.
At the time of Mr. Rajaratnam's arrest, Mr. Duff was at his nadir, about to return to a drug rehab program and ready to leave finance forever. He wasn't surprised by the news. However, as Mr. Rajaratnam's trial progressed, he was startled that prosecutors hadn't unearthed even more misconduct.
"In my mind, I was, like, that's all you could come up with?" he recalled.
First-person chronicles are unusual in the financial business, unlike accounts by journalists, which sprout reliably after the latest crash or scandal. Several new books focus on the current investigation into illegal insider trading, in which prosecutors have filed criminal charges against more than seventy people.
The crackdown has "100 per cent" changed the atmosphere in the hedge-fund industry, Mr. Duff asserted. "It's just not worth it. There are consequences now."
A native of Maine, Mr. Duff arrived in New York in 1994 with a degree in journalism. He talked his way into a job at Morgan Stanley and later joined the high-stakes world of hedge funds. There he became a capable trader and a champion party animal.
Some of what Mr. Duff describes in his frank and vivid memoir – drugs, prostitutes, Armani suits, Veuve Clicquot champagne, a $9,300-a-month apartment – is memorable, but not exactly unexpected.
However, the behaviour he saw and participated in at Galleon is eye opening. Years before U.S. authorities began investigating the fund, Mr. Duff recounts examples of buying and selling shares on the basis of confidential information, colluding with other traders to make winning bets ahead of market-moving orders and scoring profits at the expense of Galleon's clients for the benefit of Mr. Rajaratnam himself (a move referred to as booking gains "in the admiral's account").
In the book, Mr. Duff describes Mr. Rajaratnam as a "delightful bull of a man," prone to giggling when he is making money but ruthless with employees and fond of cruel pranks. Once, he reportedly offered an underling $5,000 so he could fire a taser stun gun at her in the office. (She apparently accepted.)
One of the most jaw-dropping moments involves Canada's Nortel Networks Corp. during the last moments of the dot-com bubble. Over a few short hours one afternoon in 2000, Mr. Duff wrote, Mr. Rajaratnam ordered his traders to liquidate all of the hedge fund's tech stocks. Instead, they were directed to place bets that the same shares would fall, a massive shift in the portfolio. At the same time, he instructed an employee to send him an e-mail outlining a bearish case for Nortel ("creating a paper trail" to deceive investigators who might suspect insider trading, Mr. Duff noted).
Moments after the market closed, Nortel reported dreadful earnings, setting the stage for a tumble across technology stocks the next trading day. "I start to feel like I've wandered into a heist," Mr. Duff wrote. "The reaction from the Street ranges from jealousy to awe." In the weeks that followed, some traders talked about getting lawyers; Mr. Duff was told to keep his mouth shut.
A lawyer who represented Mr. Rajaratnam during his trial declined to comment.
Mr. Duff has not been accused of any wrongdoing. He hired a lawyer to vet the book to make sure he wasn't putting himself in any legal jeopardy. The episodes he describes, which took place more than a decade ago, are beyond the statute of limitations for certain charges.
The money he earned is gone: Mr. Duff blew his hedge-fund salary on cocaine benders and a $2.1-million house, which he purchased near the top of the real-estate market and later lost to foreclosure. Now he lives in a small home in Long Island. His life revolves around writing and his seven-year-old daughter, who stays nearby with her mother, Mr. Duff's former fiancée.
In the end, he chose to walk away from Wall Street, sabotaging a promising interview for a trading job in 2010 after returning from rehab. The only thing he misses is the camaraderie. "I don't drink, I don't do drugs," he said. "So when you strip that away from the wining and dining and the lifestyle – no, I don't get that excited by stocks or companies."
These days his priorities are simple. "One, stay sober. Two, be the best dad, son and friend I can be. Three, keep writing," he said. "Everything after that is just details."