Taking ‘Wow!’ out of Wall Street parties
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KAI RYSSDAL: Maybe you noticed your company holiday party this year wasn’t quite as grand. More shrimp cocktails and beer than champagne and caviar. A consulting firm in Manhattan estimates the number of companies even throwing a bash at all this year is down almost 10 percent. You can chalk it up to general worries about the economy. And Marketplace’s Amy Scott tells us one industry in particular is feeling the pinch.
AMY SCOTT: Wall Street knows how to throw a party. Like the kind of holiday gala event planner Jennifer Gilbert put together for an investment bank last year.
JENNIFER GILBERT: We would literally transform the space. Literally, like bring in our own walls. Recarpet, bring in lounge-chair furniture, bring in fountains. I had greeters outside. I’d have models walking around.
Yes, models.
GILBERT: We’d have three different sets of entertainment. We would do a gift when they left. It would just feel lavish.
This year? Gilbert says that same client is skipping the $80,000 decor. There’s a DJ. No limo service home. And, oh yeah, no gift.
GILBERT: You know, the space is lovely. And the DJ will still provide great music. But it won’t be the same “Oh My God” when you walk in.
As subprime mortgage losses continue to mount, Wall Street firms have slashed their party budgets. Earnings are down at most of the big banks. Morgan Stanley and Bear Stearns just reported their first-ever quarterly losses. Gilbert says it’s the worst party season she’s seen since just after 9/11.
At T-Bar Steak and Lounge on the Upper East Side, owner and caterer Arthur Backal is a bit more upbeat. He says instead of renting out the ballroom at the ultra-posh Mandarin Oriental, firms might book a restaurant like his. He’s already done two Wall Street parties here this year. And he’s getting more requests for January, when you can get more for your money.
ARTHUR BACKAL: You know where they might have had a large-scale orchestra or band along with a DJ, they might be either going with one or the other instead of both. But I gotta tell you, the business — even though people wanna think it’s not doing as well — it’s been a very busy season still.
And if the parties are a little less over-the-top these days, there may be another reason. After a number of scandals, the SEC is weighing a new rule that would require firms to track how much they spend entertaining clients and set limits.
Chris Myers heads the compliance practice at law firm Holland and Knight. He says some firms are already bracing for tougher scrutiny.
CHRIS MYERS: I think they should be nervous about it. Because this is a growing trend, across industry lines. And we’re going to see more and more restrictions that are mandated as opposed to recommended.
The rule is also expected to throw water on an old staple of Wall Street entertainment — the strip club. Oh, brokers might still treat their clients to the occasional lap dance, but not on the company dime.
In New York, I’m Amy Scott for Marketplace.
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