[In]Securities Guest Blog: Get What You Need by Aegis Frumento Esq

April 30, 2020

Get What You Need

Now that, maybe, we are on the distaff side of the coronavirus curve, all thoughts are bending towards "reopening." Everyone now agrees that reopening will be more like turning a dimmer than flicking a switch, which necessarily raises the question, Who reopens what, when? That turns on which business is more or less "essential" than another. This is not going to turn out to be an easy exercise.

Something is said to be "essential" to a thing if that thing can't be the same thing without it. There is an entire branch of philosophy, called, funnily enough, "essentialism," that deals with this question, and it's a thorny one. For example, what's essential to an airplane? That it can fly? Then consider the pilots lounge at Greenwood Lake Airport in West Milford New Jersey. It consists of an entire late-50s Lockheed Constellation turned into a bistro. http://www.greenwoodlakeairport.com/pilot-lounge/. Is it still an airplane? Maybe. It would fly if you refurbished it. Except that the runway at Greenwood Lake Airport is too short for a plane that size to take off from. But it could fly off if you extended the runway. Except that you'd first have to lower the height of a cliff that sits at the end of that runway. How many "ifs" must we suffer before we stop calling that particular Constellation an airplane? Or is it enough that it theoretically could fly, even if practically it never will?

Or how about this one: What makes a swear word? Is it the sound of the word or what it means? We are all used to hearing on late-night television various words being bleeped, but whenever we hear the bleep our brains automatically fill in the blank. Has the bleep accomplished anything? In the mid-2000s reboot of Battlestar Galactica, a particularly common expletive was replaced in the dialogue by the word "frack," which was then used liberally throughout the series. More recently, The Good Place did the same thing, substituting the word "fork.Those word substitutions showed how silly censorship has become. The taboo word was never uttered in either show, and yet we all heard it in practically every scene of every episode. Meanwhile, over on HBO, the original word ranges free. What the frack's the difference?

In the various discussions about which businesses should reopen, we start to glimpse of what might be "essential" to our post-Covid lives. It's more than the skeleton crew of businesses allowed to stay open during the pandemic. Shakespeare supposedly wrote King Lear while himself under quarantine. Perhaps channeling his own strain from being unable to hit the pubs, he had Lear's evil daughters question why he needed a retinue of servants. "What need one?" asks Regan, foreshadowing Marie Kondo. "O, reason not the need," Lear answers. "Allow not nature more than nature needs, [and] man's life's as cheap as beast's." Quite so. Unlike beasts, man lives not by bread alone. Or wine (no business more essential than liquor stores!). But what more do we need?

I can see how casinos are essential to Las Vegas. Vegas surely would not be the same without them. I suppose industrial abattoirs are essential even if they are viral hotbeds. Gotta keep the White House in burgers, after all. I could guess that gun stores were essential to Floridians, but who knew tattoo parlors were essential to Georgians? Still, who am I to judge? After all, do I really need a thousand-plus books and more than one bottle of scotch in the house?

Well . . . yes, actually.

And that's the essential point here. None of us will get what we want in the reopening, but I hope we all get what we need. Our wisdom will lie in knowing the difference -- the essential difference.

One thing we won't get is the chic urban restaurant culture of the twenty-teens. And it's a good thing. There's a touching essay in last week's New York Times Magazine by the owner of Prune, a landmark East Village restaurant forced to shut down because of the virus. https://www.nytimes.com/2020/04/23/magazine/closing-prune-restaurant-covid.html. It opened in 1999 with 14 tables serving good but inexpensive fare for the last of the Village's bohemians. But as the bohemians were priced out of Manhattan, Prune grew to be cramped and crowded with too-young urban sophisticates dining on top of each other while feeding food pics to their Instagram accounts. Its owner, Gabrielle Hamilton, ends up wondering if, when restaurants reopen, the City will need a place like Prune. It won't. It never did, and Hamilton knows it:

For the past 10 years I've been staring wide-eyed and with alarm as the sweet, gentle citizen restaurant transformed into a kind of unruly colossal beast. The food world got stranger and weirder to me right while I was deep in it. The "waiter" became the "server," the "restaurant business" became the "hospitality industry," what used to be the "customer" became the "guest," and what was once your "personality" became your "brand," the small acts of kindness in the way you always used to have of sharing your talents and looking out for others became things to "monetize."

She started her restaurant, she writes, "as a place for people to talk to one another, with a very decent but affordable glass of wine and an expertly prepared plate of simply braised lamb shoulder on the table to keep the conversation flowing. If this kind of place is not relevant to society then it -- we -- should become extinct."  

But such a place will always be relevant. Places like that are the lifeblood of a true city, one where people crowd out poseurs, one focused on the conviviality rather than the cuisine. What hopefully won't be relevant anymore, what is not and never was "essential," is what Prune became, the place, like so many City restaurants, plagued by "bloat [and] fetishistic foodies . . . who have never been forced to work in retail or service sectors." 

As I've said in several columns now, pandemics have always changed how we live. According to the Financial Health Pulse study, 80% of us were, before Covid, financially insecure, barely coping or not coping at all. https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2018/11/01021056/Pulse-2018BenchmarkingStudy-Final-web.pdf. What do you suppose happens now that over 26 million of us, 20%, are unemployed? There will be a lot of empty restaurants for many months, no matter how soon they are permitted to reopen. Those necessarily crowded places like Prune cannot operate profitably with social distancing, and are too leveraged and cash-starved to outlast it. Most will not survive, but then they were never "essential." They certainly aren't what we need now. 

Henry David Thoreau secluded himself on Walden Pond because he "wished to live deliberately, to front only the essential facts of life. . . ." The pandemic will likewise force us to live deliberately. What is essential now, what we need, in the wake of this bleak experience, is no more a mystery than the birthright of our Founders: a more perfect Union, Justice, domestic Tranquility, and the general Welfare. The general welfare doesn't require fancy restaurants, nice though they may be. It requires our government to protect us not only from criminals of all color collars, from enemies foreign and domestic, but also from fire and storm, from hunger and disease. That's what makes a government essential in the first place. If we don't start taking that seriously, we will be well and truly forked. 


Aegis J. Frumento

380 Lexington Avenue
New York, NY 10168

Aegis Frumento is a partner of Stern Tannenbaum & Bell, and co-heads the firm's Financial Markets Practice. Mr. Frumento represents persons and businesses in all aspects of commercial, corporate and securities matters and dispute resolution (including trials and arbitrations); SEC and FINRA regulated firms and persons on regulatory compliance issues and in SEC and FINRA enforcement investigations and proceedings; and senior executives of public corporations personal securities law and corporate governance matters.  Mr. Frumento also represents clients in forming and registering broker-dealers and registered investment advisers, in developing compliance policies, procedures and controls, and in adopting proper disclosure documents. Those now include industry professionals looking to adapt blockchain technologies to finance and financial market enterprises.

Prior to joining the firm, Mr. Frumento was a managing director of Citigroup and Morgan Stanley, a partner and the head of the financial markets group of Duane Morris LLP, and the managing partner of Singer Frumento LLP.

He graduated from Harvard College in 1976 and New York University School of Law in 1979. Mr. Frumento is a frequent author and speaker on securities law issues, and is often quoted in the media on current securities law developments.

NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of BrokeAndBroker.com Blog.