The Last Trade

by James Conway

  As they come out of the tunnels of Manhattan and creep across the bridge over the East River, Havens thinks of a conversation he had with Salvado and Rourke back in 2007. They had just realized, based upon Havens’s findings, that they would make a killing by shorting the U.S. sub-prime mortgage market. They were talking in Salvado’s office while he was being fitted by a tailor from Milan he’d had flown in on the Gulfstream VI.

  “Why?” Havens asked. “Why can’t we simply go forward to the authorities? The heads of the banks. The Fed. The people insuring this junk? Place our positions, sure. But why not give them a chance to minimize an epic fail? Why can’t we simply go to the ratings people at S&P or Moody’s, or the regulators? The goddamn SEC? And alert—no, show—them that this is all gonna blow up in the worst possible way—a ten-sigma event—if they don’t do something about it. Lay out the models. The numbers. The inevitable result of the whole nightmare equation. Give people a chance to make the connections, recognize the deviations, and you know, unwind some of their most volatile positions. We’d be rich and heroes.”

  Salvado’s initial reaction was to laugh. Rourke didn’t laugh. Rourke looked at Havens with enlightened, admiring eyes, then turned to Salvado. “You know, he has a point, Rick. I don’t see why—”

  Salvado cut Rourke off, dismissed him by addressing Havens only. “This is why I love you, Havens. And why you are going to need me to stop you from hearting away your hard-won money.”

  Rourke couldn’t help himself. “There’s gonna be plenty to go around, regardless.”

  Salvado stopped smiling. “Enough, Tommy. Please. In fact, do me a favor and get the fuck out of here. You are a words guy, a goddamn classical lit major, and because it involves something called numbers, this is way beyond your tiny, liberal arts–polluted intellect.” Rourke, humbled, stepped back, a symbolic departure, and remained silent. The tailor looked up. “And you,” Salvado told the tailor, “if you tell a soul about this conversation I will make a suit out of your fucking skin.” Finally he turned to Havens. “Our primary obligation is to our clients. We are here to maximize the return on their—and our—investments. Second, if we did tell those assholes, it wouldn’t matter. None of them would understand. Certainly not the regulators. They understand law, not the machinery of the markets. And the ratings people? Hah! Might as well alert a hot dog vendor. You think they’d bite the hand that feeds them? The first ratings service to tell the truth about this shit is the first to see its market share plummet. Do you think people go to them for truth, or to validate their agenda? And the banks? I’ve told the heads of some of the biggest institutions in the world, and they are in complete, utter denial. Because they don’t want to believe or don’t have a clue. Screw them. Let ’em fail. And this: Why not us? Why not have the handful of hardworking people smart enough to figure it out be the ones to cash in on it?”

  Havens replied, “I don’t care about the banks either, Rick. But if these senior sub-prime tranches go to smithereens millions of innocent people . . . if we’re even one quarter right, the global economy is going to go down with them.”

  Salvado’s response: a wink. Then, “No one’s innocent. They all knew what they were getting into and didn’t believe it would end. They all thought their 401(k)s were gonna double every year, and that they could day trade as well in 2008 as they could while the Internet bubble swelled. They thought they could buy homes twenty times their annual incomes and take vacations and buy flat screens with no assets and shit jobs. They aren’t innocent. The banks aren’t innocent. Paulson and the feds aren’t innocent. The fools rating and insuring all of this aren’t innocent. They all chose to ride it out and milk every last cent out of the system. Fuck them, Havens. Every last greedy one of them.”

  Right then and there, Havens tells himself, just as he has told himself many times since that day, You should have known. You should have walked away. But you stayed because of the money, and because you stayed, your life changed all at once and then forever. Because you stayed, you lost your soul, your wife, your daughter, and now your friend and protégé. An idealistic young man is dead, all because you didn’t walk away.

  This time: 7 Trades. Not 28.

  Which seven? Havens thinks. And to what end? The conductor passes, collecting and punching tickets, announcing the next stop of White Plains, nine stops from Miranda. Havens continues to stare at Weiss’s final text and thinks of the long, rambling, paranoid, semi-lucid voice mail message Weiss left him on Friday. It was a diatribe against the U.S. financial system, the Rising Fund, and Rick Salvado, invoking everything from Area 51 to the Crash of 1929 to 9/11 and his twenty-eight trades theory. Initially, Havens had saved the message for the sole purpose of playing it back to Weiss once he sobered up, because the kid sounded out of it. On Saturday, frustrated by Havens’s lack of a serious response, Weiss sent Havens a long e-mail on his personal account under the heading “28 Trades.” The e-mail was a more concise and linear version of the previous day’s semi-hysterical phone message.

  It began with the contention that a number of unknown individuals with precise foreknowledge of the September 11, 2001, attacks on the World Trade Center had purchased an unusually large number of “put” options on a number of American holdings, including United and American Airlines. Weiss’s theory, which he supported with confirmation from everyone from the Israeli Herzliya Institute for Counterterrorism to the Drudge Report, purported that there were twenty-eight such stocks, including insurance companies and U.S. financial institution holdings, in addition to the airline puts. Their bet, essentially, was that when the towers came down, the stocks would fall as well.

  Havens got that far into the e-mail before stopping and hitting delete. The theory was too outrageous for him to take seriously. It reeked too much of the unsubstantiated cable news–brainwashed, rumor-mongering lunatic fringe that had hijacked the culture. He preferred the logic of facts and numbers to accusation and innuendo. The hypothetical made his brain hurt, and the theories that dealt with the fall of mankind made him want to curl up in a ball.

  The next day, Sunday, Weiss called four times. On the fifth Havens picked up and agreed to meet him over drinks at Cipriani. Weiss showed up late, unshaven and dressed in a T-shirt, shredded jeans, and sandals. The hostess had to be coaxed into allowing him in. At the bar, sipping a neat Macallan, Havens said to Weiss, “I’m worried about you, Danny. All this X-Files stuff, what does any of this have to do with the current holdings of the Rising Fund?”

  “You didn’t finish the e-mail?”

  “No.”

  “Everything and nothing.”

  “You’re saying that Salvado had something to do with 9/11? The man who Forbes says paints his hedge red, white, and blue?”

  “I’m saying . . .”

  “Shit, in 2001 The Rising didn’t even exist.”

  “I’m saying that my findings tell me there’s something similar going on. Another twenty-eight trade–type scenario that somehow involves, well, us.”

  “Us?”

  “Our boss. Our place of business.”

  “Why would a billionaire risk throwing it all away for what . . . a few more billion?”

  Weiss moved his face two inches from Havens’s. As Weiss began to speak, Havens wasn’t thinking conspiracy theory, but nervous breakdown. “Some, like you, only see numbers. Others only see stories. I see both. And as much as you refuse to recognize it, Drew, there’s a narrative in the numbers. In fact there’s a narrative to every trade. The world isn’t a logical place. It operates on emotions; its stories are filled with greed and revenge as well as love and redemption. I don’t know all of the components for his story, his true and absolute motive, but the parts that I’ve been exposed to so far are the stuff of tragedy. A real one.”

  “I think you need to speak with someone, Danny.”

  “The makeup of The Rising is just the beg
inning. For all I know it’s a goddamn red herring.”

  Havens grabbed Weiss by his narrow shoulders. “What do you want me to do, Danny? Go to the cops? Have ’em bust Rick, for what? Why don’t you just follow me and quit?”

  “I wish it was that easy. I don’t know the answer yet, but I’m gonna find it. And when I do, I want you to believe me.”

  That was the beginning. The scene in the apartment tonight—the body, the blood, and the board—was the end. He removes Danny Weiss’s red flash drive from his front pocket and sticks it into a USB port on the side of his computer. He’s hoping that it contains something that will make sense of this all, but instead, he sees that there is only one unmarked file on the drive. After he clicks, it takes more than five minutes for the software to load. The program appears without a logo or name or audio mnemonic. After a moment a search box appears. He types “The Rising” into the box and hits enter, but nothing happens because the Internet signal on the train fades in and out. Weiss recently mentioned that he’d gotten hold of an illegal, turbocharged piece of tracking/hacking software. Havens imagines that this is what he used to discover the clues that validated his theory and led to his death, and that Weiss wanted Havens to have it. He slips the drive into his sock and goes back to the last text message from Danny Weiss. This time he notices an icon attached to it. A tiny illustration of a camera, denoting a photo attachment.

  He clicks on the icon and watches the photograph begin to appear, first as a pixilated blur and then more sharply defined and perfectly framed. He recognizes that it’s the whiteboard from Danny Weiss’s wall, but he can’t enlarge it on the small screen. As he strains to read the tiny, blurred letters, he resolves himself, in honor of Danny Weiss, to figure this out. To validate the young man’s life and hopefully save some others. To make order from chaos. And to teach himself something his brain is not programmed to do: to craft a narrative out of numbers. Staring at the postage stamp–sized picture of the board he saw in the dead man’s apartment less than two hours ago he thinks, I believe you now, Danny.

  6

  Hong Kong

  The Hong Kong satellite office of the U.S. Department of Terrorism and Financial Intelligence exists in anonymity in a white clapboard Colonial home close to the embassies on Garden Road. From the street it looks like the home of the consul general of any one of several dozen nations that have residences in the area, and not the hub of an elite global counterterrorism task force.

  A small sign on the outer door reads: DR. ROBERT MICHAUD, PODIATRIST.

  Beneath it reads another: CLOSED.

  Inside, beyond the faux reception area, the entire first floor is open-plan, not unlike the layout of a San Francisco digital start-up. In the center of what was once the great room of a diplomat’s home are four eight-foot-long farm-style tables covered with wires and cables that merge and snake down through a hole in the center and stretch along the floor down the hall to an air-conditioned pantry that now houses four decks of the world’s most powerful servers.

  Sobieski stands alone at the tables, unpacking her knapsack. Michaud comes out of the kitchen. He’s holding two mugs of hot tea. He offers one to Sobieski. “Oolong,” he says proudly.

  “Oh, boy,” she answers, accepting one of the mugs. “Oolong tea. How fancy. And rare. Being that we’re in China and everything.”

  Michaud smiles. His eyes are a mass of intersecting red lines, the cluttered flow charts of failing conglomerates. He’s forty-five going on ninety, handsome in a past tense, post-divorce, pre-alcoholic kind of way. Sobieski catches a whiff of booze on his breath that the Mentos can’t conceal. Sort of pathetic, but she knows she’s in no position to judge, and can’t help but admire the guy for coming straight to work from the karaoke bar. “Come,” Michaud says, jerking his neck toward the small parlor that has been transformed into his office.

  “Check this out,” he says, leaning over the paper ruins of his desk and tapping the fingerprint-smudged screen of his computer monitor. He scrolls through a blur of screens, each filled with the data for more than a hundred transactions, each of which includes the call letters of the same dozen technology stocks. “Thousands of orders for the same handful of stocks. All short positions.”

  Sobieski sips the tea, tries to hide the fact that it tastes surprisingly good. “Hang Seng Bank?”

  Michaud nods. “Your boy Patrick Lau’s trading account. Disturbingly easy to hack.”

  “Did he have any similar action, any big positions on anything, before or after these?”

  “Nothing. Over the past twelve months the guy was losing money in 3-D. Most of his real clients walked after the last crash. Or next to last. Hard to keep track. To tell you the truth, considering his overall lack of assets, clients, and trades, I don’t know why they were still letting the dude in the building.”

  “Anything on the buyer? Mr. Short?”

  Michaud sips his tea and doesn’t hide his distaste for it. He spits it back, puts the mug on his desk, and pushes it far away. “Nothing on the individual Mr. Short, but it looks like the order for all this stuff came out of, or at least passed through, some bullshit firm in Berlin.”

  “What firm?”

  “Siren Securities. Most likely a false front for some bad guys. We’re looking into it.”

  “Any news on the performance or outlook for those tech companies that would indicate why someone would lay down this heavy of a bet on their failures?”

  “Other than the fact that everything I’ve read from the top tech analysts in the world leads me to believe that our mystery investor is absolutely nuts to short an entire sector that is all about digital content and technology, essentially the future of everything . . .”

  “So, no theory?”

  “Nope.”

  Sobieski blows into her cup. “Unless they’re gaming the market.”

  “Or know something about the future of innovation that us common folk cannot begin to fathom.”

  “Because if you want me to go to the States, to the San Francisco area, to look into some of these companies and, you know—”

  Michaud cuts her off. “Not happening.”

  She mock frowns. She knows there must be more. He must know something else; otherwise he wouldn’t have called her in at this hour. “Then what?”

  Michaud bangs his thick fingers on the keyboard then squints, awkwardly over-scrolling and over-correcting. “Here,” he says, jutting his chin at the monitor.

  Sobieski leans forward. He drag and clicks the mouse several times, and the monitor flashes blue with a page of numerical transaction text, not unlike the pages they just viewed in Lau’s account. “Starting yesterday morning, Dubai time, and continuing through late afternoon, a trader named Nasseem Al Mar went on a bit of a roll. In just over nine hours he booked more transactions, moved more money, and presumably made more money than he had in any one month since he started at this firm, Sayed Capital.”

  “Shorts?”

  “Yup,” Michaud answers. “Close to a billion U.S.”

  “Tech?”

  Michaud shakes his head. “No, nothing on tech, which I take as a bit of relief, like, you know, maybe they’re just planning on a widespread market dip.”

  “What, then?”

  “Well his client went short on a bunch of media plays, mostly old, traditional media. Broadcast. TV and newspapers. Publishing.”

  “American?”

  “Yup. Grade-A red, white, and blue.”

  “So,” Sobieski responds, “someone isn’t sky-high on the future of American old media, which doesn’t exactly make him unique in the investment world.”

  “But assuming it’s the same person, you’d think if he’s betting against old media, he’d have a more favorable take on the future, the tech sector that’s supposed to be killing it.”

 
Sobieski says, “Yet he or she is equally bearish.”

  “Assuming it’s the same he or she.”

  “Is Al Mar still alive?”

  “So far, nothing has turned up that says he isn’t.”

  Sobieski stares at the screen. “Why kill Lau and not Al Mar?”

  Michaud shrugs. “Why kill anyone, unless they represent, or did something to become too much of, a risk? Unless someone somewhere compromised their plan and they decided to eliminate further damage.” He picks up a single-page printout. “Here’s his story: Nasseem Al Mar. Forty-four. Born wealthy, raised wealthy, slowly working his way to poverty. Wharton Grad. Usual financial services suspects, all in the Middle East. USB. Deutsche. And, fairly recently, Lehman, before . . .”

  Sobieski bobs her head impatiently. She knows all too well about the demise of Lehman Brothers. The demise of all of them. Plus, she has to use the bathroom.

  “. . . before Lehman blew up.”

  “Right.”

  “Then in ’09, right after . . .”

  “I know . . .”

  Michaud continues, “. . . right after ‘The Crisis,’ he moved to the seemingly legit Sayed Capital in Dubai, where he proceeded to have a career that, trade for trade, disgruntled client for disgruntled client, was like the mirror image of Patrick Lau’s.”

  “Gay?”

  “No. Married with two teenage boys.”

  “Just throwing it out there. Did—what’s his name, Al Mar?—did he have a debt problem, too?”

  “No. His hobbies are all about nice cars and prostitutes. He has accounts with four high-level escort agencies in the UAE and Dubai City.”

  Sobieski clucks her tongue. “Lovely. So you want me to go where? Silicon Valley, the Sahara Desert? Undercover call girl?”

  “Berlin.”

  “Siren?”

  Michaud answers with another series of mouse clicks. The home page for a firm called Siren Securities appears on the screen. “The orders for Patrick Lau’s last trade and Nasseem Al Mar’s last trade were both initiated electronically from the same server in Berlin, which at one time was linked to this same bullshit financial services company, Siren.”