“Sir?”
I hung up. I stared at the blinking light on the phone until it ceased. I could call a lawyer, but I knew in the end I was screwed. In my heart I knew that the margin agreement was airtight. Even if I could have found a lawyer to start a class action suit, it would be years to fruition and my biggest concern at the moment was what to tell True when I got home.
I could lie. I could simply not tell her. I could try to borrow the money from somewhere to put it in the account. Just the original $60,000. Or perhaps a few thousand less. I could live with telling True that I hadn’t done as well as I expected and had lost a few thousand dollars. But a bank wouldn’t give it to me and there was no one in my phonebook that would make a loan like that.
I was paralyzed for several minutes. People began to trail into the office. I closed my door and an image of Chuck Firestone appeared to me. I didn’t know what he could do for me. Maybe he would take pity on me and tell me that he had a lot of money sitting in the Firestone family trust and he would be glad to lend it to me at bank rates. Maybe he would just give it to me. I would resist his charity, but he would insist and finally I would relent for the sake of my family. It would have been helpful if I had his phone number. He had given me his card but I misplaced it.
I racked my brain for the name of his company. What did it sound like? Sounded like foot…suit…. Never mind. I did a web search for him in Alta Vista. (2000 was BGE—before the Google era—and there was no Google search.) I typed “Charles Firestone” in the search box and got a number of hits—most of them stupid and useless as was the norm for BGE. I did, however, come up with his name on the masthead of Roos and Selvin Investment Management. A little more work yielded an estimable address in one of the Century City towers and a telephone number. I called, gave the operator my name and he came on the line quickly.
“Hey, Mitchell. What’s up?”
“Sorry to bother you, Chuck. I’ve got a problem and I need some advice.”
“About what?”
“About the market. I think I may have screwed up. I need somebody to talk to.”
“Do you want to stop by?”
“I don’t want to interrupt you.”
“No sweat. Come after the market closes. I’ll block it out, man.”
“Thanks.”
“You gonna be okay?” I was sure he could hear the panic in my voice.
“Yeah. I’ll see you around two if that’s okay.”
“Yeah. Tell you what. Come by and we’ll have a late lunch.”
He was a good guy, Chuck. I was a drowning man and I felt somehow he would be able to throw me a rope.
The office was on the twenty-fifth floor and faced the ocean. “Roos and Selvin” gleamed in stainless steel Helvetica on the marble entry wall. From a large window in the waiting room you could see the canyons of Catalina Island fifty miles off in the clear air. There were crisp copies of the Wall Street Journal and Investor’s Business Daily on the Chippendale coffee table. The receptionist offered me Perrier in a British accent, but Chuck came out before she had a chance to fill the order. He gave me a hearty handshake with a shrug of comraderie and led me out the door to the elevator.
“What happened, Mitchell? Did the market bite you in the ass?”
I nodded sheepishly. He regarded me with the air of an old trench warrior eyeing a recruit on his first day on the Maginot Line.
“It’ll do that.”
He led me off to the promenade downstairs and to Harry’s Bar where the maître d’ knew him and led us to a table in a quiet corner. I told him what happened. It was painful, and as the words came out I thought about how I would rearrange the same information later to make it palatable to True.
I told him about how my small successes made me bold. I told him that if I had put more cash in the account I would be close to even right now. I told him about True’s dad. After I finished, I realized I didn’t know what my “ask” was. I knew he wasn’t going to just hand me money. Maybe I was just relieved to unburden. I felt a little better. We were barely friends, really only neighbors. There was a long pause after I finished my story. I could see he was concerned for me.
“Something smells bad. I don’t follow JDSU but that kind of move, even on a general pullback, without any significant news just smells bad.”
“Are you saying someone manipulated the stock?”
“It’s possible. I don’t know.”
“How would I find that out?”
“Ask yourself what you would do if you did know.”
“How would they do it? I mean it’s not a penny stock. It’s not that easy to do.”
“The guys who work these things are not penny stock players, Mitchell. You learned a big lesson. Maybe that’s a good thing.”
“I can’t chalk sixty thousand up to experience. That’s Caleb’s college money.”
“You’ve got a job and you’ve still got most of your money intact. You’ll earn the rest back.”
“It will take years to save that much. And I don’t know if my marriage will survive it.”
“You are a very decent guy, Mitchell.”
“Right now I’m just another fuck-up.”
“You didn’t know. Playing individual stocks is not for amateurs. If Roos and Selvin played hunches and listened to the chat room touts, where do you think we would be?”
“I realize you tried to warn me and I appreciate it.”
“I didn’t expect you to listen. In a bull market nobody listens. You’re a human being.”
“I am not feeling that way. I’m feeling like kind of an ass.”
“It’s an insider’s game. Order an extra beer, have the hot fudge cake for dessert and then go tell your wife. She’ll forgive you. She loves you, right? That’s worth more than money.”
“Is Schein going to come after me for the twelve thousand dollars they say I owe?”
“Believe it. With hammer and tongs.”
I rested my head in my hands.
“Oh sweet Jesus.”
Chuck signaled the waiter for the check.
“I’m sorry, Mitchell. I have to get back to the office. You’ll get through this. I promise.”
I made a shabby display of trying to take the check. Chuck waved me off. “The company has an account here.”
He signed his name on the face of the check and we stood up.
“Have you got a parking ticket?”
I reached into my pocket and weakly handed it to his outstretched hand. On the way to the door he handed it to the cashier who quickly stamped it.
We passed into the concrete courtyard at the foot of the towers. I thanked him for his time and he started off toward the office elevator. I was bound for the escalator to the parking garage with no idea where I would go next after I got in my car.
“If I think of something for you, I’ll let you know. Do you mind if I talk to a couple of the guys in the office about this?”
“Sure. If there’s a chance it could help.”
He pushed the elevator button, paused and then turned back to me as I started down the escalator to the parking garage.
“I might have an idea,” he said.
I had almost made it onto the top step of the escalator, but withdrew.
“Maybe it won’t work out. Do you mind coming back up?”
“No…”
“It could be a waste of your time, but I have something I want to try out on one of the partners.”
“Okay.”
I followed him up in the elevator.
“Look, Mitchell. I know you’re in trouble. I wish you had talked to me before you did what you did. But you didn’t come just for sympathy. I don’t know if I can yet, but I’m going to see if there’s a way to help you out. No promises.”
When we got back to his office he asked if I would mind sitting in the lobby for a few minutes. I tried reading the Wall Street Journal, but the market optimism on the front page was about as relevant to me now as flappers and Prohi
bition. Ten minutes later Chuck appeared and asked me to come in. He led me to a conference room with a big center table. He closed the door after us.
“It is just possible that you are in luck. Can I tell you something in confidence?” he said.
“Sure.”
“I mean it. This would be hard on the firm if it were to get out. Reputation is ninety percent of the business.”
“I understand.”
“Nobody’s immune when the market gets tough. We’re getting beaten up, too.”
“I’m sorry.”
“But overall our portfolio is strong and I think we’ll get through this fine.”
“I wish I could say the same.”
“There’s no sense kicking yourself. Here’s the point. And here’s the place where I need you to tell me that this is in absolute confidence.”
“I swear.”
“We got a cap call from the SEC today. Brokers have capital requirements and the market selloff really put a dent in our capitalization report. We’re below our requirements and we have to sell some of our positions.”
Chuck saw from my expression that this was over my head.
“It’s not an uncommon event. They require us to have a certain minimum cash reserve and sometimes we have to sell off some of our portfolio we would really rather keep.”
“I’m sorry,” I said although I was consoled that even the smart money was hurting today.
“Last year we became market makers for a company in Baltimore called Biogram Pharmaceuticals. Started up ten years ago by some very smart MDs out of Johns Hopkins. Publicly traded since 1996 and they already make a small but steady profit from licensing patents to the big pharmaceutical companies. For a couple of years they’ve been doing a good job marketing an emergency artificial blood substitute that works great on large animals—horses, cows, pigs. They’ve started clinical trials on humans. It could be a huge deal. Every emergency room. In the battlefield. They’re in stage three human trials that are scheduled to report out in a month. I need you to swear to me that you will never tell anybody what I am going to tell you.”
“I swear.”
“I mean it, Mitchell. I know you’re a good guy and if you weren’t in such trouble right now I would never be telling you this.”
“I swear.”
“People can go to jail for this.”
“Jail?”
“Look at me. I am guessing you know the meaning of insider trading.”
I nodded. Considering my current situation jail was a barely perceptible raise in the ante.
“I won’t tell anyone.”
“Take this as an object lesson in why an amateur investor doesn’t have a chance. The clinical trials are being held in Denver, Houston and Tucson. They’re supposed to be done in complete secrecy, but the truth is that a lot of nurses and medical assistants are just underpaid workers who hate their bosses and can be approached for a few bucks to let somebody know how the trials are progressing. This is how business is done, Mitchell. I’m not defending it. It stinks. It’s why I hope to be out of this game and on my boat five years from now. In the meanwhile we try our best to keep up, right?”
I nodded. I wasn’t sure where this was going. I can’t say I was devoid of suspicion.
“I have it from a very good source that the trials are going better than hoped for and there will be an announcement very soon. The stock is around seven right now.”
He pulled out a calculator, punched the keys.
“The smallest block we can sell is thirty thousand shares at seven and it would have to go up to at least nine on good news. That’s very conservative if they report a positive trial. It’s likely to be ten or eleven. You could pay Schein and go home to your wife with a hundred thousand over what you lost.”
“Thirty thousand shares?” I was incredulous. If I were interested in investing, this was way over what I could consider.
“Blocks of thirty thousand. I think we have twelve or thirteen blocks to sell.”
“That’s over two hundred thousand dollars. I can’t do that.”
“We only sell them in blocks of thirty thousand shares. I’m sorry.”
“I can’t.”
“You could sell half and make yourself even, then keep the rest to see if it gets FDA approval. If it’s approved it’ll probably go to a hundred or more. But, truthfully, FDA approval is like hitting the bull’s-eye from a thousand yards. I might keep a few shares, but I’d sell most after a positive trial.”
“It’s out of my league. I’m sorry.”
“I don’t know your situation. I was thinking maybe you had some reserves.”
“I don’t. I mean there is money. But I can’t touch it.”
“Fine then. Don’t make yourself crazy. You can only do what you can do.”
“When would they announce?”
“It’s scheduled in ten days.”
I found myself planted in the chair. I couldn’t leave.
“I’m sorry,” he said. He got up and moved toward the door in a gesture for me to leave. Perhaps I had overplayed my hand.
“I just can’t,” I said and I think I meant it. I suddenly felt gripped by the fear of what awaited me at home when I told True. I felt a tear roll unchecked down my cheek.
“Sometimes you just have to face the music, Mitchell. Maybe this is one of those times. Make a deal with the brokerage to pay off the debt on installment and make peace with your wife.”
The tears flowed. I found myself whimpering. It wasn’t anything like me, but I went with it. I don’t know if it was just cathartic or if I was trying somehow to work Chuck. Probably both. In either case it seemed to affect him. He stopped leading me to the door. He put his hand on my shoulder. Surprisingly, my chest began to heave. Chuck sat down again, apparently moved. He spoke after a long pause.
“I’ll make you a deal. I could try to find a customer to split a block with you, but that would take time. I can sell it to you on fifty percent margin and I’ll see if I can get them to cut you a five percent break on the price. Needless to say, under the circumstances I wouldn’t charge you commission.”
Even on margin that was $105,000, nearly all we had left in the bank.
“It’s just too much.”
This seemed like it could be a very good deal for a guy with real money. Not me. And besides, all of this good will from a relative stranger made me uncomfortable. I couldn’t help but wonder was this all really so they could meet their capital requirements? Perhaps. It was worrisome.
“Listen to me carefully, Mitchell. I don’t want there to be any misunderstanding. If I do this, I have to be able to trust you.”
“Do what?”
“I can open a margin account for you and walk the check over to accounting. I can tell them to put it in a corner under a bunch of old invoices and leave it there.”
“Leave it there?”
“Yeah. I could make that happen. It could sit there for two weeks and not get deposited. Look, Mitchell…you know better than me there are no guarantees, but chances are that after the trial results come out that you’ll just sell out your part of your position, replace the money you lost on JDSU and still have shares left.”
“You wouldn’t deposit the check?”
“As far as the SEC is concerned it’s a reportable capital asset for the company if we have received a viable check. We can hold it for a month. It wouldn’t be the first check we’ve held on to. It’s a service brokers sometimes perform for good clients. It’s a service you would never get at Seymour Schein.”
“Why are you doing this, Chuck? We aren’t that close.”
“There is a quid pro quo.” His eyes narrowed and he leaned forward and spoke quietly. Here it comes, I thought.
“This is only between you and me. I want you to give me a warrant to buy five thousand shares from you at ten dollars in a month from today. You hold five thousand back when you sell your shares. If the stock is fifteen or twenty or a thousand a month from
today, you absolutely promise to sell them to me for ten. That is still nearly a fifty percent profit for you.”
Now we are at the meat of it. He takes my surprise in stride.
“I am your neighbor and your friend, Mitchell. I am not Santa Claus.”
“Is this legal?”
“Of course it’s legal. But it’s between you and me. We won’t put it on paper. I’ll trust you just as you are trusting me.”
So much for good neighbor Sam. But it really made me feel so much better. Now it all made sense. He has the potential to personally make $100,000 with no risk to him and little apparent risk to me. Now that I knew what he would get out of it, and that he would also be a stakeholder, it seemed like genius. There was, however, one nagging problem.
“My check is for a joint account. Technically I need True’s signature.”
“Then get it.”
“I can’t.”
“Did she sign when you bought the JDSU from Schein?”
“I signed for her.”
He looked at me as if I had just solved the problem.
“I had her permission.”
“You signed it… Mitchell, I am trying to help you out of a jam here. You do what you think is right. You’re my neighbor. A year from now or ten years from now I’d like to be able to look up at you if you pass me on the street no matter what. You understand that, right?”
I nodded. I thought it was very self-serving for him to act as if his self-enrichment was social work, but even though there was unquestionable risk to me, this was my only opportunity and, considering the alternative, I was happy to play his game. He straightened his arms against the table, signaling that he was finished.
“Say no if you like. I’ll understand. We won’t have a problem selling the shares elsewhere.”
There was no more opportunity for deferral here. I knew it was up to me to be either in or out. There was just the one lifeline being offered to me. I felt better that he had skin in the game. I grabbed for it.
Chapter 19
Stepping back and rejoining the other singers Helmet Head seems flushed from his performance. He basks in unambiguous admiration from his peers. He seems purposely to ignore my presence. The choir director, however, glances to me with a slight lilt of the eyebrows. I am an unexpected guest, and perhaps he hasn’t determined from my skin color whether I am black or white. The director addresses his choir with the enthusiasm and charm of a preacher.
Some Books Aren’t for Reading Page 16
