Black Fridays

by Michael Sears

  I kept a stack of books on the sideboard, which I ran to frequently for advice, solace, or courage. Case histories, personal stories, theories, and practices. Sometimes the books helped. But as Mamma had pointed out, what worked best was simply listening to my near-nonverbal son. He made his likes and dislikes known quite clearly.

  Escalators were not allowed under any circumstances. Elevators, on the other hand, held no terrors. He had traveled in them from the womb. He walked in, the doors closed, and when they reopened, the universe had changed. It was a form of magic with which he was quite familiar.

  The black and white tiles in the lobby of the Ansonia presented a surprising challenge. There was a wide expanse of large white tiles, interspersed in an irregular pattern with black tiles. They were the problem.

  The first time, the elevator doors opened and the Kid froze.

  “Come on, Kid. It’s no problem.” I stepped out, placing a foot on a tile of each color.

  “Nggnngnggg.” It came out half growl, half cry. It was a sound no child should be able to make.

  As I turned to hold the elevator doors for him, I took my foot off the black tile. He relaxed.

  “Let’s go, bud. Doors are closing.”

  Elevator rules: you never let the doors close once the adult has stepped out. The Kid carefully stepped out onto a white tile.

  “Hole,” he shuddered, pointing to the offending black tile.

  Whether it was a hole in the floor or the firmament, I never learned. But I had already come to respect his fears—and fight only the battles that mattered. We crossed the floor in an awkward pas de deux, garnering smiles from the staff and neighbors we passed. Two days later, he had Heather avoiding the black tiles as well.

  TUESDAY.

  Spud was unshaven, wearing the same clothes as the night before, and slumped over the little conference table—fast asleep.

  “Rise and shine, Spuddy-boy.” It had been a rough night with the Kid, and I had no patience.

  Spud jerked erect, startled to find that his bedroom had been transformed into a ten-by-ten gray box.

  “You need a minute? Want to get yourself some coffee or something?” I tried to put as much sarcasm into my voice as possible. The Kid had been up twice with night terrors—aptly named events that I was assured were “perfectly normal” and which had left me with a sleepless adrenaline hangover and a very short fuse.

  “Whoa. Sorry. I mean, no, I’m fine.” He was barely registering my presence, still shaking his head and blinking his eyes.

  “Big night?” I drew it out.

  He finally heard the edge in my voice.

  “Wait. No. Not at all. I’ve been right here all night. I must have dozed off.”

  I looked around the room. The trash can in the corner was overflowing with a cardboard pizza box and at least a six-pack’s worth of empty Diet Coke cans. He had somehow managed to shut off the damn AC vent. I cut him some slack and softened my tone.

  “Sorry. Take your time. Pull yourself together and, when you’re ready, give me a report.”

  “I’m good.” He cowboyed up.

  “I thought this was going to be cake. No problem, I think you said.”

  He nodded ruefully. “It started that way. But when I ran the final spreadsheet, I found there were a whole bunch of trades missing.”

  “Okay. So you didn’t pull them all in when you grabbed the data.” Garbage in, garbage out.

  “First thing I checked. But the system dropped selective trades, not just a column.”

  That was odd. “So how’d you catch it?”

  “Brian did a big trade back in late June. He was psyched about it. It was an unwind of a position he had been working on for over a month. He took me for beers that night to celebrate.”

  “And that trade didn’t show on the computer run?”

  “Right. It should have jumped right out on the spreadsheet, just because of the size.”

  “So, you went back to the paper files . . . ?”

  He nodded again. “And started finding other missing trades right away. Dozens.”

  “Any pattern to them? All big trades?”

  “Yes and no. The size was all over the place—no pattern at all. But they were all with the same client—a small hedge fund called Arrowhead.”

  “What do you know about them?”

  “Nothing. Brian did trades with them and told me to write the tickets.”

  As much as any trading assistant would be expected to know, I thought. I changed tack.

  “So, how would these trades just get dropped from the system?”

  “They’re not! They’re all in there. When I do a search for a specific trade, they show up. They only show up missing when I run a request for all trades by Brian Sanders.”

  I still thought it was just a glitch, but if it was something more, I wasn’t ready to discuss it with a trading assistant.

  “Are they all back in your spreadsheets now?”

  “As of around four-thirty this morning.” He paused as though he had more to say.

  “What? We have a lot of ground to cover today.”

  “It’s just that no one on the trading or sales side would have the security codes to rig something like this.”

  It was my experience that people put a lot more faith in things like security codes than was appropriate. I had no doubt that given a few hours with no one looking over my shoulder, I would have been able to engineer something myself. I’d done it before.

  “I’ll pass it on to Stockman. If he wants to follow up, it’s on him. All right?”

  Spud seemed satisfied.

  “Now show me what we’ve got.”

  Nothing else stuck out. Spud was of some help with the technical aspects of the bonds Sanders traded, but he was an admitted neophyte. Most of the trading was done dealer to dealer through a network of intermediary brokers. The few trades with clients—non-Street accounts—were all with the same handful of hedge funds and money managers. An hour later, I had learned a few things about the bond market, but I was still a long way from discovering any misconduct.

  “Okay,” I sighed. “Just give me the breakdown by salesman. I’ve got to start meeting with them. We’ll see if any of them can shed some light.”

  I wanted a nap, hours of uninterrupted sleep with no child biting me or screaming like the damned. Instead, I commandeered a broom closet–sized office and began interviewing the salespeople who had worked with Sanders. The room belonged to an IT project manager out with the flu. It was a third the size of the mini conference room, but offered a touch more privacy. The sole decoration on the wall was a monochromatic print of the city skyline, old enough that it still showed the twin towers. It was a beautiful, even majestic view, given a terrible poignancy by those two dark monoliths. I moved my chair so I would not have to look.

  Securities salesmen—and women—are no different, as a class, than salespeople in any other industry. There are conniving bastards who would plunder the jewelry off their mother’s corpse and smile while they did it, and there are honorable, hardworking professionals who are justly proud of the value-added service they provide their clients. In twenty-some years on Wall Street, I had come to believe the latter were far more numerous, but it was always the other guys who got the press.

  The first three interviews were pleasant, unsurprising in any way, and of no help to me whatsoever. All were senior guys who had been around for years and while they were willing to cooperate, they had little to say. And they were all hungry to get back out to the trading floor. Time away from their phones and computers was money out of pocket. I heard what I had already been told—Sanders was a good guy who knew his markets. He was no pushover, but he was flexible and very sales-friendly. They all parted with the same message: it was a shame about the acci
dent, and they were surprised that anyone was asking questions about his trading.

  The walls were beginning to get to me—the room was smaller than an upstate cell. If the IT guy worked typical Wall Street hours, he lived more than a third of his life in that room. If I had had to spend much more time there, I would have had to ask Spud to take my belt and shoelaces.

  I decided to do one more interview before lunch.

  “David Rhys Jones.” He announced himself like a television game show host. “Call me Davey. Everyone does.”

  Mr. Jones was an expat Brit, complete with the loudly striped shirt, with solid cutaway collar and oversized French cuffs, over-the-ankle zippered boots, and a custom-made suit that hadn’t been pressed since leaving the tailor’s shop. He was carrying a McDonald’s bag.

  He jerked my hand up and down for a few shakes, as though he was showing off some newly acquired skill, and sat down. He looked around the tiny room as though it were the ballroom at the Waldorf.

  “Nice digs. Spared no expense here, mate, what?” He gave a much too hearty laugh.

  His accent was an odd mix of the BBC and the East End. I couldn’t tell if he was upper class and playing the fool, or working class and reaching higher.

  “Brian Sanders,” I said. “What can you tell me?”

  “Oh, yes. Very sad.” He made a long face to demonstrate what sadness was.

  “You did a lot of business with him.”

  “Good lad. Bottle and glass.” He opened the fast-food bag and spread his lunch on the desk. Double cheeseburger. Fries. Soda. “You don’t mind, I hope. This is my only chance for a bit of tucker.”

  “Bottle and glass?”

  “Class,” he said around a large bite of burger.

  I found Cockney rhyming slang to be as bewildering as the gangsta Ebonics I had dealt with in jail. My first cellmate had taken offense when I had not responded to his kind offer of “a dime a lala, it be da butta.” Luckily, his kindness extended to educating me enough that I understood he had been trying to sell me a small amount of very good marijuana. I declined. Politely.

  “What kinds of accounts do you cover?”

  “All crooks,” he laughed. “Babbling brook, the lot of them. Those that aren’t, are pirates.”

  Like many of his countrymen living in the States, he seemed to enjoy “playing the Brit,” based on the shaky supposition that all American women found British accents sexy, and the even shakier idea that because American men like John Cleese, they’re also going to love Hugh Grant. Or Benny Hill.

  “The only client of mine that did any business with young Bri’ was the one small hedge fund—Arrowhead. I imagine that’s who you want to hear about.”

  I did. The missing Arrowhead trades were the only anomaly I had seen so far.

  “Let’s start there, then.”

  Jones stuffed a handful of fries in his mouth and closed his eyes in rapture.

  “You Yanks have no idea how well off you are. Food this good for next to nothing on every corner. Bloody amazing.”

  The smell in the small room was overpowering. I wanted to finish up and get out of there before I got sick.

  “Arrowhead?”

  “Right. Well. Arrowhead is a British hedge fund. Chartered in Jersey—which tells you there’s some tax fiddle involved there, eh?” He grinned as though we were fellow conspirators united against the tax man. “There’s rumors—rumors only, mind—that they run money for the artsy set. Damien Hirst and that crowd. I wouldn’t know. Another rumor is that it’s all American money, growing offshore, unimpeded by Uncle Sam. The fund is closed, however, so it makes no difference. They take no new subscribers and stay under the reportable limit, so they have to report next to nothing to the regulators.”

  Arrowhead sounded like a classic FBN account—Fly By Night. And some genius had assigned the account to Davey—a cross-cultural clown with an admiration for larceny.

  “They tend to run on a shoestring—at least over here. Geoffrey Hochstadt is their New York trader. He does a fair bit of business, but I don’t get the feeling he holds positions very long. More of an in-and-out-and-move-on approach. Does that give you some idea?” He licked a glob of ketchup off of his little finger.

  “Just the one trader?” I said.

  “As I say, it’s a small operation. Geoffrey and an assistant. They have a one-room office across from Grand Central.”

  “This guy, Hochstadt. Is he a Brit, too?”

  “Geoffrey?” he laughed. “Not bloody likely. Born and raised in Darien.” He pronounced the word like a native, back in the throat with the teeth almost clenched. “House on a hill. I imagine there are water views, if you can climb a high enough tree.”

  “How did you two get along?”

  He had finished the burger and was using the last of the fries to wipe up the smears of ketchup, cheese, and grease from the waxed paper.

  “Brian or Geoffrey?”

  “Both.”

  “Brian had not yet picked up the heated paranoia of the more seasoned traders. Never got all Punch ’n’ Judy—except after bonuses. And don’t they all? A good loaf.”

  “And Hochstadt?”

  “A wanker. Almost abusive if you’re not right on top of your game. We got together once or twice a year. I can’t say I knew him in any sense. One day, dear Kenneth stopped by my desk and told me I had a new client, and bob’s your uncle. I’ve been to the man’s house. Like all you Yanks, he loves to burn meat alfresco and serve it up ash and all. We had a meal—we weren’t mates.” He stuck the straw down to the bottom of the cup and began to slurp in earnest.

  “Did he and Brian hang out? Were they mates, would you say?”

  “Geoffrey liked to entertain the young traders. He was always leading his tribe of Lost Boys out on some evening adventure. As I understand there was a rotating clique of two or three dozen—from every department. Mortgages, corporates, stocks, derivatives.”

  “He traded in all those products?” I said.

  “He traded anything he wanted, didn’t he? The more obscure the better, it seemed. Options. Derivatives. CDOs. Commodities. More bonds than anything else, I’d guess.”

  “Let’s run through a trade, then. This Hochstadt would call you up looking for a market in something esoteric—Bolivian government bonds, for instance—and you’d call the trader for a price. Right so far?”

  “Well, not always. Most of my business is in corporate bonds and derivatives. I don’t have the expertise to talk a good game in many of these other areas.”

  “So, you would just hook him up with a trader?” Just as Toland had described.

  “Right. Let them work the magic together and I’d write a ticket. It all tended to be low margin, if you see my point.”

  Meaning that the sales commission on those trades had been small—another good reason for Jones to have paid little attention. He had done no real work with the client and had no expectation that more work would be rewarded. “Know Your Customer” is the foundation of Wall Street’s ability to self-regulate, as often ignored as practiced. Jones was lazy enough—and mercenary enough—to treat the account like “found money.”

  “How did you keep track of all those different trades? All those different products?”

  “Not by half. Hochstadt’s assistant would call at day’s end and read them off to me. Then I just confirmed with the trader and wrote a ticket.”

  “And there was never a problem. Never a discrepancy. Never a buy that should have been a sell, never a disagreement over price?”

  It was obvious from Jones’ bewildered expression that he had never before considered the question. “Never. Not once. The trader always agreed.”

  Impossible. It defied the laws of probability—and common sense.

  “Let’s back up for a minut
e. Sanders and these other traders would be out with this guy regularly? Once a week? Once a month?”

  “Oh, a good bit more than that. Hochstadt was standing them to grilled beef dinners two or three times a week. He would bring along traders from other firms as well. It was a great way for the young turks to meet and mix, wasn’t it?”

  “You never invited yourself along?”

  “Once. It was a bore. All they talked about was their last brilliant trade—or their last trip to AC.”

  “AC?” I was thinking of the broken air-conditioning vent in the little conference room.

  “Sorry. Atlantic City. Hochstadt would take a half-dozen lads gambling most weekends. Usually up to Connecticut or down to the Jersey shore. Once or twice a year out to Las Vegas.”

  “You didn’t go?”

  “Missing the necessary gene, I’m afraid. Gambling itself holds no allure—I hate to lose, and if you’re going to play games where the odds are stacked against you, you have to accept the fact that you are going to lose more often than you win. Besides, I find casinos in this country to be the nadir of American culture. Loud, crude, and desperate.” He finished his soda with a loud, crude, bubbling snort.

  In a world of private jets to the Bahamas, ten-thousand-dollar wine bills, and dwarf-tossing parties, a few young traders throwing their money away at Foxwoods sounded like kid stuff. If I had been their manager, I would have been concerned, but not overly so. Entertaining, usually lubricated with alcohol, was a necessary evil.

  “Well, Davey, one last question. Did you ever have the feeling that Brian Sanders was up to anything?”

  “Bent?” He wadded up the wrappings from his lunch and dropped them into the wastebasket, ensuring that the room would smell of fast food for the rest of the afternoon.

  “Anything not quite kosher.”

  “Bit of a prig, actually.”

  I let him go. If I had learned anything of value, I didn’t know what it was. Stockman would laugh me out of his office if I walked in and announced that a junior trader had been dealing direct with a client who regularly wined and dined him in Atlantic City. It may have been a red flag, but it was no smoking gun.