How to Cover Wall Street

John Meriwether has had an eventful post-Liar’s Poker career.

Actually it’s been spectacular.

Meriwether, now 61, resigned from Solomon Brothers in 1991 after a subordinate of his tried to corner the market in two-year U.S. Treasury notes. He informed superiors of the infraction, but it wasn’t reported to the Treasury until much later. An investigation found illeagalities at the firm and Meriwether agreed to a three-month suspension and a $50,000, but never declared his innocence or any wrongdoing as a superior.

After a few years pursuing golf and his love of horses, Meriwether returned in 1994 with the founding of the hedge fund Long-Term Capital Management. The high-profile fund attracted money from celebrities, top pension funds and Ivy League endowments. In the first few years, the fund made solid returns. But by 1997, the firm had made huge bets on Russian government bonds and when the Russian government defaulted on its bonds in 1998, Long-Term Capital’s losses were in the billions of dollars. The fund eventually lost more than $4 billion in four months had was bailed out by as group of investment banks and the Federal Reserve. The fund folded in 2000.

But with Long-Term Capital’s collapse still fresh in investors’ minds, Meriwether was able to start another hedge fund, JWM Partners LLC, in Greenwich, Connecticut, in 1999. The fund has done relatively well, growing from $400 million of initial capital to $2 billion today. But according to Bloomberg News one of the firm’s funds was down 24% earlier this year.

INTERESTING LIAR’S POKER FACT CHECK

In this 1998 piece by the NYT’s Gretchen Morgenson, she reports that the famous scene at the beginning of Liar’s Poker, in which Meriwether challenges John Gutfreund to a $10 million-game of liar’s poker is inaccurate.

People who have never met Meriwether may remember him as the man featured at the start of Michael Lewis’s book, “Liar’s Poker.” As recounted there, Meriwether supposedly challenged John H. Gutfreund, then the chairman of Salomon Brothers, to up the ante from $1 million to $10 million in a game of “I dare you” played with serial numbers on a dollar bill. Gutfreund, no pansy himself, walked away, according to the book.

This story almost certainly helped forge the romantic view of Meriwether as a Wall Street cowboy, willing to make a bet that even his rich boss shrank from. Only trouble is, it never happened. According to people who were there, it was not Meriwether who made the challenge. It was John O’Grady, a gregarious and blustery Salomon partner who ran technical support for the traders. O’Grady died in 1989. ( Lewis was traveling and not available for comment.)

According to those who know him well, the story is also out of character, because Meriwether only made the most calculated of bets, both personally and for the firm. He loved to bet on Chicago Cubs games, for example, but would not do so until he had first received the weather report to see which way and how hard the wind was blowing at Wrigley Field. That way he could better guess how the Cubs home-run hitters might do against the opposing pitchers. “These weren’t big bets,” said a person who had knowledge of them at the time. “He just liked to have a lot of things he could analyze.” More often than not, he came away a winner.

Note: This was an assignment to speak to Meriwether about the relevance of Liar’s Poker to today. Meriwether, through his assistant at JWM Partners, declined to comment.