Fiasco

F.I.A.S.C.O. is an insider's diary, a shocking education in the jungle of high finance in the 1990s from New York to Tokyo.

It tracks the progress of a young Morgan Stanley salesman as he learns the ropes of this sophisticated jungle, where billions of dollars are lost in the creation and trading of securities so unlikely and so complicated that almost nobody - certainly not the unwary or undereducated buyer - understands them. And some of that money, whether you know it or not, may be yours.

Frank Partnoy's journey is partly comical, and full of incredible characters, but what he learns should stir fear in anyone who owns mutual funds, stocks, or even insurance.

Partnoy's colleagues sharpen their killer instincts at an annual drunken skeet-shooting competition called F.I.A.S.C.O., the Fixed Income Annual Sporting Clays Outing.

Against well-trained derivatives salesmen, buyers don't face much better odds than a clay pigeon, and the actual fiascoes involve billions of dollars of well-publicized losses at Orange County, Barings, Procter & Gamble, and many others.

In 1994, when the author attended F.I.A.S.C.O., and when the first big derivatives losses hit, the rallying cry at Morgan Stanley should have struck fear into the heart of any investor: "There's blood in the water.

Let's go kill someone." Partnoy's story shows how Morgan Stanley's sales force put that advice to work.