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The Battle for Wall Street: Behind the Lines in the Struggle that Pushed an Industry into Turmoil
By Richard Goldberg
Wiley, 2009, 240 pages
$19.77 hardcover, $15.82 Kindle

A conflict of epic financial proportions has begun on Wall Street. The opposing forces are (a) the sellers, an army of commercial and investment bankers, some of the more prominent of which were humbled into restructuring as commercial banks; and (b) the buyers, an army of hedge fund managers and private equity groups. It is a battle to dominate the market known as the investment community. Goldberg, a Wall Street veteran, describes the strategies and steps he thinks will create future winners.

Nerds on Wall Street: Math, Machines and Wired Markets
By David J. Leinweber
Wiley, 2009, 353 pages
$26.37 hardcover, $21.10 Kindle

Leinweber, one of the Wall Street quants who developed electronic trading innovations, gives a humorous (sometimes silly), inside look at the technological revolution in equity trading. The author is a founding director of the Center for Innovative Financial Technology at the Haas School of Business, University of California at Berkeley.

“This is a delightfully entertaining romp across the trading floors and through the research departments of major financial institutions, told by one of the early architects of automated trading,” says Andrew W. Lo, professor of finance at MIT Sloan School of Management

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Den of Thieves
By James B. Stewart
Touchstone Books, 1992, 587 pages
$11.56 paperback

Pulitzer Prize-winner Stewart tells of the biggest insider trading ring in Wall Street history, during the 1980s, centering on arbitrageur Ivan Boesky and junk bond king Michael Milken (of Drexel Burnham Lambert). Both of them seem stranger than fiction. Also in the ring were Drexel financiers Dennis Levine and Martin Siegel. The first half of this 1992 bestseller lays out their get-rich schemes, and the second half tells how prosecutors nailed them.

The Predators’ Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders
By Connie Bruck
Penguin, 1989, 400 pages
$10.88 paperback

During the 1970s and ’80s, workaholic billionaire Michael Milken at Drexel used junk bonds, among other inventive tools, to fuel a generation of corporate raiders. In once scene, Milken raised $1.5 billion in 48 hours to finance Carl Icahn’s takeover bid for Phillips Petroleum. In 1988, the SEC charged Milken and Drexel with insider trading and stock fraud, and the U.S. district attorney followed with criminal charges.

The author Bruck, then a reporter for American Lawyer magazine, tells a good story, but her marshalling of evidence against Milken is sloppy. Drexel claimed, after the book was published, that it had not been given enough time to review the manuscript and respond to numerous errors before the book was rushed into print.

Wall Street (20th Anniversary Edition, 2007)
Starring Charlie Sheen, Michael Douglas, Daryl Hannah, Sean Young
Directed by Oliver Stone
20th Century Fox, original release 1987, 126 minutes
$13.99 for DVD

Bud Fox (Charlie Sheen) is a bright, blindly ambitious young Wall Street broker who, on the strength of an insider tip, gains a spectacular career and a trophy girlfriend (Daryl Hannah), but loses his soul. It’s also about Fox’s mentor, the ruthless Gordon Gekko (Michael Douglas), a corporate raider whose definition of “rich” is having your own jet. Oliver Stone, the director, “gives us a tantalizing peek into the boardrooms and bedrooms of the rich and powerful,” wrote Vincent Canby in a review. Douglas plays Gekko with wit and charm, eliciting cheers when he says in a speech to stockholders of a takeover target that greed is what made America great.

Stone condemns “a system that creates paper profits at the cost of diminishing products, services, and jobs,” wrote Canby. “But ultimately, his wit fails him. The movie crashes in a heap of platitudes that remind us that honesty is…the best policy.”

Douglas won an Academy Award for best actor in this role. Hannah earned a Razzie for worst supporting actress.

The lesson of these two books, from a small investor’s perspective, is that the market is rigged in favor of people with inside info. Always assume analysts have conflicts of interest. (Click on the book images to see more details or to purchase.)

Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors
By Charles Gasparino
Free Press 2005, 368 pages
$17.95 hardcover, $14.30 Kindle

In the booming 1990s, stock analysts Jack Grubman, Henry Blodget, and Mary Meeker issued buy recommendations for the stocks of certain corporations. Those stock values soared, and kept soaring. So did the prestige, celebrity, and salaries of Grubman (at Salomon Smith Barney and later Citigroup), Blodget (Merrill Lynch), and Meeker (Morgan Stanley). Then the tech bubble started to burst, and they saw it coming, but they continued to give high ratings to, let’s see, the tech companies that brought their investment banking business to Salomon, Merrill, and Morgan. When those stocks tanked, the deceptive practices of the analysts were laid bare. SEC chairman Arthur Levitt looked the other way while investors lost billions in stock value.

A little-known attorney general from New York named Elliott Spitzer stepped in to hold Wall Street accountable—for a while. Charles Gasparino, who broke this story in the Wall Street Journal, tells it here in fascinating detail, in an understated style that nevertheless evokes outrage.

Confessions of a Wall Street Analyst: A True Story of Inside Information and Corruption in the Stock Market
By Daniel Reingold, Jennifer Reingold
Harper 2007, 384 pages
$11.16 paperback, $9.56 Kindle

“Confessions” does not accurately describe the substance of this book. The author (a Wall Street analyst from 1989 to 2003) did nothing wrong, so he had nothing to confess. What he does is gripe about the analysts (mainly his competitors) who did things wrong, like insider trading and sellout analysis. He hammers home the lesson that “insider influence is so pervasive in the financial markets that investors should avoid individual stocks completely” (Publishers Weekly).