“Good idea,” the senior partner says. “Anything else?”
“Yeah, those paper shredders you’re using to destroy confidential documents. … They’re antiques. Shredded documents can be pasted together again. The Iranians taught us that when they re-created CIA secret memos from strips of paper lifted from the shredders in our embassy. You need new models that turn paper into confetti.”
“Excellent suggestion. More?”
“Not today,” Cone says. “I’ll be back tomorrow and take a closer look. I’ll stop by at the end of the day and give you my report.”
“I think you’re doing a fine job.”
“It’s all practical stuff. It’s not going to stop insider leaks, but it may help. Like keeping a cleaning woman who’s on the take from delivering the contents of your wastebaskets to some wise guys.”
At the end of the second day, he says to Twiggs, “This one is going to cost you bucks. You’ve got your Mergers and Acquisitions people scattered all over the place. An office here, an office there. That’s an invitation to leaks. You’ve got to consolidate that whole department. They can still have their individual offices, but all of them have to be in the same area. And that area has to be behind a locked door that can only be opened by authorized personnel with a computer-coded card.”
“It’s beginning to sound more and more like a fortress,” Twiggs says with a wan smile.
Cone shrugs. “You want to cut down on the possibility of leaks? This is one way to do it.”
On his final day at Pistol amp; Burns, he says to the senior partner, “This one is going to cost you big bucks. Your M and A people are writing too many office memos, too many suggestions, projections, analyses of upcoming deals-and all on paper.”
“We’ve got to communicate,” Twiggs protests.
“Not on paper you don’t. Computerize the whole operation. If anyone has something to say on a possible takeover, buyout, or merger, he puts it on the computer. Anyone else who’s involved can call it up on his monitor-but only if he knows the code word. You understand? Nothing typed on paper. And everything in the computer coded so that it can only be retrieved by personnel who have a need to know, and have the key word or number allowing them access. Also, the computer can keep a list of who requests access to the record.”
G. Fergus Twiggs shakes his head dolefully. “What’s the world coming to?” he asks.
“Beats the hell out of me,” Timothy Cone says.
He plods back to Haldering amp; Co. to pick up his salary check. He figures he’s done a decent job for Pistol amp; Burns. If they want to follow his suggestions, fine. If not, it’s no skin off his ass.
But something is gnawing at him. Something he heard or saw that flicks on a red light. Maybe it was something Bigelow said, or Twiggs. Maybe it was something he observed at Pistol amp; Burns. He shakes his head violently, but can’t dislodge whatever it is. It nags him, a fragment of peanut caught in his teeth.
When he gets back to his office, there’s a message on his desk: Call Jeremy Bigelow. So, without taking off his cap, Cone phones the SEC investigator.
“Hiya, old buddy,” Jerry says breezily. “How did you make out at Pistol and Burns?”
“Like you said, it’s as holey as Swiss cheese. I gave them some ways to close the holes.”
“But no evidence of an insider leak?”
“I didn’t find any.”
“That’s a relief. I wrote in my report it was the arbs who caused the run-up of the stock. I guess I was right.”
“Uh-huh,” Cone says.
“So much for the good news. Now comes the bad. We got another squeal on insider trading.”
“Oh, Jesus,” the Wall Street dick says. “Don’t tell me it’s a Pistol and Burns’ deal.”
“No, this one is at Snellig Firsten Holbrook. You know the outfit?”
“The junk bond specialists?”
“That’s right. They’re supposed to have the best security on the Street, but they’re handling a leveraged buyout and someone is onto it. The stock of the takee is going up, up, up. Listen, could you and I meet on Monday? Maybe we can figure out what’s going on.”
“Maybe,” Cone says, striving mightily to recall what he cannot remember.
He wakes the next morning, hoping the night’s sleep has brought to mind what he’s been trying to recollect; sleep does that sometimes. But all he can remember is the entire pepperoni pizza he ate the night before.
He goes over to Samantha’s place on Saturday night. She won’t be seen with him in public, fearing someone from Haldering will spot them and office gossip will start. That’s okay with Cone; he’s willing to play by her rules.
She serves a dinner of baked chicken, Spanish rice, and a salad. They also have a bottle of chilled Orvieto which puts them in a mellow mood. They have a nice, pleasant evening of fun and games, and Cone is home by 1:00 A.M. He gives Cleo fresh water and some of the chicken skin and bones he doggie-bagged from Sam’s dinner.
Sunday is just as relaxed. He futzes around the loft, smokes two packs of Camels, drinks about a pint of vodka, with water, and digs his way through Barron’s and the Business Section of the New York Times. In the evening he has a one-pound can of beef stew with a heel of French bread he finds in the refrigerator, so hard that he has to soak it in the stew to render it edible. Cleo gets the remainder of the chicken scraps.
On Monday he’s late for work, as usual. Jeremy Bigelow shows up at ten o’clock, carrying a fat briefcase. Cone calls down to the local deli for two black coffees and two toasted bagels with a schmear. They wait for their breakfast to arrive before they get down to business.
“Look,” Cone says, “it would help if you could tell me how the SEC works on insider trading scams. Then maybe I’ll know what you’re talking about.”
“It’s a two-level operation,” Jerry says, gnawing on his bagel. “We get a lead and start gathering facts. That’s where I come in. If we can’t find any evidence of hanky-panky, the investigation is usually dropped. If things look sour, the staff goes to the Commission and gets an order for a formal inquiry. That’s when we get power of subpoena.”
“Yeah, but what gets you moving? Where do the leads come from?”
“Computers mostly. We couldn’t live without them. You know how many companies are listed on all the stock exchanges in the country?”
“No idea.”
“Neither do I-exactly. But I’d guess about twelve thousand. How could you check all those every day by hand? Imfuckingpossible. So the computers are programmed to pick up unusual activity. Say a stock has been trading an average of fifty thousand shares a day for months and months. Suddenly the trading volume goes up to maybe a million shares a day. The computer flashes a red light, bells go off, and an American flag pops from the top of the machine and starts waving madly back and forth.”
“And that’s when you move in?”
“Sure,” Bigelow says. “We want to know who’s trading. Most of the time it’s entirely innocent. A rumor got floated on Wall Street, and a lot of amateur arbitrageurs are hopping on what they hope will be a bandwagon-and probably won’t.”
“So your computers do it all?”
“Hell, no. Just the first line of defense. We also get tips from brokerage houses. Their computers pick up unusual trading activity. They report to us because they don’t want to get their balls caught in the wringer. Also, we get anonymous tips from divorced wives and husbands who want the boom lowered on their former mates. And sometimes we get squeals from honest executives who know or suspect the guy in the next office is buying or selling illegally on the basis of the next quarterly earnings report.”
“You check out the executives first?”
“Of course. If they’re officers of the company, they’ve got to declare buys and sells. If they don’t, they’re in the soup.”
“Look,” the Wall Street dick says, “I know you haven’t got the time or staff to check out every piddling little trade. I mean yo
u’re not going to investigate Joe E. Clunk of Hanging Dog, North Carolina, who bought ten shares of this or that. So what do you look for?”
“Generally I look for trades of ten thousand shares or more. But if a corporation officer is involved, he’s as guilty if he trades a hundred shares as he would be if he traded a hundred thousand on the basis of inside knowledge.”
“But he could get his relatives and friends to trade for him.”
“Of course,” Jerry says, grinning. “Happens all the time. That’s when we’ve got to play detective, track down relationships, and tell them all they’ve committed a no-no.”
“And what do they get for that?”
“Usually they have to surrender their profits, pay a fine, and are put on probation. A few go to the clink.”
“For how long?”
“I think the longest sentence for insider trading has been four years.”
“Which means the guy is out in eighteen months.”
“Probably,” Bigelow says, shrugging. “But that’s not my problem. I’m supposed to make the case. What the judge decides is something else again.”
Cone lights up a cigarette, after offering the pack to the other man. But Jerry declines.
“I stopped smoking four years ago,” he says virtuously. “You know what those things are doing to your lungs and heart?”
“Please,” Cone says, holding up a hand. “I’ve heard all the lectures and none of them take. Let me enjoy my vices. Now what’s this Snellig Firsten Holbrook deal you mentioned on the phone?”
“Like I said, it’s a leveraged buyout. An old outfit named Trimbley and Diggs, up in Massachusetts. They make brooms, brushes, wooden clothespins, and stuff like that. But they also own some choice shorefront real estate. They went public about twenty years ago and have been paying a small dividend-but never missing a quarter. It’s a small outfit, Tim; General Motors it ain’t. If their daily trading volume hits, say, ten thousand shares, it’s a big day. Now the top executive officers want to buy them out, take the company private again, and develop their beachfront properties. Snellig Firsten Holbrook is handling the deal. But suddenly the daily volume is way up-almost a hundred thousand shares last Friday. Nobody can figure how the buyout leaked. Someone is gobbling up shares, and we want to know who.”
“The arbs?” Cone asks.
Bigelow shakes his head. “I doubt it. Not enough loot in it for them.”
“Yeah,” Cone says, “I can understand that. But what’s all this got to do with me? I work for Haldering, and we don’t have Snellig Firsten Holbrook as a client, or Trimbley and Diggs either. So why am I supposed to get involved?”
“One,” Jeremy says, holding up a thumb, “as a personal favor to me. Two,” he says, pointing a forefinger, “because it’s a puzzle, and I’ve got you made as a guy who likes puzzles. And three,” he adds, extending his middle finger, “who the hell do you think recommended you to Pistol and Burns?”
“Jesus,” Cone says, “you’re really calling in your chits, aren’t you?”
“Just take a look at it, will you? I brought you computer printouts of trading and a record of the stock since the leveraged buyout got started.”
“What’s it selling for now?”
“About eight dollars a share. A week ago it was four.”
“All right,” the Wall Street dick says, sighing. “Leave your bumf and I’ll take a look. No guarantees.”
“Thanks, Tim,” Bigelow says gratefully. “In return, the SEC can be very cooperative with Haldering and Company if the occasion ever arises.”
“Who the hell cares?” Cone says roughly. “When are you going to buy me a street lunch like you promised?”
“You give me a lead on this, I’ll take you to The Four Seasons for dinner.”
“Yeah? They got ham hocks?”
He would never lie to Samantha Whatley on a personal matter. But he will lie to her officially, as his boss at Haldering amp; Co. That he can do with nary a qualm.
He lounges in the doorway of her office. “Listen,” he says seriously, “I’ve got to go back to Pistol and Burns and finish up that job.”
“Yeah?” she says. “I thought you were all done with them.”
“I need a couple of more days. Clean up some odds and ends. Then I want to talk to Twiggs about the final report.”
She looks at him suspiciously. “So what you’re telling me is that you’ll be out of the office again this week.”
“Just until Wednesday or so. I’ll have it wrapped up by then.”
“You better,” she says. “I’ve got three new files waiting for you.”
“Gee, thanks, boss,” he says. “That makes me feel warm all over.”
Jeremy Bigelow has left his battered briefcase stuffed with all the skinny on the Trimbley amp; Diggs buyout.
“You can borrow the briefcase,” he tells Cone. “But I want it back eventually.”
“What for?” Cone asks. “Sentimental attachment? It’s a piece of junk. You should pay me for taking it off your hands.”
So he plods up Broadway in a warm drizzle, lugging the case and feeling no guilt at having conned Sam. The world isn’t going to come to an end just because he finagled a couple of days off. Besides, it is a good cause: cooperation with an agency of the U.S. Government.
Back in his loft, he pops a tall can of Bud. Then he opens Bigelow’s briefcase and dumps the contents onto his wooden table. He sets the empty case on the floor, and Cleo immediately jumps in and curls up contentedly.
“Leave your fleas in there,” Cone tells the cat.
He reads all the papers and reads them again. Then he sits back and considers the case. It’s pretty much as Bigelow described it. The first printed documents are dated about three weeks previously and deal with Snellig Firsten Holbrook’s suggested plan for the proposed buyout of Trimbley amp; Diggs, Inc.
Subsequent printed documents amend and refine the plan. Then there’s a letter assuring the principals involved that the required funds can be raised through the sale of high-risk bonds, and Snellig Firsten Holbrook has “every confidence” the bond issue will be oversubscribed.
All that is routine stuff, and Cone can’t see anything freaky going on. What interests him more are the computer records of trading activity in Trimbley amp; Diggs. The volume began to climb about ten days ago, and the stock, listed on the Nasdaq National Market, rose in value steadily from about $4 a share to its current price of slightly over $8. Nice. The buyers are probably rubbing their sweaty palms with glee and wondering whether to hold on or sell and take the money and run.
Cone leans down to address Cleo, who is snoozing in the briefcase. “Sometimes the bulls make money,” he says, “and sometimes the bears make money. It’s the pigs who always get stuck.”
But who are these lucky investors who doubled their stake in about ten days? Cone goes over the computerized trading records again, and what he finds amuses him. He can’t spot any trades of 10,000 shares or more, but there are plenty for 9,000 shares. Timothy figures that’s because a lot of wise guys have heard that the SEC is interested in trades of 10K-shares and over. If they buy or sell 9,000 shares, they think they’re home free. Cone is surprised Jeremy Bigelow didn’t spot that, and he wonders just how swift the guy is.
The big buyers of Trimbley amp; Diggs’ stock are from all over the country, but seem to be concentrated in New York, Atlantic City, Miami, New Orleans, and Las Vegas. Also, most of the buyers’ names end in vowels. That gets Cone’s juices flowing because all those cities are big mob towns-which may mean something or absolutely nothing.
Since no one is going to finance his travels to investigate out-of-state buyers, he concentrates on the names of New York investors. One that catches his eye is a man named Paul Ramsey, who lives on 47th Street at an address that would place his residence west of Tenth Avenue.
That sets off alarm bells because, after Cone returned from Nam, he lived for two years in a five-story walk-up on 48th east of Tent
h, and he knows what a slummy neighborhood that is. It’s in the middle of Hell’s Kitchen, with rundown tenements, sad mom-and-pop bodegas, dusty beer joints, and boarded-up buildings awaiting demolition.
Unless the whole area has been gentrified since Cone lived there, it’s hard to believe one of the residents is a stock market plunger. Not many ghetto dwellers deal in gold coins either.
He goes through the computer printouts for the fourth time, checking Paul Ramsey’s trades. It looks to Cone like the guy now owns 27,000 shares of Trimbley amp; Diggs, Inc., bought at an average of six bucks a share. If he sells out today, he’ll walk away with a profit of about $54,000. Not bad for someone who lives on streets where a mugger would be happy with a take of $10-enough for a vial of crack.
Cone pulls on his leather cap and takes his grungy raincoat in case the drizzle has thickened. Just before he leaves the loft, he checks the short-barreled S amp;W.357 in his ankle holster. Reassured, he ventures out to visit his old neighborhood.
“Guard!” he admonishes a startled Cleo before he leaves.
Down on the street, he finds the drizzle hasn’t just thickened, it’s as if someone has turned a tap on over Manhattan. And there’s not a cab in sight. Cursing his luck, Cone bows his head against the rain and humps his way to the nearest subway station. He tries to figure the best way to get to 47th Street and Tenth Avenue, and finally realizes there is no “best” way. No matter what his route, he’s going to get soaked.
But almost a half-hour later, when he exits at 50th Street and Eighth Avenue, the downpour has ended. The city remains a sauna, and Cone reflects morosely that all he needs is someone to beat him with birch branches. He carries his raincoat and splashes through puddles and running gutters down to 47th Street and westward to Tenth Avenue.
Ramsey’s building looks the way Cone imagined it: peeling paint, torn shades, cracked windows. It is dreary and dying, and no way would you figure it as the residence of a Wall Street plunger.
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