In short
The Learning Leader Show: Episode 675 with Tom Hardin (Tipper X)
Podcast Overview
- Podcast Title: The Learning Leader Show
- Host: Ryan Hawk
- Guest: Tom Hardin (Tipper X)
- Episode Title: 675: Tom Hardin - The Largest Insider Trading Case, Ambiguous Leadership, and Building Psychological Safety
- Episode Description: A discussion on leadership, ethical dilemmas, and the significant insider trading case that Tom Hardin was involved in, including the impacts of ambiguous leadership and the importance of psychological safety.
Key Learnings Ambiguity in Leadership
- Ambiguity Blurs Ethical Lines: Tom's experience highlights how vague instructions from leaders can compromise ethical standards.
- Culture of Silence: Ambiguous messages from leaders create confusion, leading employees to refrain from questioning decisions, which can harm organizational culture.
Decision Making
- Isolation Dangers: Making decisions without consulting others can lead to poor choices, as evidenced by Tom's decisions to trade illegally without discussing them with his boss or wife.
- Psychological Safety: Leaders must create an environment where employees feel comfortable asking for clarification on vague directives.
Rationalizing Decisions
- Bad Decisions vs. Mistakes: Tom emphasizes that bad decisions are made with intent, while mistakes are unintentional. Acknowledging this distinction is crucial for accountability.
- Rationalization Journal: Keeping a record of justifications for decisions can help individuals reflect on their thought processes and recognize potential moral drift.
Employee Influence
- The 10-10-80 Rule:
- 10% of employees are morally incorruptible.
- 10% are compliance nightmares.
- 80% can be influenced by their organizational culture.
Company Culture
- Tone at the Top: Merely having a strong tone set by leadership is insufficient; it is the behaviors employees observe that define the actual culture.
- Rewarding Character: Companies should reward ethical behavior, not just short-term performance, to cultivate a strong ethical culture.
Personal Growth and Reflection
- Windscreen Mentality: Focusing on future growth rather than dwelling on past mistakes helps individuals learn and improve.
- Eulogy vs. Resume Virtues: Reflecting on what will be said at one's eulogy rather than just career achievements allows for deeper personal growth.
Personal Experiences Insider Trading and Consequences
- Operation Perfect Hedge: Tom was a key informant during the largest insider trading investigation in history, which involved 81 hedge fund professionals.
- Personal Loss: Tom reflects on the significant financial and personal losses stemming from his poor choices.
Impact on Relationships
- Marital Resilience: Tom credits his wife's support during his crisis as crucial for his recovery and growth, highlighting the importance of strong personal relationships.
Physical and Mental Challenges
- Running as Therapy: After facing personal and professional crises, Tom took up running, which he initially used as a distraction from his problems. He later found balance and purpose in fitness.
Reflection Questions for Leaders
- Ambiguous Messages: Reflect on a recent ambiguous instruction from leadership. Did you seek clarity, or did you fill in the blanks yourself?
- Organizational Culture: What behaviors are being rewarded in your organization? What would employees say truly gets them ahead?
- Eulogy Virtues: Identify one virtue to prioritize today that aligns with the legacy you want to leave, which may require slowing down on career achievements.
Conclusion This episode of The Learning Leader Show with Tom Hardin provides valuable insights into the importance of ethical leadership, the dangers of ambiguity, and the significance of building psychological safety within organizations. Tom's journey from insider trading to becoming a leader in ethical discussions offers a cautionary tale and practical lessons for current and aspiring leaders.
For more insights from this episode and to learn about Tom's journey, visit [TipperX.com](http://tipperx.com/) or connect with him on LinkedIn.
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Additional Resources
- Related episodes and insights from other leaders available at [The Learning Leader Show](https://www.LearningLeader.com).
Note This markdown file serves as a comprehensive summary and reflection of the podcast episode, encapsulating the key discussions and takeaways for leaders and individuals alike.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOOperation Perfect Hedge Overview
0:46 to 2:26
Discussion about the largest insider trading case in history and its implications.
“During our conversation, we discuss how pressure can create blind spots and what we as leaders can do to help prevent our people from making poor decisions.”
Becoming Tipper X
2:27 to 5:40
Tom Hardin recounts his unexpected journey into becoming a key informant.
“around the time of the financial crisis.”
Ambiguity in Leadership
5:41 to 9:08
The impact of ambiguous leadership messages on decision making.
“these guys, they were like, dude, I don't really care what you do, but I do care about the results.”
Moral Drift in the Workplace
9:09 to 11:29
Exploring the idea of moral drift and the susceptibility of employees.
“Like here's a situation, your boss is coming in, giving you an ambiguous order.”
Building Ethical Cultures
11:30 to 13:20
Strategies for leaders to foster ethical behavior in organizations.
“So the more granular people can get and companies and leaders can get with that, the more they'll understand it and create better cultures.”
Understanding Mistakes vs. Bad Decisions
13:21 to 15:12
Distinguishing between mistakes and intentional bad decisions and their impacts.
“That's the big one I wrote about in the book, because then we're not really owning our bad decisions if we call them mistakes.”
Tom's Insider Trading Experience
15:12 to 17:46
Discover the mindset and rationalizations behind Tom's insider trading decisions.
“So that's how I do it today that they're teenagers.”
The Fraud Triangle in Trading
17:46 to 19:14
Understand the fraud triangle and its role in crossing ethical lines in trading.
“Back when I got my driver's license, I'd go a little bit over the speed limit because my friend said it was fine.”
Consequences of Insider Trading
19:14 to 21:10
Explore the aftermath of Tom's insider trading and the challenges he faced.
“I thought, holy crap, this is exact information.”
Confession and Support from Family
21:10 to 24:50
Hear about Tom's experience confessing to his wife and the support he received.
“So then they got you and they're going to send you to jail or whatever.”
Show all 25 chapters
The Role of Trust in Relationships
24:50 to 27:40
Learn about the impact of bad decisions on trust within relationships.
“What does it currently mean to you to have that rock there, especially when you're going through the toughest thing of your life?”
Wearing a Wire and Building Cases
27:40 to 28:00
Discover the process and emotional challenges of wearing a wire for the FBI.
“I'm thinking of goodfellas, you know, and they really speak poorly around about the snakes or the people who help the FBI.”
Navigating the Wire Experience
28:00 to 29:08
Learn about the challenges and emotions of wearing a wire while working with the FBI.
“What is it like putting on a wire and going to have a conversation knowing the FBI is listening and knowing you might help put this person away?”
The Pressure of Undercover Work
29:08 to 30:24
Understand the intense pressure and fear associated with undercover operations.
“My first meeting was this guy in Silicon Valley.”
The Unexpected Dinner Invite
30:24 to 32:16
Discover the tense moments during a dinner invitation that could compromise safety.
“I felt the wire must be huge in his eyes.”
Current Landscape of Insider Trading
32:16 to 33:41
Explore how insider trading has evolved and the challenges faced by regulators today.
“I've been sharing this story for compliance training for nine years, so hopefully it's better.”
Political Trading and Ethics
33:41 to 35:02
Examine the ethics of politicians trading stocks and the implications for public trust.
“It seems like it would be illegal, but their track records of their net worth growing a ton when their salary is, you know, 150 grand or whatever is wild.”
Finding Balance Through Running
35:02 to 37:15
Learn how running became a coping mechanism and a journey towards personal health.
“What happens, Ryan, is they have these 25 bills the last 12 years to stop this.”
The Danger of Extremes in Life
37:15 to 38:31
Discuss the impact of extreme behavior on personal and professional relationships.
“But also Ryan, as I was thinking about this, I was using running as a crutch to not have to deal with like what I had to deal with.”
Lessons from Hard Challenges
38:31 to 40:09
Understand how overcoming difficult challenges can lead to personal growth.
“So how does that help you and how does that hurt you?”
Embracing the Past While Moving Forward
40:09 to 42:01
Explore the importance of accepting past actions while focusing on future growth.
“How is that portable to other areas of life?”
Facing the Past: Embracing Reputation vs. Character
42:01 to 43:48
Learn how to embrace your past rather than hide it, focusing on character over reputation.
“And my name became released two months later.”
Teaching Leadership: Building Psychological Safety
43:49 to 45:48
Explore effective leadership techniques that prioritize psychological safety and servant leadership.
“And that gap, those rationalizations we talked about often fill that gap and try to close the gap over time.”
The Long View: Eulogy vs. Resume Virtues
45:49 to 48:56
Understand the difference between eulogy virtues and resume virtues and their impact on life choices.
“You have to create that psychological safety inside the organizations so people can actually check you.”
Personal Transformation: Insights from a Turbulent Journey
48:57 to 51:10
Discover how personal experiences and setbacks can lead to meaningful life transformations.
“I was reading the end of your book, a business school professor calculated you would have made $23 million if you'd stayed on the hedge fund path.”
Transcript
Automatic transcript. May contain errors.0:02Welcome to the Learning Leader Show.
0:3081 people in Operation Perfect Edge, the largest insider trading case in United States history. He's the author of Wired on Wall Street, the rise and fall of Tipper X, one of the FBI's most prolific informants. Oh, it's crazy. During our conversation, we discuss how pressure can create blind spots and what we as leaders can do to help prevent our people from making poor decisions. And then you'll hear about how Tom's story taps into a deeper truth, and that is, we are all more susceptible to moral drift than we'd like to admit. And then we talked about living for your eulogy virtues instead of your resume virtues and how to do that while still making a great living.
1:21Ladies and gentlemen, this one is different than most of the conversations I have on The Learning Leader Show. I hope you enjoy it. I think you'll find it both entertaining and useful. Please enjoy my conversation with Tom Hardin. This episode is brought to you by my friends at Insight Global. Insight Global is a staffing and professional services company dedicated to providing amazing people to their clients and taking great care of them. If you need to hire one person, hire a team of people, or transform your business through talent or technical services, Insight Global can get you the people you need and help you develop them to reach their full potential.
2:08Developing your people can be tough, but having productive employees can be magic. Visit insightglobal.com slash learningleader. That's insightglobal.com slash learningleader to learn more. So Operation Perfect Hedge was the largest insider trading investigation in history. around the time of the financial crisis. So 2008 to 2010, 81 hedge fund professionals were charged on Wall Street with insider trading, buying or selling stocks on non-public information. There was 32 cooperators who helped the FBI build these cases. And I always say today, you don't just volunteer to cooperate with the FBI.
2:53There's a reason you do that. And they approached me on the street, which we'll talk about and convinced me to help them out. And they called me Tipper X because I was the key informant. I helped build 20 of those 81 cases going back around 15 years ago or so. So that's what that operation was. Wild. Okay. How did we get to the point where you decided to help them and wear a wire? I guess 40 plus times. Is that right? Right. Over 40 occasions. It was July of 2008. I'm leaving my apartment in Manhattan, 630 in the morning to drop off some dry cleaning. I'm working at a hedge fund as a hedge fund analyst in the middle of the financial crisis, I step on the sidewalk and this guy behind me says, are you Thomas Covey Harden?
3:35And the last time I heard my full name was my mother back in Georgia about to whip my butt. It wasn't my mom. So I turned around, two FBI agents, dark suits, can you come sit down with us? So that's how it all started, just sort of out of the movie scene. Now, why were they calling you by all three names and wanting to talk to you? I think that's probably just a tactic to intimidate targets. You're not expecting that in 6.30 in the morning in Manhattan of 7 million people on the street. So that was part of the tactics. And then they sat me down. They were aware of four trades that I had placed on inside information while working at a hedge fund.
4:08And they said, hey, we think you can help us build these cases we're looking at in the industry. And I said, should I talk to a lawyer? And they said, don't talk to a lawyer. So four trades you made based on inside information. Take me inside those trades and how you got this information and then how you made these trades yeah so i guess to even back up where i started in my career my 20s working in the hedge fund industry i loved investing when i started especially with tech stocks you can always bet on the new interest bet against the old business and i also became aware that insider trading was rampantly happening buying or selling stocks and inside information and i never felt i had to cross that line until one day my boss made my goals very short term so we went from investing over a three your horizon after we lost money, we have to make money every month.
4:56And so he walks into my office and says, do whatever it takes. And Ryan, as a junior employee, I didn't ask any clarifying questions. And here is a very ambiguous message from the leader to the junior to do what it takes. And again, me just letting the ambiguity sit. And then right after that meeting, a few months later, over the next seven months, I received four tips from another investor, placed very small trades in my portfolio at my company. I told myself, everybody's doing it. The classic rationalizations that people can go through in your head. It seems like I'll do it just this one time.
5:30It wasn't one time, it happened four times. And then that was the end of 2007. Nine months later was an FBI approach on the street in New York City. So you think from a leadership perspective, these guys, they were like, dude, I don't really care what you do, but I do care about the results. So find a way, essentially. And if you have to go near or over the line, then you do what you got to do, Tom. Is that basically the mentality of all hedge funds at the time, your hedge fund? What do you think? It was a lot of hedge funds focused on tech stocks because tech stocks trade in high volatility around their earnings reports, which are four times a year or M &A announcements.
6:13So it was really focused on hedge funds looking at those companies. But to your point, ambiguity is something I see today. hey, sometimes I'm hired to speak to a Fortune 500 leadership summit. I say, ladies and gentlemen, it starts with an ambiguous message, which my boss gave to me. Then they pretend the message wasn't ambiguous. Don't question my communication. Just do as I said. And then that ambiguity, it kind of becomes undiscussable because the employees are confused and don't question the boss. And then almost the undiscussability becomes undiscussable. And then you have this culture of silence.
6:45So it happened in a micro way at my little firm, but it happens in major ways and other types of industries around the world that I see quite often. Have you watched the TV show Billions by chance? Yes. So Bobby Axelrod will say, how confident are you? And they'd say, I am not uncertain. I believe that's what Brian Koppelman, the writer of that show has been on this podcast. I think that's how they phrase it, which essentially means I've got insider information. It wasn't like that. So that's a really good show. They have great consultants. There was two people when the FBI approached me on the street that they were trying to get two big billionaires.
7:17One, they caught a guy named Raj Rajaratnam from Sri Lanka, went to prison for 11 years. And the other guy they didn't catch. And the show Billions is based on that individual. And the way that they would get information was not directly. It was, tell me what your conviction is, sort of one to 10. And when the analyst who's pitching the idea says nine or 10, that implied that there was inside information. So again, to your point, not expressly saying, here is the actual tip. But that's where it was the show, as I understand it, was derived from that case that never came to be. Interesting. So I guess I want to look at this from a leadership perspective, Tom, and I guess morals and ethics, and some people are willing to push it.
7:58Some people go over the line. Now that you work and you speak with these big companies and you go to these leadership summits, what is your messaging around effective leadership doing it with morals, with ethics, that perhaps you learned from your time of going over the line? So leaders really need to identify that ambiguity I mentioned. One of the biggest takeaways is I look back to my situation and writing the book really had me focus on what was I actually thinking at the time. You know, the book is much longer than my keynote. And really, it's making decisions in isolation. So the information came to me.
8:35I didn't talk to my boss. I didn't even talk to my wife, who probably would have slapped me around. Why would you ever cross those lines? Like as a young man in my 20s, I just made decisions in isolation. So leaders need to figure out where in your organizations, maybe there's one team, maybe there's one geography that's in a higher corruption risk country where people could be making decisions in isolation, especially today, Ryan, with everybody kind of hybrid. Some people are in the office a day a week. Some people are. So teams are all trying to figure out, you know, my teams at home or in the office once a week, like where do people make decisions in isolation?
9:07That's a big thing. and also what I try to do in my ethics training is to do sort of muscle memory. Like here's a situation, your boss is coming in, giving you an ambiguous order. You have to have psychological safety at the company to say, hey, I'm not sure here. I have to ask some clarifying questions. Psychological safety is a big buzzword now, but it's sometimes thrown around without any meaning behind it. You have to be comfortable as the junior to say, I'm just gonna ask some clarifying questions here. Don't start making decisions in your own head. get help that you need so you're protected.
9:39I mean, this is people's reputations. And as I understood, my livelihood was impacted. One of the things that I, after reading and learning about your story, I wanted to talk to you about was this thought that most people, they may look at your story and say, I would never do that. Your story shows that we're more susceptible to moral drift than maybe we realize. And you write, typically 10 % of employees are morally incorruptible. 10 % are a compliance nightmare. And 80 % can be swayed either way. 80 % seems really high to be swayed, again, over the line. Can you talk to me more about this potential for drift and how more of us are susceptible than maybe we'd like to think?
10:20Yes, absolutely. And there will be people that read the book and even hear my story today in the keynote. They're like, that would never be me. I would never make those decisions. I would argue you're more susceptible to falling down your own slippery slope when you think it couldn't be you. So I always encourage people to have some healthy paranoia. Never say never. Ryan, if I had read my story back in ethics class in college that we all had, I'd say that that would never be me. I would never be 29 years old and making those trades because I'm a good person. We all think we're good people, but we all have the capacity to start rationalizing very small decisions.
10:51And I think that 10-10-80 is really apropos. The 10 % are sort of the nightmare of HR and compliance. Every time I speak at a company, they sort of nod their head like, we know who they are. The 10 % are sort of the Girl Scouts and the Boy Scouts, but that middle 80 % can really be swayed. And so many companies I speak to today say we have a great tone at the top. We have great shareholder letters. The tone means nothing. It's the actual behaviors in the organization. What is actually happening inside the company? What behaviors are rewarded? Company culture is not the tone at the top. It's the behaviors employees believe will be rewarded or put them ahead.
11:28That's exactly what the culture is. So the more granular people can get and companies and leaders can get with that, the more they'll understand it and create better cultures. If you were giving advice, you're consulting, working alongside a senior leadership team, and you wanted them to build a place that's morally sound, they make the right decisions, they do it the right way, right? They do the right things the right way. And you just said that you got to ensure that the right behaviors are being rewarded. So what would you institute? Would there be some sort of process or some sort of reward system where to ensure that they're living by the values and ethics that the leaders want?
12:09Yeah, it doesn't even have to be anything that's really big and grandiose. It can be very small, just recognition of an employee who made an ethical call where they actually had to give up maybe some business because that was the right thing to do at the time. So even just not even a financial reward for that, just a recognition at the all hands meeting or however companies have their group meetings on the Monday recap. We want to recognize this person or maybe some companies have little newsletters that go out and say, hey, this person chose ethics over the commercial opportunity because it wasn't the right one.
12:38So just little little nudges like that actually will help set the culture. Also, I think it's more about companies have to ask better questions. Every company I speak at always has a culture survey and they say, rate the culture of ethics and compliance, which is a terrible question because people always read it. It's more like which of our values are true and which aren't and in which way. And you have to ask questions that you maybe don't even want to know the answers to because it'll make you uncomfortable, but you won't get at the root cause unless you're asking better questions is also something I've seen.
13:10What are the right questions to be asking? What are great questions to be asking? Every company has values. which of our values are true, which are not, and in what way, just getting more granularity. You could just say, well, looking at how we make decisions here, do we call our bad decisions mistakes? That's the big one I wrote about in the book, because then we're not really owning our bad decisions if we call them mistakes. What do you want to call your bad decisions? Bad decisions, because they were actually made with intent and mistakes are done without intent. And so I didn't learn that until I actually started sharing the story after all this happened.
13:44and I was telling myself I made mistakes. And then on the drive home, I was speaking at a college in Boston. I said, there's no way I made mistakes. I made bad decisions. And actually my whole life up to that point of going through this, it made me feel better because I told myself I made mistakes. We make both, right? And just understand how you learn from them and the difference. Can we take a quick side road on this? Bad decisions and mistakes. So you're a dad as well. And I immediately start thinking of this as a dad. Okay. How do you talk about this with your kids when they make a decision and they say, I didn't mean to, I just made a mistake, dad.
14:18How does this go? So my oldest, I guess I'll tell this story. It's fine. She will listen. She was in kindergarten or first grade. The teacher called. She had written all over the wall with a crayon, five years old. I made a mistake. Well, did the crayon fall out of your bag and hit the wall and it just did that itself? Or did you actually do it yourself? I did it myself. Okay, that's what we call a bad decision. Even at five years old, she understood that. And then going now that she's a teenager and in 10th grade, there's all kinds of opportunities to make some very bad decisions, which now could impact.
14:51Thank God I didn't have the phones back in my day because that one picture can impact your whole life. And so, you know, I always sit down with them when they're having these discussions and they'll say, you know, dad, you and your psychology. Like, no, this is actually my lived experience. Your dad went through this so you don't have to. And that's just something I see today to call them out and say, those are mistakes. Those are bad decisions and how it's just important to think about the difference and did you have intent or not? So that's how I do it today that they're teenagers. Let's go back to the day when you made the first insider trade.
15:20I just love to go inside your mindset as you're deciding to do it and then how you felt after the first one and after the second and the third one and the fourth one. Are you feeling shame or are you thinking like, hey, I just got to do what I got to do? I'm just curious to get inside your head at that time. So a few months after that meeting with my boss, do what it takes. Be not asking clarifying questions. Now our goals are make money every month. I receive a phone call from a woman who used to work for this billionaire. I mentioned Raj Rajaratnam, who went to prison for some time. She says, Tom, you'd made me a lot of money over the last few years.
15:53I always gave her my best ideas. I wrote in the book. My best idea ever was long Google and then short the yellow pages. Younger listeners won't know what the yellow pages are, but they were back in the day, these big things in our driveway and those were going to go away. And so that's the only insight you even need in this business like that. She calls me and says, I have something for you now, Tom, and you can't tell anybody. And she proceeded to say, this public company was going to be acquired in a few weeks. Here's the date. Here's the price. Here's the private equity firm. When I talk to students today, I say, imagine the answers to the test just fell in your lap.
16:30Are you not going to look at them? Are you going to throw it away? And I actually, I was still holding onto my moral compass. I was telling myself, I don't do this. I know a lot of people are doing this. But then I shared it with a friend I mentioned in the book who worked at a prop trading firm. He was down that month. We're talking. He said, are you hearing anything out there? I can make a short-term trade on. His wife was pregnant. They were expecting he was losing money. And so almost to help him out, I said, I don't trade this, but if you want to, you can do it just right there. It's really important for people to know.
16:58I've exposed myself to insider trading liability by sharing this information. So anybody working at a public company, you're not helping your friend, right? You're actually exposing yourself. He loads up. He calls me back. I see the stock moving up every day just a little bit. The woman that calls me is going to make millions. He's going to make millions. And I'm just watching it. He calls me back. Are you in? And when an employee crosses a line, there's something called a fraud triangle. There's three reasons usually. There's the perceived need to cross the line. So I had short-term performance need.
17:31Then there's an opportunity. And the opportunity at my company was I could buy a stock in our portfolio, less than 1 % of our assets and not have to talk to the boss. And I remember calculating and buying a 0.9 % position in our portfolio. The third part of the fraud triangle is rationalization, which I said, everybody's doing it i'll do it just this one time it's never once ryan i could still think of myself as a good person i'm a faithful husband go to mass you know it's called moral licensing or 99 of my life i'm doing the right thing i make thousands of trades a year i can make one bad trade that's how you can tell yourself i'll do it just once and never again it never is and really as i sat back i said you know i have no idea who she's talking to she's full of rumors and the big thing here again in writing the book, I realized my whole life, I would tell myself stories about crossing lines.
18:22Back when I got my driver's license, I'd go a little bit over the speed limit because my friend said it was fine. When I was in college, I'm dating myself, there was Napster that came out, did a little bit of that. So all my life, I'm telling myself stories, it's okay to cross that line. And by the time I was 29, I placed that trade. My boss actually said nothing. And so a week later, the deal happens, the stock is up 30 % before the market opens. We're going through our portfolio every morning, 20 stocks. And he says, oh, it's one of those. Keep me out of it. So that's called willful blindness for leaders to think about.
18:55When you see short-term performance in any business, you have to ask what's behind that performance. Just don't make assumptions. Anything goes or try to be willfully blind because then you're actually enabling that behavior. And then it would happen three more times, just because it's exactly like that. But now when the news came out, Ryan, I kind of had my heart rate shut up. I thought, holy crap, this is exact information. And then when my boss said, don't tell me about it, and I knew the other guys were doing it, I hate to say it, but I kind of got an adrenaline rush. Just, oh my gosh, now I'm part of this illicit in-group.
19:28And writing the book, I kind of figured out, I always felt like an outsider. And now I'm part of this in-group who's engaging in this behavior. So that was really the mental gymnastics that were happening at that time. It kind of makes me hate your boss. I mean, it's the first thought of this. Oh, it's one of those. Don't tell me. I mean, I don't know. Maybe I'm just virtue signaling. I could be. I don't know. But what was he like as a boss? Yeah, it was very confrontational. It was a 2007, 2008. So it was really toxic environment. Shouting matches, which is not uncommon in this business. It's high pressure.
20:03It's cutthroat. You have to make money for your investors. We were always blaming each other for the bad stocks because sometimes we would both work on a stock idea. That was your position. That was yours. At one point, he's in my face, our secretary. It was just very toxic. And by this point, he knew what I was doing. And over every trade of the four trades, it was some iteration of, don't tell me how you're getting this information. Keep me out of it. Oh, this is really helping us. And the fourth and final trade, I was at a conference in California. He emailed me, great trade. And he was actually never charged, right?
20:36But he actually knew what I was doing for certain. But that further fueled my rationalizations. He's 15 years older. He's my mentor, not a great mentor, but he thinks it's okay. And so I'm surprised I didn't start buying more stock, more than what I could do, because he's all into this. We could have been making millions. And I just kept it small because I felt I'm just playing along. It's like dropping a penny into Grand Canyon. Nobody would ever know until I found out that morning in New York City, people know. Why wasn't he charged? It's a good question. Today, just so people are aware, he would definitely be charged with failure to supervise his employee who's committing these trades that's a civil case from the sec so in these cases the sec which has a lower burden of proof and the fbi law enforcement has a higher burden of proof because you're actually potentially taking away people's liberties and so today the sec would definitely charge somebody with failure to supervise because i was his only one stock analyst like how did he have that conversation I'll never figure out how he wasn't charged.
21:34Wow. Okay. Okay. So then they got you and they're going to send you to jail or whatever. But there's another option, right? You can help us. You can work with us. Walk me through what's going through your head at that time, the conversations that you may or may not be having with your wife about all of this. I mean, this is what we see in movies, yet this is your actual real lived life. Yeah. So at the Wendy's, we know about your four trades. Tom, we know that you were just down in Georgia visiting your baby nephew for his baptism and they knew his name and he's six weeks old. And so Ryan, my first thought was, oh my God, my dad's going to kill me.
22:13What's he going to say? You know, he just, all our parents can talk about is our success. They don't know what Wall Street or hedge funds are. They just know that, you know, their son's doing really well. That was my first thought. They're going to be very sad about this. I thought, oh my goodness, my wife's going to leave. We just got married. I went through RCIA for her. She's about Catholic, she's going to have a reason to sort of question the marriage. And I thought, oh my gosh, this might impact my career. Oh yeah. Oh my God, I might be going to prison. I start making implicating statements.
22:37Yes, I made those four trades. In fact, I mentioned in the book, two of them, there was a cash payoff situation. The FBI had no idea. And the FBI said, go on, go on. And so they said, I want to stop you right there. Are you aware of this happening? You have the chance to help us. I said, should I talk to a lawyer? They said, don't talk to a lawyer. They're their own incentives to build cases. So they're going to say, I should have watched more Law and Order to understand. I could just take their card, but I was scared. They called me a cab to the office. They told me I could only tell my wife, nobody else.
23:09I immediately violated that. My second confession after RCIA was Tuesday afternoon at St. Patrick's at lunch. I get in line. I had gallows humor. I wrote, like how many other hedge fund people are here in line for a confession? I sat down with the priest and I think he honestly saved my life. He said, Hey, it sounds like 99 % of your life. You know, I started with my life story and I got to the trade. He's like, get to it. And he said, basically, your penance is to help the FBI. Now, I should have talked to a lawyer. I didn't talk to a lawyer for almost two years, but I talked to the priest. And then I said, now I have to tell my wife.
23:43And I waited until Friday, Ryan, after work. Just, I didn't want to see her. I was having panic attacks, bed sweats. And she's wondering what's going on. She's texting me. I said, oh, the market's crazy, which was a good excuse. I'm working so hard. Friday after work. She was working at Lehman Brothers. So people are familiar with that that went to zero. She's under stress. I said, let me go first. Young couple in New York City, a glass of wine before dinner, get a sit down. And I told her everything. Tuesday morning, the FBI approached me. And I remember accepting responsibility. Yes, I made these four trades.
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24:15I didn't try to tell lies or white lies. I just said, I did it. And she said, can you say it again? And I said it again. And she said, you didn't do anything to hurt me. Ryan, 85 % of marriages, I found this stat when I was researching. And more or less right there, because she had every right to leave. Say, I don't know who you are. We just got married. We didn't have kids. You know, it would have been easier just to hoist the sales and say, you're going to be tip her ex, not the future hedge fund manager. No, thanks. It wasn't easy, but she was able to accept it as best as she could that day, which I think really, I don't even want to think about if I was kicked out, what kind of spiral I would have been into.
24:49So I was very lucky that she accepted it. Oh man, what did that mean to you? What does it currently mean to you to have that rock there, especially when you're going through the toughest thing of your life? Yeah, it's, you know, I think about it. I made four very bad decisions on the trades, but I made the most important decision, which I argue for anybody of my life was a good, good decision. We just passed 20 years of marriage, 2025. When I was interviewing her. It's pretty surreal to interview your wife for your memoir. So 2025, I figured I had to interview her for her perspective. And I said, what was it like for you?
25:23And she sort of set me straight. She said, Tom, thanks for asking because you never did. And she was correct. You know, I was so consumed with myself. Once my name became public as Tipper X, this FBI informant, I was so concerned with myself. And she was like, hello. I was here the whole time with the kids going to work she was holding down work well I couldn't work I blew a complete hole in our family financials because I couldn't work and we had bought the house on double income you know we had we were trying to stay positive and I just felt like I just couldn't believe how she handled it so well just interviewing her just last year for something that happened quite a long time ago and she said you know we've had good times we had tough times but we never had bad times so what do you mean by that she said well that times we would have turned to each other, I would have moved out.
26:10So we had tough times, but not bad times because I knew who you were. And so I hope people see you. The real hero of the book is not me. When you make those four bad decisions though, wouldn't it erode trust? I know you didn't do anything to her directly, but you did make bad decisions. And some would say, I might say this, well, if you could make bad decisions there, you're going to make bad decisions in other places that are really important and that can be a tough thing when it comes to the foundation of a relationship which is trust oh 100 100 and i think that's usually why the marriage ends because if you cheat here and sort of it's a lie of omission you know not not mentioning it where else would he be cheating and so you're to your point i think that's why most marriages dissolve because then the trust is lost in the marriage and i had to work hard you know again interviewing her my wife last year She said, all I remember is you accepted responsibility immediately.
27:05You didn't make up excuses. And so that was just, I guess, a feather in my cap. But it was rocky. She was able to work, thank God. But as I wrote, I was a stay-at-home dad at some point. We started our family. I was still in a shame spiral. There was one point where I saw there was a major bank years later who was laundering money for El Chapo. Nobody was arrested, no felonies. They just paid a fine. And I said, Sue, can you believe this? These people were laundering money for El Chapo in New York, and they're going home to their brownstones. And she said, hey, is that helping you find a job? So talk about a woman that can just put you back in your place.
27:41That's what I needed to. You go on to wear a wire. What are those conversations like? Where are you going? Where are you meeting these people? I'm thinking of goodfellas, you know, and they really speak poorly around about the snakes or the people who help the FBI. You know, I don't know what that's like. I'm fascinated. What is it like putting on a wire and going to have a conversation knowing the FBI is listening and knowing you might help put this person away? I mean, man, what was that like? So I told her Friday and I said, Monday, I have to have lunch with the FBI. I had my first lunch with the FBI after the Wendy's meeting.
28:15There was a small piece of metal on the table. And I was just so naive. I said, is that an extra BlackBerry battery? And they were probably looking at me. No, this is a recording device. This is a body wire. They said, yes, we want you to help us build cases. It's going to help you out. And they played up to my patriotism. You're doing this for your country. It wasn't for that. To be honest, it was just to help myself, just to maybe not have dire consequences at sentencing. But it was a weird situation because I had to build relationships with people. Usually somebody that wears a wire in a case, you would have to think about, would I wear a wire on a friend?
28:50There was one case where a guy wore a wire on his best man at his wedding. I'd like to think I wouldn't do that. But the woman that tipped me and the guy I had tipped, I had already won a wire on me. So I said, how do I help you? And they said, who are the worst actors? Now, Tom, here's your opportunity to help us. And so I just went with that. Hey, if I can help them, maybe it's something positive I could do. But I ran around. My first meeting was this guy in Silicon Valley. He would sit down. I would just get right to the point. Nice to meet you. Remember three years ago when you made those illicit trades?
29:21If you were a target, Ryan, why is this guy asking me these questions about crimes I committed? I just met this guy. The FBI would be at the table next to me because they wanted to make sure I wasn't sliding you a piece of paper. Hey, I'm wearing a wire. Don't talk to me, which would be obstructing justice. And so the guy would leave. I gave them the device. The next day, they'd say, Tom, you did a terrible job. And I'm like, guys, it's my first time doing this. There was no training in ethics class about wearing a wire. and eventually the coaching I got was ask a question and then be silent. I would always ask a question, the target would not say anything and I would just fill it.
29:56They said, ask a question, be silent. And then eventually by the third meeting, people would just start saying enough, oh, I have a contact inside this company and they often looked at me as the younger version of themselves and they were going to groom me into somebody who could be helpful for them. And the FBI would say, you're done here, go on to the next one. But I could get to the scariest moment too, where there was a guy high up the FBI's list who got me in 15 conversations. He would say nothing. He would always change the subject. I felt the wire must be huge in his eyes. He calls me Sunday afternoon and he said, Tom, we need to have dinner tonight.
30:34We need to talk. I called the FBI. I said, this guy you want wants to have dinner on a Sunday. They got excited. They met me at the train station in Manhattan, gave me the wire. I took the train up to Connecticut. he picks me up at the train station and he says, Tom, good to see you. I brought swim trunks for you. We're going swimming at my mother's house. And the Sopranos, that was the final season that summer. So all these ideas are going through my head. I played a cool guy in his car, said, let's go swimming. We drive to this old mansion in Connecticut. He starts disrobing in this room. He wants to see if something's taped to my chest.
31:08It was in my front pocket. Now I'm about to have a heart attack. I excused myself, went to the restroom. I took the wire up, put in my jeans, put these swim trunks on. So the two of us are walking out to this pool. It was so quiet. I saw a shovel against the house, a hole in the ground. I thought, oh my God, is this guy gonna try to kill me or something? And he was just having landscaping done. And we got in a swimming pool and he grabs a tennis ball. We're playing this awkward game of catch. So he's pouring it on. And after a while, he said, Tom, he spoke to a lawyer. He has one question for me.
31:38I was gonna give it up, Ryan. I just wanted to go home. He said, Tom, have you been approached by the SEC, which is the regulator? And truthfully, I could say, no, not the SEC. I was paltering. So I was trying to give him a hint, not the SEC. And he said, okay, I just had to make sure you weren't wearing a wire. Sorry about that. He starts telling me everything. Of course, it wasn't recorded. And the FBI later would say, we can't use anything because it wasn't recorded. That guy was actually never charged. I couldn't believe it. He was one of the worst actors. So they arrested 81 people. There was another two dozen, I was shocked weren't even arrested.
32:10Oh my goodness. So this is just rampant. Yeah, it was everywhere. How do you think it is today? Today, I think it's better. I've been sharing this story for compliance training for nine years, so hopefully it's better. But I would be surprised if 20 hedge fund people were in handcuffs today in New York City. But I think what I see is the new behavior is often ahead of the stock market police or the regulator police. So today, with prediction markets, a couple of weeks ago, So we saw somebody make$4 million making a bet that we were going to get the Venezuela dictator. And so that was somebody who they think had information.
32:45So I think insider trading, it's one of the oldest economic crimes ever. It goes all the way back to the founding of the New York Stock Exchange in the 1790s, the first stock that was insider trading. So it's like the longest economic crime. I just think it goes to new prediction markets. I think that's a wide open area for insider trading if they want to bring cases. what happens today too is the bad actors and the stocks are more like organized crime sometimes, whereas my case, the woman calls me, I trade. That's an easy one. The harder ones are maybe even involving hacking or cybersecurity where information is stolen from public companies and traded on by organized networks.
33:25The SEC's budget's maybe$2 billion to prosecute. But when you have all these bad actors in the world potentially doing this, it just becomes an issue of resources. So the easy cases are brought, the much more complicated cases, sometimes there's just not a push to go for those cases. What about when you see people tracking politicians and what they're doing? It seems like it would be illegal, but their track records of their net worth growing a ton when their salary is, you know, 150 grand or whatever is wild. Like, what do you think about that? I think it's probably the most like disgusting behavior.
34:00Xavier, I see this when I speak at a conference, they'll say, they got you for four trades. What about XYZ politician? And it's on both sides of the aisle. For sure. And you'll see it. And what happens is they'll trade the stocks or the spouse will trade the stocks like Paul Pelosi will trade the stocks with Nancy Pelosi. And there's a stock act. It's only a$250 fine they have to pay. And it's like, all right, let me do the math. I'll make$4 million on NVIDIA call options to pay a$250 fine. and the Congress people can actually trade the stocks with the committees they're on. So Dan Crenshaw, he was on the meta TikTok thing a few years ago, trading meta stock, and he's on the committee.
34:38How is this even allowed? And so what I think has to happen, and I hope one of the big things from my book when it comes out is to have a bigger platform to talk about these issues. We have to find a bill to pass to stop Congress from single stock trading. 86 % of Americans agree on nothing. They actually agree in a poll that Congress should not be able to trade single stocks. So I hope I just have a bigger platform to actually write the bill and give it to a Congress person to get it through. What happens, Ryan, is they have these 25 bills the last 12 years to stop this. It never gets to the president's desk.
35:10Every bill has a stipulation. If you own shares in a private business and you're running for Congress, you have to somehow monetize your private shares. And like, well, why would I run for Congress if I have millions of dollars in a private business and we want more business people, I think, and less career politicians. So that has to be taken out. So I actually have it all written up. If I can just get it out there to people, I'm happy to talk. Oh, I feel like that one would be popular with, I think, just everyday Americans. We don't like the thought of people cheating. I mean, that's what it is.
35:46And that doesn't feel good for everybody else. So I think that makes a lot of sense. Shifting again back to leadership and personal excellence. And I think when you're going through all this, you start running is what I'm reading about, right? Like punishing your body in a way, running lots and lots of miles. You start with short races and you end up with really, really long races. How has running helped you? Yeah. So at the time I got quite heavy for my frame. I was always standing up until like classic guy, mid thirties or something, and then not doing anything. It catches up. And I had a point where I was a stay at home dad in this saga.
36:20And I was carrying my daughter up the stairs and out of breath. and went to the doctor. And of course, I hadn't been a typical guy since college. You know, I'm 32 years old and he does the blood work. He says, oh my God, you're obese. And what? Like I'm saying, no, you're obese and your blood work's awful. What's happening? And so I told him my whole story for the first time. And I told my wife and she, again, she said, hey, you know, I used to be a soccer player through high school. Like, I'm going to sign you up. Maybe you have some endurance. So she signed me up for a 5K race. I think just even crossing the line at the 5K and she beat me pushing the jogging stroller.
36:50It just lit a fire. like, oh my gosh, I accomplished something. Like I just felt I was in such a shame spiral, but then it became sort of a mania for me. 5Ks went right to marathons and marathons became ultra marathons. I got up to the point when I was riding, I went back at my running logs. There was weeks I was running 140 miles. I was downloading Olympic training plans for Runner's World and saying, I can do this. And I would run twice a day. But also Ryan, as I was thinking about this, I was using running as a crutch to not have to deal with like what I had to deal with. So Sue would come home.
37:22How's the job search going? I got a race to train for. I've got this ultra coming up. So in many respects, I got very fit and that was good. And it got me out of my own head, but also it wasn't helping me move forward. I was doing way too much of that. I wrote in the book, this first hundred mile race I did was around a one mile loop. You think about what kind of headspace I was in to run a hundred miles around a one mile loop. I don't know. Like I read Dante's Inferno. It was probably one of those nine circles of hell I was doing right now. and you pass your car every time. And by mile 78, everything's breaking down.
37:55I had rhabdo where really things are breaking down in my body. I said, I'm done. I popped the trunk to the car. There was an air mattress. I said, I'm going to just take a nap. My race is over. Sue had left a note there. And she said, we didn't sleep on you. You can't sleep on us. And so I closed the trunk, finished the 100-mile race. And we were talking earlier about how she even stayed with me. That was just a proof point to me that she's going to stay with me, but only if I get my act together. After that, I said, I'm never doing ultra marathons again because I was not doing it in a healthy way.
38:27And now I just run for fitness. So it's a much more healthy relationship with running. Seems like you're a guy of extremes. Is that accurate? Yes. That's 100%. That's what my wife says all the time. Yeah, that's right. So how does that help you and how does that hurt you? Even looking back, as I was writing the book, just I had this tremendous ambition coming out of from Georgia, like unbridled ambition. I applied to this Ivy League college. Nobody from my high school ever went to an Ivy League college. And then I got deferred and I started making up business clubs. I was the president enough just to get in.
38:56So I had this unbridled ambition that eventually caught up with me in my career. Today, I would say I'm much more aware of that. And so I try to check myself when I'm getting a little bit too crazy about the newest thing, whatever that is for me. And so I just try to have a little bit more balance in my life. But I also, I'm of two minds because I think a very balanced life is boring. And I want to have something that I'm really obsessive about, but I don't want it to be the detriment to my other relationships or my other pursuits. So it's an ongoing process I'm working through. I run less and now I'm into master's boxing.
39:32And this is just something new for me, like combat sports and Tom did not mix. And so I've never, ever thrown a punch in my life. And boxing, you learn how to do all that. But I have a better relationship just, I guess, with my new sports or my new endeavors to try to have some balance, but also to be challenged. There's nothing like doing hard things because you learn so much about yourself. So that ultra marathon, there was negatives, but I also learned so much about myself that I can do things. And maybe when it got to the point in the book where I had to start a speaking business because we were running out of money, I said, I can do this.
40:03I can actually accomplish things because I put my body through that. So it's trying to find a balance, but I don't have a great answer. How does doing, I'm a firm believer in this, so I want to hear from your perspective, but I think doing hard things can create portable lessons, meaning you could take what you learn from whether it's a marathon, ultra marathon, getting punched in the face regularly as you're doing now. How does that help you? How is that portable to other areas of life? I think it just it shows me that no challenge is insurmountable I just like the growth that I feel when I try to take on something that seems insurmountable like I told my running group you know guys I'm tired of training for marathons I think I want to get into something else oh do you want to go cycling top no I think I want to get punched in the face like what like yeah because that is the most uncomfortable situation I could ever imagine being in but then the learnings from that it's a little bit like not a drug but a little bit like okay what's the next hit I can go after to have that feeling of just accomplishing something or just taking on something.
41:05So it's interesting that we're talking about this because I don't really think I have a fully developed idea in terms of what this is going to lead to. But I just know, I feel like I learn and grow a lot as a person. I just can't be status quo, not challenging myself. Are you ever scared though? I mean, you wore a wire a lot. Do you ever kind of look over your shoulder and say, hey, you know, I know this isn't Sopranos or Goodfellas, but I don't know. That's what I think of when I think of wires. You ever have those feelings? I was concerned. So back to the Tipper X story, I did this for two years and eventually I didn't know it was leading anywhere.
41:40Classic FBI agents, no feedback. 2009, they said, turn on CNBC, Tom. 20 people are in handcuffs in the middle of the Wall Street Journal. All their names are out except for one name. And they called that name Tipper X. I didn't know I was Tipper X. I'm an analyst, so I figured it out. Oh, it's probably me. And so I was scared that day, Ryan, because I thought these people are of means. I mean, they could pay somebody 5 ,000 bucks to do something bad to me and be nothing to them. And my name became released two months later. I got some threatening calls, emails. I always boarded those to the FBI to look into, and they said, oh, you're fine.
42:14So I actually just trusted them. I sometimes Google people in these cases, and most people, actually, it's interesting, have scrubbed anything bad about them. There's a way, I guess, to do that now off the Google. and I get these reputation management emails all the time now from AI bots. Mr. Harden, we found something bad about you on the internet for a certain price. I'm sure they would take it off. I have some fun. I reply and say, here's tipperx.com. Here's all the bad stuff. What do we do? And they couldn't figure out how to play with them because why not own it? Why not try to help people?
42:46I can't change the past, but I can have a windshield mentality where I'm only looking forward and not in the rear view mirror and actually late. A lot of people in their 20s do stupid stuff. Now, maybe not to this degree, but now in my 40s, I can look back and say, there's actually a lot of lessons I can learn. We mentioned with my kids, why not just embrace it rather than try to scrub it off the internet. And right in the book, one of the big things I figured out was the integrity gap between we are so focused on our reputations, whether it's social media or companies have reputation management they spend millions on, when we often neglect our character.
43:19And reading Stan McChrystal's book last year on character, He talks about that more. And I thought, oh my goodness, I would love to have Stan read my book. I cold emailed him. 28 hours later, he responded. He had read the whole thing and gave me a phenomenal endorsement. It was just an amazing moment for my life, kind of a full circle moment in my life to be able to get somebody of that status to actually read the manuscript and understand it. So that's something I call the integrity gap in the book. Your reputation is what people think you are. Your character is what you are. And that gap, those rationalizations we talked about often fill that gap and try to close the gap over time.
43:54When you think about your character, what are some of the things you do intentionally to live and lead a high character life? So one of the things I'm very attuned to is anytime today I'm rationalizing a decision, because I went through that in a very negative way as a young man. And so when my wife and I have big decisions to make or even little things, I have like a rationalization journal. So I don't really call it a daily journal because it's not daily, but I'll write those down and maybe once a month reflect on those and why did this pop into my head? What did I do about that? And what can I learn from it?
44:33And that's just checking myself in terms of everyday decisions. Because I know even having gone through this, I'm still susceptible of going down another type of slippery slope. Hopefully it's not a federal crime, but it could be something else in our life with our family. And if I'm not just sort of meditating on that a little bit and thinking about those rationalizations, I think for me, that's going to just improve my character over time or just make me more attuned to that, those passing thoughts in my head. Let's say you were teaching a class at an Ivy League school like you went to, and it was titled, Being an Effective Leader.
45:12You've learned from ineffective leaders or leaders with low character. Now that you've had this exposure and these experiences, I would love to hear what are some of the topics of that class you'd be teaching of being an effective leader? What would be on that syllabus? I think for me, some of the most effective leaders I've had the opportunity to engage with their teams, I would say they're almost like servant leaders where everybody can speak up, hey, I'm just another person at the company. Leadership is not so much by the title as it is by just how the person behaves. So I would just say, these are my mandates for the company, but hey, please speak up.
45:48If you have questions or disagreements, we're all on the same team here. You have to create that psychological safety inside the organizations so people can actually check you. And as I do in my workshops, we'll just workshop this where a leader has a new goal. And then the table, one table works as their biggest competitor. So how are they gonna challenge that? And then one table works as like the junior employees challenging that. And so we go around the tables, we have them challenge the leader and it's a control safe environment. And that my hope is that actually sort of changes behavior going forward in a good way.
46:23And also going back to our earlier conversation about what culture is, it's not what you say, you know, even us as parents, our kids actually see what we do, not what we say. And it's the exact same thing, what your behaviors are as a leader, what behaviors you're rewarding and incentivizing not what you say, it's what you do. I love that element of rewarding the ones who are doing it right, especially in corporate America. One of the companies I work with called Insight Global, it's cool that I just thought of them when it comes to this. They do this giant Titan trip. And to be a Titan, it has nothing to do with your financial performance.
47:00It has everything to do with living out the company's shared values. And they spend an insane amount of money on this Titan trip. It just happened. So it's top of mind. I was talking with one of the leaders who were there. And it's amazing to see these people celebrated for living up to the shared values. And I think that's something all companies can learn from is that's legitimately putting millions and millions of dollars behind something that doesn't necessarily have any... Now, I bet those people probably do well and add revenue to the company because they're living out the values, but that's not why they're there.
47:38They're there specifically because of that. I think all companies, and I'd be curious to hear what you think about this, all companies would be better served if they really care about high character and living out those values of doing things like that, where you're honoring those people who live them out. I think that's 100 % correct. You can't just be, again, ambiguous messages or just focused on short-term performance. Just focus on what the dollar goal is. you have to understand how the business was made, what was behind the performance. You also have to, I think as a leader too, share your own sort of ethical dilemmas that you've worked through in your career.
48:14Because we've all been in situations where we could make decisions to go left or right. And then how did you work through that as a leader? You have to be, but that also takes vulnerability. And sometimes people don't want to be too vulnerable in front of their people. But I think that makes you more endearing and a better leader to actually share your own flaws or just decisions that you made or bad mistakes or bad decisions you've made through your career because then it's all learning for employees. But I think you're correct. We can't just, and because I came from financial services, I think there's so much more focus on what's the number, what's the revenue, what are we producing for clients, and not so much a discussion as to how do we actually get there.
48:46Because how you get there is sort of like the sustainability of your career. If you're just focused on the short term, just the numbers, you have the opportunity to potentially get in a situation like me. It could be a totally different facts and circumstances, but it could be the same type of slippery slope. I was reading the end of your book, a business school professor calculated you would have made $23 million if you'd stayed on the hedge fund path. Your daughters joke with you about it. You're on a cruise ship and you're right. But I ended up with something better. What is that? Yeah. Something better is I ended up not with the life I had planned for.
49:20I had planned my whole life coming out of high school, Ivy League, hedge funds. That was all the plan. And that was going to be a hedge fund billionaire, like the people I read about in magazines. And then in the end, I got something better because it's not about the status. It's not about the money. It's about really just who I am with my family, with my relationships now. And it's not so much about status and money. And I speak at that professor's class every year. And it's good for the students to see that. But it does make my stomach turn. I mean, you're a human being. It's not comfortable to see that every time.
49:52but it's a good example for the students because me personally on those four trades, I made$46 ,000 and the students all look at me. So 23 million,$46 ,000 to throw your career away. Why'd you do it? And, you know, we walked through all the, the rationalizations, but I think today that's kind of where I am. Anybody in your forties, your priorities change from your twenties, but I just have a, a longer view on things now. And one of the most important books I read in this process was Road to Character by David Brooks. And he talks about eulogy virtues and resume virtues. And I realized, wow, in my 20s, I was just thinking about those resume virtues, how much money this year, the next job, the next stepping stone.
50:34I never was content to just say, I'm in a good place now. I was always striving. And I never thought about the eulogy virtues. What are people going to say about, we talked about character at the end when it's all over, because we all leave one way. Will people still be talking about four trades about 29-year-old Tom? Or whenever the day comes for me, what people obviously say, something about the eulogy virtues is something I think about too today, now in my life. The book is called Wired on Wall Street, The Rise and Fall of Tipper X, one of the FBI's most prolific informants. Tom, thanks so much for being here.
51:07Where would you send my viewers, listeners to learn more about you online? Thanks, Ryan. TipperX.com, I just found out in the US Patent Office, I have a trademark now on Tipper X, so there can be no more Tipper Xs out there. And I'm very active on LinkedIn, and writing, not just sharing my story, but just sharing a lot what we talked about today, Ryan, about slippery slopes. Just I hope leaders can read my little newsletter on LinkedIn and get something from it every week. I try to write every Monday. Awesome, man. Well, I appreciate you and your team sending me over early copies of the book. I had not heard the story prior to this, and I just thought, what is this?
51:40So it was really cool to see that you just kind of lay it all out there. I appreciate that very much. It was eye-opening and enlightening. and the fact also that you're super vulnerable with all of it, just willing to share for the benefit of others and helping. And certainly you're building a career and getting after it. But I found that to be endearing and helpful. And it seems like you're as straightforward as it gets. So thanks so much for being here, man. I'd love to continue our dialogue as we both progress, man. Absolutely. Thanks for having me, Ryan.
52:13It is the end of the podcast club. Thank you for being a member of the end of the podcast club. If you are, send me a note, Ryan at learningleader.com. Let me know what you learned from this great conversation with Tipper X, Tom Harden. A few takeaways from my notes. Think of somebody on your team who does it the right way, who lives out your values and recognize them publicly, shine a bright light on their specific behaviors. That is how culture is built. It's by celebrating the people who do the right thing the right way, even if it costs them or the company from time to time. Find someone perhaps who lost the deal but did it because they refused to cut corners.
52:59That's why I shared that Insight Global story of the Titan trip. I love seeing the Titan celebrations. It's all about the people who are living the shared values and then celebrating them in a huge way. Then the difference between mistakes and bad decisions. Mistakes can be accidental. Bad decisions are intentional choices that go wrong. They are bad decisions. I like how Tom replied to that question. That language, it changes how you coach, how you hire, how you fire, how you build accountability. Tom uses it with his teenage daughters. You can use it all the time, whether it's at home or at work.
53:40And then start a rationalization journal. I've never heard of this. I've heard of gratitude journals or daily journals or Matthew Dick's homework for life, but a rationalization journal is different. Tom keeps one. When you're about to make a decision that needs justifying, write down the justification. If you're working really hard to explain it to yourself, then maybe that is a warning sign. I want to say thank you so much for continuing to spread the message and telling a friend or two, hey, you should listen to this episode of The Learning Leader Show with Tom Harden. I think he'll help you become a more effective leader because you continue to do that and you also go to Spotify, Apple Podcasts, subscribe to the show, rate it hopefully five stars, write a thoughtful review by doing all of that.
54:27You are helping me do what I love on a daily basis and for that, I will forever be grateful. Thank you so, so much. Talk to you soon. Can't wait.
54:43We'll see you next time.
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My guest: Tom Hardin was known as "Tipper X" during Operation Perfect Hedge, the largest insider trading investigation in history. After making four illegal trades based on inside information, the FBI approached him on a Manhattan street corner and convinced him to wear a wire over 40 times, helping build 20 of the 81 cases.
Key Learnings
Ambiguity is where ethical lines blur. Tom's boss said, "Do whatever it takes," after the hedge fund lost money, and as a junior employee, Tom didn't ask clarifying questions.
The undiscussable becomes undiscussable. Leaders give ambiguous messages, then pretend they weren't ambiguous, employees get confused and don't question the boss, and you end up with a culture of silence.
Making decisions in isolation is dangerous. The information came to Tom and he didn't talk to his boss or his wife (who probably would've slapped him around for crossing ethical lines).
Psychological safety requires muscle memory. You have to practice saying "I'm just going to ask some clarifying questions here" when your boss gives ambiguous orders.
Bad decisions aren't mistakes. Mistakes are made without intent, but bad decisions are made with intent. Tom told himself for years he made "mistakes," but on a drive home from speaking at a keynote, he realized: "There's no way I made mistakes. I made bad decisions."
Never say never. Tom argues you're more susceptible to falling down your own slippery slope when you think "that would never be me."
80% of employees can be swayed either way. 10% are morally incorruptible, 10% are a compliance nightmare, and 80% can be influenced by the culture around them.
Tone at the top means nothing. Company culture isn't the tone at the top or glossy shareholder letters; it's the behaviors employees believe will be rewarded or put them ahead.
Reward character, not just results. You can't just focus on short-term performance and dollar goals without understanding how the business was made and what was behind the performance.
The question isn't "what?" but "how?" If you're just focused on the numbers and not on how you got there, you have the opportunity to end up in a slippery slope situation.
Celebrate people who live your values. Companies that spend millions on trips for people who live out shared values (not financial performance) are putting their money where their mouth is.
Leaders must share their own ethical dilemmas. We've all been in situations where we could go left or right, and sharing how you worked through those moments makes you more endearing and a better leader.
Keep a rationalization journal. When Tom and his wife have big decisions (or even little things), he writes them down in a rationalization journal and reflects on them once a month. He's still susceptible to going down another slippery slope, so checking himself on those passing thoughts improves his character over time.
It's not what you say, it's what you do. Just like kids see what parents do (not what they say), employees see what behaviors leaders actually reward.
$46,000 cost him $23 million. A business school professor calculated Tom would've made $23 million if he'd stayed on the hedge fund path, but he made $46,000 on the four illegal trades before getting caught.
His wife was his rock. 85% of marriages end when something like this happens, and she had every right to leave. They just got married, no kids yet. But she stayed. When Tom interviewed her for the book 20 years later, she said, "All I remember is you accepted responsibility immediately. You didn't make up excuses."
Running pulled him out of a shame spiral. Tom got obese as a stay-at-home dad. His wife signed him up for a 5K race (and beat him while pushing a jogging stroller). Just crossing that finish line lit a fire. He ended up running a 100-mile race.
Doing hard things teaches you that you can do hard things. When Tom had to start a speaking business because they were running out of money, he said, "I can do this" because he'd already put his body through ultramarathons. No challenge is insurmountable.
He ended up with something better. It's not about status or money anymore; it's about who he is with his family and his relationships now.
Windshield mentality, not rearview mirror. Tom can't change the past, but he can look forward instead of backward. A lot of people in their twenties do stupid stuff (maybe not to this degree), but now, in his forties, he can learn from it. Why not embrace it rather than try to scrub it off the internet?
Eulogy virtues versus resume virtues. In his twenties, Tom only thought about resume virtues (how much money, the next job, the next stepping stone) and never about eulogy virtues (what people will say about his character when it's all over).
What will people say at your eulogy? Will they still be talking about those four trades, or will they talk about who you became after?
More Learning
#226 - Steve Wojciechowski: How to Win Every Day
#281 - George Raveling: Wisdom from MLK Jr to Michael Jordan
#637 - Tom Ryan: Chosen Suffering: Become Elite in Life & Leadership
Reflection Questions
- Tom's boss gave him an ambiguous message ("do whatever it takes"), and as a junior employee, he didn't ask clarifying questions. Think about the last ambiguous instruction you received from leadership. Did you ask clarifying questions, or did you fill in the blanks yourself? What's stopping you from creating psychological safety to ask next time?
- Tom argues that 80% of employees can be swayed either way by culture. Look at your organization right now. What behaviors are actually being rewarded? If someone asked your team "what gets you ahead here?" what would they honestly say?
- Tom asks: "Will people be talking about the resume virtues (money, titles, achievements) or the eulogy virtues (character, relationships, who you were) when you're gone?" What's one eulogy virtue you need to start prioritizing today, even if it means slowing down on resume building?
