Chapter 2 Part 1: Boston Massacre - UBS Swallows a Giant

Chapter 2 opens with Birkenfeld landing his first real job in finance. The year is 1989. The place is State Street Bank and Trust Company in Boston. And the boss is a guy straight out of a mob movie.

Nick Lopardo – The Boss You Don’t Mess With

Nick Lopardo ran State Street Global Advisors like a football coach who happened to work in banking. Brooklyn-born, son of a scrap-metal shop owner, built like a fullback. No MBA. No fancy pedigree. Just raw hustle and zero tolerance for laziness.

When Lopardo showed up at State Street in 1987, the firm managed $18 billion. By the time he left in 2001, that number was over $700 billion. Read that again. He grew the business almost 40x.

His management style was simple: work hard, look sharp, and never leave before the job is done. He literally paid off a bootblack across the street so everyone could shine their shoes for free. Then sent out a company memo – show up with shined shoes or don’t show up at all. One guy brought his entire shoe collection to work.

Birkenfeld the Entry-Level Grunt

Birkenfeld started at the bottom. Like, basement-level bottom. Running files for senior bankers, delivering sandwiches to meetings he didn’t understand, and checking numbers three times because one mistake meant you’d “end up facedown in the aquarium.”

But he loved it. The trading floor was loud, fast, and full of practical jokes. Spitballs, whoopee cushions, superglued desk drawers. Someone rigged the office sound system to play the famous Meg Ryan deli scene from When Harry Met Sally. That prank only worked once – someone complained.

Outside work, Birkenfeld ran a softball team called “Liquid Assets” and earned the nickname “the pantser commander” for pulling down coworkers’ pants at bars. Classy stuff. But this was late-80s Wall Street culture – you worked until you dropped, then you partied until you dropped again.

The Currency Department – Where Birkenfeld Thrived

As State Street grew, Birkenfeld moved up through corporate actions and international proxy voting. Then he landed in the newly created currency department, and that’s where he found his groove.

The concept is straightforward. Big pension funds need to invest overseas for better returns. To buy French stocks, you need French francs. To buy German stocks, you need Deutsche marks. Someone has to handle all those currency trades. That someone was Birkenfeld’s team.

Before the department existed, five different managers might buy the same currency at different times and prices. The new centralized approach saved money for everyone. Within a year, Birkenfeld was handling spot and forward currency trading across 90 accounts with over $30 billion in assets. He was 23 years old, making $40K a year, and running a side business cleaning windows and carpets on weekends at $100 an hour.

The Cowboys Show Up

About three years in, things started going sideways. Management hired two aggressive traders from New York and placed them above Birkenfeld’s solid, careful boss Joe Foster.

These guys didn’t follow the firm’s conservative investment models. Instead of carefully managing currency exposure, they started “shooting from the hip” – making aggressive bets across client portfolios, sometimes flipping positions within a single day. This was the opposite of what clients signed up for.

Losses piled up. The portfolio managers who actually talked to clients got hung out to dry, forced to defend trades they never approved. The two new guys were treating client money like casino chips, chasing quick profits and fat bonuses.

The fairy tale at State Street was starting to crack.

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Part of the Lucifer’s Banker Uncensored series