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Ri$ky Business

by Jennifer Post Stoudt

Morgan Stanley view

Five hundred million dollars was at risk, but Andrew Pipa ’84 remained calm, barely breaking a sweat.

A major company was being added to the S&P 500 and Morgan Stanley, a global financial services firm, knew the company would have extra stock that needed to be purchased. So they took the risk and committed 500 million dollars of capital to transact and sell. The risk was all on Pipa’s shoulders.

“We announced at noon that we were raising capital for this company,” Pipa says. “I’m down there on the desk with about 15 people standing around me and I watched the stock go way down.” But all of a sudden, he says, it went back up. “It became a very, very fast tape.” Andy Pipa '84

Amidst a sea of computers and phones, everyone was screaming at the top of their lungs, he says. “The phones were ringing, lights were blinking…It was crazy mayhem. It truly looked like total disorganization.”

But, when the bell rang to close the market at 4 p.m., the stock was sold, the investors were pleased, Morgan Stanley made a fee and “we had no risk in the end,”

Pipa says. Everyone burst out with excitement; cheering, shouting and clapping, Pipa says. “It was very big for Morgan Stanley and I was right in the middle of that excitement.”

Pipa, a managing director for Morgan Stanley in New York City, says it’s that kind of excitement that “gets his juices going.”

After graduating from Albright with a degree in business, Pipa says he was interested in the field, owned stocks and had a taste for it, but didn’t have much access to Wall Street. Although he was determined to make his dream become a reality.

Soon after graduation Pipa decided to attend graduate school. While working towards his MBA at the University of Chicago, he went to work as a “general hire” for Salomon Brothers, the “Kings of Wall Street,” in 1985. He worked through their formal training program which, he says, “introduces you to everything on Wall Street. It’s the same program that Michael Lewis chronicles in his best selling book Liar’s Poker.” In fact, he says, “Lewis was in the training program just before me.”

Following a three-year stint in London where he traded corporate bonds and then, started his career in convertible bonds, Pipa eventually came back to the states to work for Morgan Stanley in New York.

Andy at workAs a managing director, Pipa’s primary role is to be a risk manager for Morgan Stanley’s capital and provide liquidity to its customers. He, along with his staff of traders and salespeople, trade convertible bonds, a complex product primarily used by large institutions such as banks and mutual funds. In fact, Morgan Stanley controls 23 percent of the convertible bond market. “We’re basically a quarter of the market,” he says. “That is exceedingly high. It’s the highest share in this product,” he says confidently.

Convertible bonds, Pipa says, are considered “over the counter products.” That means you can’t look at a computer screen and get a quote for them, he says.

“When a customer has a desire to do something in this product they actually have to call Morgan Stanley.” Convertible bonds, which he refers to as “kind of a geeky product in a lot of ways, is not standard bond, not standard equity, but a derivative of that,” he says. “It’s a hybrid security really. It’s a bond that pays a coupon, has a maturity, but also has the attraction of being convertible into stock.”

Although the days are long, Pipa says there’s nothing else he’d rather do. Awake at 4:15 a.m., he is driven to the train station from his Long Island home and arrives at work between 6:30 and 6:45 a.m. At this time he’s ready to evaluate the market, scour the newspapers for any pertinent information, conduct his own analysis of where he thinks the market may or may not go that day, and look at the value of the securities he will trade. But as the clock strikes 9:30 a.m. and the market opens, Pipa’s adrenalin starts pumping as he heads down to “the pit” to get on the phones and start trading.

“Everything is about working as a team.”

In a job where stress levels rise by the second, Pipa takes it all in stride. “Yes, it’s a stressful job,” he says. However, I thrive on it.” As he sits relaxed in his office chair, he says, “At first, it’s extremely stressful. But you learn how to cope. If you don’t, a lot of people burn out by the time they’re 40. You’ve got to learn how to remove the emotional attachment to losing money.”

In addition to trading, however, Pipa’s other main role involves managing his department. Teamwork, he says, is the key to success. Working in convertible bonds is “as close as one can get to playing for a professional sports team. You work with a group of people and try to figure out how to win everyday.” But he stresses that the environment at Morgan Stanley “is not about being that person who says, ‘Hey, look at me. I just came up with the best idea so pay me millions of dollars.’ That’s just not the environment that we instill,” he says. “Everything is about working as a team.”Andy at work

Although, Pipa admits he is a fan of winning. In fact, it’s that “competitive spirit” that gets him up at 4:15 a.m. everyday, he says. The business is “constantly challenging. It never gets old, it piques my interest, and the educational process never ends. ”

Plus, he adds, “We have highly paid, sophisticated and smart people working here. We all have a common drive to be successful.”

It’s also a wonderful business for young people, Pipa says. “It requires a lot of energy, thought and intelligence. It really keeps you going.”

Working for Morgan Stanley has definitely kept Pipa going. “Morgan Stanley has given me a lot of responsibility, and I continue to grow and get more involved in a lot of other avenues of the business.”

For Pipa, “Everyday is new and different,” he says. “I’ll probably continue to do this until it doesn’t excite me anymore.” But, he says with a smile, “I don’t see that happening soon.” 

When Terror Struck...

On the morning of September 11, Andrew Pipa ’84 was in a meeting with several senior partners in the Morgan Stanley office building in Times Square. “All of a sudden,” he says, “one of the secretaries came in and said that the World Trade Center had been hit.” Realizing right away that there were numerous bond brokers in the Towers with whom he worked everyday, and 3,700 Morgan Stanley employees, Pipa got on the phone immediately.

“I was on the phone calling Canter Fitzgerald when the second plane hit,” he says. “But the phones were dead.” Then he tried another friend. Again, there was no answer. “I had no idea what had happened to our employees and other brokers from other companies…some of those guys who I speak to 40 times a day.”

But, he says, when the first plane hit, Morgan Stanley security didn’t waste a moment. They evacuated all of the firm’s employees from the Towers. “That’s why, even though we had the most people in the Towers, we only lost six people,” he says. Of course, he adds sadly, “It’s unfortunate that we lost six people, but it could have been a lot worse.”

When the second tower went down, Pipa says, his office building in Times Square was also evacuated. “Because we have a ticker tape on our building and we’re in Times Square we’ve always thought that we could be a problem.”

With no trains running, the bridges closed and almost the entire city shut down, Pipa says he finally got home at about 10:30 p.m. Tired and glad to be with his family, he was relieved to find out that his close friends who worked in the Towers were okay.

Now, even after a week of the market being closed, Pipa says “things are pretty much back to normal in the sense of day-to-day business.” Companies are putting more safety precautions in place and people are more conservative now, he says, but basically, “everyone’s just trying to get back to normal.” 

New York Stock Exchange

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