Morgan Stanley quant manager cleans house at poker night

Peter Muller, who founded and leads Morgan Stanley’s quantitative investment unit, bested 104 players last week to win the annual Wall Street Poker Night.

His prize: knowing that he helped raise $1.5 million for Math for America, a charitable organization dedicated to making the math skills of public school students better by improving instruction.

“The real goal is increasing awareness to the point where people realize that you have to pay more for math and science teachers, because they are more skilled and have alternatives,” Muller said in a telephone interview. “Many people who have skills in engineering, math and science need to be paid more or they just won’t teach.”

All proceeds from the event, including the $20,000 Muller spent to enter the tournament and buy chips, benefited the charity. The tournament has raised more than $10 million since it was created eight years ago. Muller took no prize money home from the event, held April 14 at the St. Regis Hotel in New York.

Muller is a board member at the organization, the not-for- profit started by billionaire James Simons, founder of the hedge-fund firm Renaissance Technologies Corp. Each year, they join other Wall Street executives quietly raising money for an educational cause that’s directly aided their careers.

“We get a great group of people — a Who’s Who on Wall Street — who would rather not be mentioned,” said Muller, 46. “All the money goes to charity, but people on Wall Street don’t love to be in the press these days.”

Nevada Regulations

The event was closed to the media. Its organizers prefer to stay out of the spotlight even though it is perhaps the most charitable poker event in the U.S.

“$1.5 million sounds like it may indeed be the most significant one of the year,” World Series of Poker spokesman Seth Palansky said in an e-mail. “I don’t think there’s anything in Nevada that generates more.”

Nevada gaming regulations inhibit raising such a large amount of money since event organizers cannot designate a portion of the buy-in amount directly to a charity. Instead, participating players can choose to give to the cause, but a donation cannot be mandated, Palansky said.

The World Series of Poker, run by Harrah Entertainment Inc., holds events to raise money for Ante Up for Africa. The charity has raised more than $3 million since being founded in 2006, according to its Web site.

Math for America

Wall Street Poker Night is akin to a charity cocktail party that draws wealthy patrons, said Daniel Borochoff, president of the American Institute of Philanthropy, which rates charities for donors.

“You’re convening a lot of high rollers to put a chunk of money down to contribute, and then they’re getting to play cards,” Borochoff said in a telephone interview. “Certainly though, it’s substantial for the charity. Outside of the really large organizations, this doesn’t happen that often.”

Math for America was started in 2004 with the mission of improving mathematics in New York City public schools and serving as a national math education model. The poker tournament proceeds go to New York programs, and the charity has autonomous programs in San Diego, Los Angeles, Washington and Boston.

In New York, there are 300 fellows and master teachers, with the charity paying for graduate school and awarding an additional $100,000 over each five-year fellowship.

Muller is the head of Morgan Stanley’s quantitative investment unit PDT, for Process Driven Trading. PDT was responsible for one-quarter of Morgan Stanley’s earnings in some years during the late 1990s and early 2000s before losing as much as $500 million in less than a month in 2007, according to “The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It” by Scott Patterson.

PDT rebounded in 2008, when the Standard & Poor’s 500 Index suffered its worst drop in seven decades, returning 25 percent, according to the 2010 book.

Muller said some of the figures in the book are inaccurate.

Away from Wall Street, Muller has put his math skills to use in other ways. He’s a pianist who has two folk/rock albums and plays monthly at Café Vivaldi in New York’s Greenwich Village. He also constructs crossword puzzles, having written 10 for the New York Times. Both hobbies relate directly to math, he said.

“Enumerating the possible choices in crossword puzzles is a heavy statistical or computer-science based algorithm,” Muller said. “There’s a lot of mathematical structure to music, too. There are a bunch of people that have the correlating music-math skill.”

With interests such as poker and music, Muller said his lifestyle fits well with his career as a quant.

“The nice thing about what we do is, since we trade models, I don’t have to stare at a screen all the time and figure out what the market’s doing,” Muller said.