Shadow Banking

by C. M. Albright

  ‘I didn’t take you for the waiter type,’ said Rob with a grin.

  ‘Yeah, I’d do a bit of waiting on table. I’d be happy to. I’d do a bit of cooking too. Other times, I’d take a boat out and do some fishing.’

  Georgina giggled: ‘You old romantic you. I can’t see Krystina cooking and waiting on tables.’

  ‘No,’ said Al with a half-smile as he turned his attention back to his glass of wine. ‘No, I don’t think she would.’

  The phone rang. Rob said, ‘I’ll go,’ and pulled himself out of his armchair.

  ‘How’s Krystina’s career going?’ asked Georgina.

  ‘It’s OK. She’s due back in LA next week for an audition. Krystina doesn’t call it an audition – none of them do when they get to that level – they call it a meeting but that’s what it is. It looks like she’ll get the part too, it’s ...’

  ‘George?’ The tone of Rob’s voice had changed.

  ‘What is it?’ Georgina knew her husband well enough to know when something was wrong.

  George and Al looked up at Rob. Tears were forming in his eyes as he swallowed hard and said, ‘It’s your dad.’

  SP500: 1499

  EUR/USD: 1.383

  3mth EUR/USD implied vol: 6.45

  It had become an obsession. Miles couldn’t stop racking his brain for the password which would give him access to the files on Roger Ellwood’s laptop. The more he tried to think like Ellwood, the more he realised that what he was doing was potentially futile. Nonetheless he felt driven to continue, knowing that failure was not an option. He had to gain access to this information. He didn’t want to consider the consequences of not finding out what Ellwood had done.

  Before Roger’s widow had come to collect all his things from his office after the funeral, Miles had made sure that he had removed the laptop. Just by its very location in Roger’s office, in a false drawer in his desk – it had taken Miles four hours to find it – he knew that this was the vital information, information that he would need to know if he was to have any chance of unravelling Ellwood’s trading history. There were computer whizz-kids who might be able to help him, might be able to crack the password encryption and gain access for him but even thinking about trying to source someone’s skills in that department set his paranoia jangling.

  It had been a difficult few weeks. Dealing with the aftermath after Roger’s death in Hvar was something that he had found difficult to process emotionally. He had to concentrate very hard to keep the story straight. There were occasions when he felt an almost irrepressible urge to throw his hands up and admit that Roger had been murdered. Surprisingly for Miles, he felt a sense of loss. It wasn’t anything to do with any attachment that he might have felt to the man. He never liked Roger. His death had done nothing to change that feeling. But his death was a metaphor for Miles’s dreams and ambitions. For a long time, Miles’s job had provided him with intellectual puzzles the solution of which had fascinated him. The money that he earned was proof that he was at the top of his game. He had liked the feeling. It was an affirmation of his worth, testament to the fact that he had broken the cycle of tragic inevitability that he had always feared had dogged him from childhood. Since Ellwood’s death and all that came with it in terms of his feelings of being imprisoned at Aden Partners – a stooge for desperate men – those bonds to his father felt as though they had been renewed, strengthened, and never had he felt the need to break them as much as he did now.

  The funeral was uncomfortable. Roger’s wife was there with his son and daughter. Their grief aroused in him a feeling he had never experienced before. He thought it must be guilt. When people had asked him in the past if he ever felt guilt for business decisions that he made that might have far reaching implications in terms of people’s lives on the other side of the world, he had always taken very much an existentialist position. All he was doing was exploiting weaknesses in a system using the markets as a vector. He refused to allow himself to take responsibility for something that he did within his investable universe. But seeing the sorrow and pain on the faces of Roger Ellwood’s family was something else. He had offered his condolences to Roger’s widow, Meretta. Artem had told him to expect anger from her. She was fiercely loyal to her husband and only too well aware of his professional difficulties. There was a part of him that wanted her to display her anger; it would have made things easier. But as he stepped forward to her after the service at St John’s Episcopal Church in Roger’s home town of Bridgeport, Connecticut, she showed no anger towards him. She kissed him on both cheeks. Miles and Meretta had only ever met a couple of times in the past in Zurich, where she and the children spent half of the year. He told her, ‘I’m so sorry.’ She said, ‘Thanks.’ That was it. But then she hit him with an emotional punch and introduced him to the old woman standing next to her.

  ‘Miles, this is Roger’s mother, Barbara Ellwood.’ Miles felt a knot in his stomach. Turning to Barbara, Meretta said, ‘Miles was a good friend and colleague of Roger’s.’

  ‘Hello, Mrs Ellwood,’ said Miles taking her wrinkled hand.

  ‘Hello Miles.’ She smiled. It was a weary smile. The sort of smile that attempts to defy tragedy and fails.

  ‘I’m so sorry,’ he whispered, struggling to cling to his subterfuge. If at that moment he had acknowledged the truth even to himself – that legally and morally, he was some sort of accessory to the murder of this woman’s son – he would have crumbled. There were others waiting to speak to the Ellwood family and Miles was saved from further conversation. One of those who was making his way to kiss and console with the Ellwoods was Artem. Miles had watched him as he moved forward, arms outstretched. Being more intricately involved in Roger Ellwood’s murder, Artem would have even more emotional baggage to contend with. He and Roger had been friends since Yale. Miles watched Artem. The façade was as polished and smooth as ever. Only once did it slip momentarily and no one other than Miles would have even noticed. Artem had completed his ritual of greeting Roger’s family and playing the grieving friend. As he moved away, he had glanced across at Miles. Artem looked deflated, he seemed to have lost an inch or two from his height. He visibly sagged. For Miles, it had been confirmation that Artem was struggling just as much as he was in raising up a front to the world, a front that weighed heavy, rendered the person carrying it exhausted. Implicit within the look they shared was the sense that they were in this together. Despite it being a family bond that Miles would have done anything to live without, in so many ways, they were brothers. They were both up to their necks in huge amounts of risk and they both knew they could pay the ultimate price.

  The lunch that Roger and Miles had shared on the day before Roger died represented a memory that Miles found himself returning to time and again. Miles sometimes wondered if he could have saved Roger but it would have been impossible to provide him with a viable exit strategy. For a start, Miles was never going to stand shoulder to shoulder with Roger over risk he had no knowledge of. Bad positions were a fact of life in trading. Shit happens. But God only knew what Roger had actually done. Miles had more important matters to consider. His own life was at risk.

  It was like trying to find a needle in a haystack. He had replayed his recent conversations with Roger over and over in his mind but he kept being drawn back to one conversation in particular. It was during their ill-fated lunch in the pizzeria on Lake Zug.

  ‘You remember King Arthur and the Knights of the Round Table? It’s like that at Aden. You’re either in or you’re out. You’ve got to work out where the fuck you’re going to sit.’

  Miles had already tapped in over a hundred possible different passwords that morning, typing in the words as they came to him, sieving them out of his stream of consciousness as though panhandling for gold. He typed ‘Arthur’ into the password box. He didn’t hold out any more hope for it than he had done with all his other attempts. But instead of the red box that had kept flashing up at him all morning with the words: ‘Password denied�
�� etched on it in white lettering, there was a green box with ‘Password accepted’ written on it. A jolt of adrenalin hit his blood stream and he sat bolt upright. He was in. He took a deep breath. There was a single folder on the desktop entitled, ‘My documents.’ Miles double-clicked on it and it opened up a window in which there was a sub-folder containing files called Arthur, Lancelot, Gawain and other names that Miles could only presume belonged to other Knights of the Round Table. Miles clicked on one at random – Mordred – and it opened up into a second window in which there was a handful of documents which clearly all pertained to one specific transaction. He clicked on one. This was a CDO equity piece which Miles could see, from a quick scan of the document, related to Californian credit card receivables. As Miles sat and opened up other folders one by one, each held all the documentation to a discreet asset-backed trade. It was clear that the laptop contained a digital paper trail of Roger’s shadow trades. Whether it was everything, Miles had no way of knowing. But as he opened folder after folder, the sheer scale of the deception became clearer. With an almost pathological commitment, Roger had engineered his own perfect storm. This was even more fucked up than Miles had even feared. But Roger was dead now. What was it that Artem had said to him? ‘Roger’s risk is now your risk.’ All of Roger’s asset-backed securities were now his. Miles poured himself a drink and then he connected the laptop to the printer and started printing out hard copies of the files as well as saving everything across to a memory stick. When the printing was done, he set about trying to make some sense out of the stinking mess that Roger had bequeathed him.

  The intercom buzzer sounded. The house keeper would get it. Miles wanted nothing to distract him from the files. When the buzzer sounded again, Miles remembered that he had asked his housekeeper to finish up early. Since Roger’s death, he had spent more and more time working from home and when he was there, he preferred to be on his own. As the printer whirred, the buzzer sounded for a third time. Whoever it was knew that he was in and wasn’t going to go away. Annoyed, Miles stood up and went over to the video intercom and looked at the square of road outside his security gates framed on the security console’s screen. Looking up at him was a face that he hadn’t expected to see, a face that made him swallow hard as anger joined the welter of emotions that already battled for

  supremacy. Miles picked up the handset and pressed the ‘speak’ button.

  ‘Krystina? What the hell are you doing here?’

  ‘Charming Miles. I need to see you.’

  Miles pressed the ‘door open’ button and listened as a car pulled into the drive. A car door was opened and slammed and footsteps approached the front door which Miles opened to reveal Krystina standing between two Louis Vuitton bags. She was intending to stay.

  ‘You didn’t call.’

  Krystina shook her head as though Miles’s comment was confirmation of some long held view she had about him. Krystina went inside, glancing at Miles and the bags on the step. Miles eased the bags backwards out of the way of the closing door and joined Krystina in the kitchen where she was already taking a glass from a cupboard.

  ‘Why didn’t you call?’

  ‘I need a drink.’

  Miles took a bottle of Grey Goose from his drinks fridge and passed it to Krystina.

  ‘Do you want one?’ she asked, taking the bottle from him.

  ‘I’m fine.’

  Krystina filled the tumbler a third full and then topped it up with orange juice from the carton that Miles passed to her in anticipation of her choice of mixer. Miles watched her and decided to follow a trusted plan when verbal confrontation was imminent – say nothing, wait and see how the land lies.

  ‘I can’t go on living like this,’ she said.

  ‘Why didn’t you call?’

  ‘You’ve already asked me that.’

  ‘And you didn’t answer me.’

  ‘I didn’t call because I wanted to see your reaction. I wanted to catch you unprepared. I needed to see your true feelings for me. And I think they’re pretty clear.’

  ‘Hold on a minute. You turn up here without any warning. How do you expect me to react?’

  ‘I don’t expect anything, Miles. Not anymore.’

  He could have taken the drink from her and held her. That was what she wanted. But he didn’t. There was something about her demeanour that worried him – and he couldn’t shake off his anger at the unwanted imposition. He had many other things on his mind and he was still reeling from his recent discoveries on Roger’s laptop.

  ‘You’re being over-emotional.’ As soon as he said it, her features hardened.

  ‘And what about you Miles? You’re perpetually under-emotional.’

  She took a big slug from her drink.

  Miles pulled out a chair from the kitchen table and sat down, gesturing for Krystina to join him. She sat down opposite him, taking another sip from her drink.

  ‘Listen, Krystina, feeling guilty about Al is perfectly understandable.’

  ‘You think this is about me feeling guilty?’

  ‘Isn’t it?’

  ‘Oh it is, Miles, it really is. But you don’t know the half of it.’

  ‘Krystina, are you going to tell me what the fuck is going on?’

  ‘You think this is just about you, me and Al. But there’s someone you’ve forgotten, Miles. That’s not like you. You’re so good at maths. So good with numbers. But this time you’ve forgotten the most important part of the equation.’

  Miles stared at her impassively. He wasn’t going to play a guessing game with her. He wasn’t going to indulge her spite.

  ‘You’ve forgotten Felix,’ she said with a defiant expression.

  As soon as she said it, Miles knew exactly what she meant. There had been so much going on in his life with the fund over the past couple of years that Felix’s birth had passed almost completely unnoticed. He had sent some flowers, a basket of toys for the little boy and when he had spoken to Al, he had said that they must wet the baby’s head. Krystina hadn’t visited him for a few months but when she had, it was as though nothing had changed. They slipped back into the old routine which was concerned with little other than sex. But clearly Felix’s arrival had not gone unnoticed by his subconscious because as soon as Krystina referred to Felix as his son, he knew it was true. There was no point trying to work out the date of when they started their relationship. He knew that he had a son. His name was Felix Denham. Miles’s parents were now grandparents. His father had a grandson. Miles stood up and crossed the kitchen. He didn’t speak. Krystina watched him nervously. She had nothing else to throw at him.

  ‘You can have a DNA test if you want one,’ she said.

  He didn’t even acknowledge the statement but as her belligerence melted away, he glanced across at her and saw the tears in her eyes. She had never looked so beautiful, but he had never cared less. Her usual confidence was stripped away. She had been so focused on telling him the truth about Felix that she hadn’t thought about how she would feel after she had unburdened herself. She was in uncharted territory and she felt the need to fill the silence.

  ‘I’ve known all along. Now that he’s a toddler, it’s obvious. Al must know. He must.’

  Miles had been wrong about Krystina having nothing else to throw at him. The thought that Al might already know the truth hit him hard and made him think whether Al’s demeanour towards him had changed at all in the recent past. They hadn’t spoken for a few days but prior to that they had been speaking regularly, sometimes three or four times a day if the markets were busy. He hadn’t noticed anything.

  ‘Aren’t you going to fucking say something, Miles?’

  The belligerence was back. He was grateful for that. She was easier to deal with when she was angry.

  ‘So, what do you want to do?’ His voice sounded even calmer when contrasted with her emotional tone.

  ‘I want us to be together and raise our son as a family.’

  ‘That’s not going to happen
.’

  It came out automatically and as soon as it had, Miles felt relieved. This was a trade he wanted no part of. The tears in Krystina’s eyes broke free of their glassy surface tension and slipped down her cheek. She wiped them away angrily.

  ‘I realise how hard this must be for you.’

  ‘Hard? What do you think?’

  ‘You belong with Al.’

  ‘Don’t ever presume to know who I belong with.’

  A ringtone sounded and Krystina walked across to her bag, took out her iPhoneand looked at the screen.

  ‘How ironic,’ she muttered as she answered the call. ‘Hi Al. I’m fine. Zurich, yeah.’ She went quiet for a moment and her expression and demeanour changed. She glanced at Miles. ‘Do you want me to come? No, I never knew him.’ She rummaged in her bag and took out a piece of paper and a Biro. She gestured for Miles to come and see what she was writing. By the time he had made his way across the kitchen, she had already scribbled: Tobias Green died.

  What else could happen today? Miles couldn’t speak. A man like Tobias Green wasn’t meant to die young. He seemed destined to become a wise old sage. Miles had to sit down. His thoughts turned to the night before Georgina and Rob’s wedding when he had felt awkward on account of his recent break-up with Imogen, and Tobias had shown him such kindness with his warm words of reassurance.

  ‘Yeah, I know you really liked him,’ said Krystina. ‘Miles? I didn’t know he knew him. Oh right. OK, you call him. I’ll see you on Thursday.’

  Krystina said, ‘Bye.’ She put her phone back into her bag and they looked at each other as Miles’s phone started to ring.

  5yr Xover Credit spread: 305bps

  VIX: 23.5

  USD/CNY: 7.584

  The wake continued around him but he was oblivious to the other mourners. Al couldn’t take his eyes off Imogen. Her sadness made her more beautiful than ever. She and Georgina both spoke at the funeral and bore their grief with a quiet stillness and reserve that was proof positive, Al felt, of their father’s exemplary genetic input.