Man in the Middle

by Ken Morris

  “You willing to put your neck in the noose on this one? ’Cause that’s where it’s gonna be if you’re wrong.”

  “Yes. Even if I’m proven to be full of shit, I need to know. So do you.”

  “If this were anyone else in the department, I’d say go to hell. But you’re a good agent, and I can’t ignore something this big. Let’s hear the plan.”

  “We go around Ranson . . .” Dawson explained how. “Then I work in the background to determine where those documents came from—I work solo. Without anyone’s sanction, not even yours. It will take some time, but I’ve waited my whole life for this kind of an opportunity, and I’m willing to take it slow and easy.”

  “Why without sanction?”

  Dawson sensed the heated stare and felt naked, subjected to ridicule by this important man. Dawson’s skinny chest began panting. No turning back now, he knew. “Because eventually these sons of bitches are gonna figure out I’m involved. If they think this is official, and think the SEC is launching a full-blown investigation, people and their families are gonna get buried—literally. If they think it’s just me, they’re more likely to opt for damage control.”

  “If what you say is true—and I suspect ninety-plus percent of your story is self-delusional—that makes you a possible target too.”

  “Maybe. But if I disappear or end up dead, it’ll be hard for them to explain. If anything does happen to me, then at least I’ll have proven a point. Correct?”

  “If you die in a freaky manner, yes, I’ll buy into your thesis. Hell of a way to make your point, Oliver.”

  Dawson’s head swung from the road to Ackerman. In all the years they had known one another, this marked the first time the director referred to him as Oliver. He felt foolish for the happiness this small gesture brought him.

  Still warmed by the informality, Dawson continued: “I’ll go to San Diego. I’ll pay my own way. When I find out who in San Diego sent me those documents, I’ll take some time off and investigate on my own time, in violation of agency guidelines. If I’m caught, you read me the riot act. If I create too much of a stink, you fire me on the spot. That should convince Ranson I’m acting without agency approval.”

  “This is nuts. I don’t think such extreme—”

  “Excuse me for interrupting, sir, but if I lose one more lead, this case will disappear—and I’ll feel responsible for additional suffering. Please. Trust me.”

  “Once you’re fired, then what?”

  “If we get to that, I’ll try to find someone on the inside to feed me information. If this person who sent the Cannodine papers has anything else, or can produce more, I milk him or her. That’s it.”

  “You’re a piece of work, Dawson.”

  “Thank you, sir.”

  “I didn’t mean it as a compliment. I reiterate: you screw up, or smear Ranson—assuming, as I suspect, he’s done nothing wrong—and you are history. And until this heats up, you work your normal case load.”

  “Of course.”

  “You keep me up-to-date once you make a contact in San Diego—if you make a contact. I want reports at least once a week, even if it’s to tell me you are up shit creek. Understood?”

  “Yes.”

  “You have six months to get me something concrete—no, more than concrete. Six months to bust this case open or I bust you. That’s the deal.”

  Dawson exhaled, realizing that working covertly, with limited resources, meant slow progress. Even uncovering who had sent him the papers might take weeks or months. If he used up his allotted time without concluding the case, he’d get on his knees, if necessary, and beg for more time. On second thought, looking at the ripples of black around Ackerman’s narrowed eyes, Dawson realized begging would be a waste of time.

  “You put up or shut up.” Those were the last words from Director Ackerman as he stormed from Dawson’s car once they reached the office.

  Fumbling under his seat for a can, Dawson found a Diet Coke, opened it, and sipped.

  “A dog that’s got a bone,” he told himself. “That’s what I am . . . an ugly mutt, done got a stinky bone, and nobody’s gonna take it away from me.”

  Nobody.

  As the San Diego summer arrived, and the fog hanging over his pre-sunrise arrivals gave way to dry, warmer days, Peter found his financial confidence growing. San Diego, never cold, had transitioned from cool spring to tepid summer. At the same time, Peter had devoured book after book on the markets. He learned about value investing, momentum investing, charts and graphs, micro-economics, macro-economics, even the capital asset pricing model and the theory’s absurd assumption that markets were efficient. If they were efficient, he figured, then Stenman and her operatives couldn’t be turning in kick-ass performance records quarter-after-quarter, year-after-year.

  Peter also enjoyed analyzing companies and picking them apart—by accessing annual reports, year-end 10K’s filed with the SEC, quarterly 10Q’s, brokerage research reports, and calls to and visits from company executives. He dug deeply for investment insights, using his newfound analytical skills. The learning curve was slick and fast and exciting as hell. The days seemed to last only seconds, the weekends—even when having a good time with friends—lingered, feeding his impatience to get back into the action—so much so that he often came into the office Sunday evenings, with the opening of foreign markets, and stayed the night. He had developed, he told himself, a healthy addiction.

  After months of clerking and working orders on the various exchanges at the behest of others, Peter was finally allowed to cut his teeth. By the end of summer, he began to trade independently. By having Stenman Partners on his business card, brokers and executives fed him information and favors. It was as if it were Christmas, year-round. A whisper-number on earnings came a day ahead of the company’s press release, and always dead-on accurate. When a gigantic institution hit the market with a buy order in a given stock—one big enough to push the price up several dollars—a broker might let it slip that Peter should buy a few shares ahead of that event. With a research recommendation pending, he’d be told: “Buy some, Peter. You won’t be sorry.”

  Gifts, bestowed every hour of every day. Was it all perfectly legal? he asked himself. Probably not, but it was business as usual, and it wasn’t smart to refuse presents from people he might one day need.

  In a jam, like when lugging a non-performing stock position, Peter learned to create a technical breakout—buy more, and take the stock higher, through a previous price-resistance level. A call to one of the Street’s top-rated technical analysts—along with the promise of future remuneration—could generate a technical, short-term buy-recommendation, thus driving the share price even higher, just long enough for Peter to dump his position. “Tricks of the trade,” Stuart told him. It was a smaller version of the good old pump and dump, only tailored to his specific needs. Information and influential friends—Stuart had been quite right about their importance.

  Once fall rolled in, Peter began to make substantial contributions to the hedge fund’s profits. In some things—fundamental stock research for one—he actually became more proficient than his mentor Stuart. Peter’s energy and passion grew daily. Even an occasional stinker trade couldn’t diminish the thrill of making significant money by day’s end, and of winning, where the final score was determined simply by numbers of dollars. In the case of a hot deal, Peter might make a hundred percent increase in a single trading session. And because of Stenman’s financial muscle, when he asked for it, he always got gigantic representation on these ultra-hot deals. Everybody understood the unwritten rule: generous stock allocations went to those who paid the most in commissions. And nobody paid more than Stenman Partners with their four- or five-hundred percent turnover per year in funds under management.

  Now that he understood the process, Peter felt like a pump-cart in a room full of locomotives. He longed to dabble in the big numbers thrown around by more senior traders—those who tucked their ears into their phones
, protected their sources of information like a well-guarded treasure, and made tens-of-millions in magical profit on a near-constant basis.

  And beyond these wizards were Howard Muller and Morgan Stenman. They had the resources and touch that could turn a “pittance”— a hundred million or so—into a fortune of several hundred million or even a billion dollars. Peter could recite stories he’d heard of how mysterious overseas partners raked in more money than many countries’ governments had stored in their central banks. This was heady stuff, and Peter imagined the day he could taste that kind of raw financial power.

  By October, nobody doubted Peter’s passion. “A machine,” Stuart said of Peter’s seventy-hour weeks. “A natural,” Morgan Stenman had said more than once after reviewing his performance numbers.

  The brokers who covered him enjoyed his pleasant manner, and bent over to give him preference on deals, insight, and knowing winks and nods. Company executives, accustomed to a browbeating whenever someone from Stenman Partners called, seeking information, appreciated Peter’s politeness. He sometimes received a proprietary nugget or two as a reward for his uncommon civility.

  On the first Friday in October, Peter closed out a trade and took a quick look around the room. With his turret close enough to Stuart’s that their elbows brushed, Peter noticed Stuart’s nose dripping like a leaky faucet. “Fucking-A, Stu, it’s noon,” he said, muffling his voice. “You need to get a grip.” Stuart’s eyes rolled so fast they made Peter dizzy.

  “Lighten up, dude,” Stuart said. “Friday ritual. A treat after a week’s hard work.”

  “Can’t you at least wait until the market’s closed? How can you function with all that shit floating around the scrambled eggs between your ears?”

  “Usually helps. I got a great idea . . . since you got nothing to do, mind reconciling for me today?” Stuart’s leg jack-hammered off the ball of his foot.

  “Nothing to do? You know better than that.”

  “Fact is, Petey, you’re right. I am a little messed up. And I got too many . . .” Stuart paused to wipe his nose. “Muller had me take down some of his trades . . . I’ve got to reconcile them. Help me out, just this once. It’s not as if I haven’t taken you under my wing, helped build your budding career and all that.”

  “Yeah, yeah.” Peter began to play an imaginary violin. “Just this once. Whatta you need me to do?”

  Peter recalled Stuart disappearing that morning into Muller’s office just as Muller left for a meeting. When Stuart emerged, an hour later, he had a stack of fifteen or twenty tickets that he now withdrew from a side drawer. Stuart dropped them in front of Peter.

  “The P&L ought to add up to . . . uh . . . shit, how much was that?” he asked himself in a voice loud enough for half the room to hear.

  Stuart patted the desktop with both palms like a man trying to put out a small brush fire. Spinning his head, he said, “Oh yeah, oh yeah, oh yeah.”

  He then darted to Muller’s office. With a rapid series of punches, Stuart typed a seven-digit password into a keypad, opened the door, and went in. A moment later, he reemerged and pulled Muller’s door closed. Stuart wore a ridiculous drug-fueled grin and looked as if he might be humming to himself. He waved a slip of paper as he bounded towards their desks on the balls of his feet. In the background, one of the clerks dinged a bell that signaled one p.m.—the stock markets had closed for the week.

  “Here,” Stuart said, flopping into his chair, facing Peter. “This is on the QT. If Fat-Head knew about this, he’d cut my balls off, hang ’em up to dry.”

  “What number am I trying to reconcile?”

  Stuart rolled his shoulders to a silent rhythm as he squinted at his own handwriting. “Two hundred twenty-one and some change.”

  “Two hundred and twenty-one what?” Peter asked.

  “We’re dealing in millions of dollars.” Stuart grinned.

  Peter felt bewildered. “You’re saying you or Muller or whoever did these trades made that much money this morning?”

  Stuart horse-laughed. When he caught his breath, he said, “Yeah. That was me and the freak.”

  Several traders turned, annoyed at the levity. “Shhh,” Stuart slurred, not able to take his own advice. “You mind crunching these numbers while I take recess in the conference room?”

  “I don’t mind, Stu, but don’t you think”—Peter’s voice dropped to a whisper. He leaned into Stuart’s ear “—that you should go easy on that stuff. You’re already messed up.”

  “Make the money, dude, and nobody’s gonna care. See you in ten.”

  Stuart double-timed it to the conference room. A moment later, he drew shut the curtains. By now, Peter knew the routine. Four lines drawn on the table with a hundred. Roll that bill, inhale, switch nostrils, inhale. Wait five minutes, do it again.

  “Get some help, Stu,” Peter said under his breath.

  Peter picked up the first two tickets. They involved massive day-trades in the Japanese Yen. Net profit: $32 million. The account name was coded. The next two trades were in the British Pound Sterling, similarly large and coded, but something looked wrong with the information on the tickets. The purchase appeared out of whack. According to the ticket, the buy took place several hours after the sale. Unless this was a short sale, and nothing indicated it was, the trade times looked ass-backwards. Peter matched the last seven sets of trades—all hugely profitable—and discovered one other with a similar discrepancy. This second erroneous transaction was done through an Irish broker in a stock that appreciated fifteen percent between the purchase and sale. The transaction times also made no logical sense.

  By the time Stuart returned, Peter had separated out two sets of confusing trades.

  “How’d you do on reconciliation, Petey?”

  Stuart’s brain, Peter guessed, now floundered in a stupor, light years from reality.

  “Stuart—”

  “Why you whispering, dude? Got a problem? You need a lesson in addition, subtraction?” Stuart’s lids and brows opened and closed in an annoying dance.

  “Were any of these trades short sales?” Peter asked.

  “Nope. All straight buys then sells.”

  “So we didn’t sell stock or currency ahead of the purchase?” Peter grabbed Stuart’s hand and squeezed hard enough to feel bone bow.

  “Hey, what’re you trying to do?”

  Still whispering, Peter said, “These trades are backwards—the time stamps have sales occurring hours before purchases. What’s going on?”

  Stuart managed to focus. “What?”

  “Sales before—”

  “I heard you the first time.” As if he had been caught stealing candy, Stuart looked side to side in an attempt to read others’ faces.

  “Follow me,” Stuart ordered.

  The two men quick-stepped to Howard Muller’s office. For the second time in the last hour, Peter watched Stuart punch numbers on the keypad lock.

  “Muller changes the office code by four p.m. every Friday,” Stuart said. “Thank God you . . .”

  Entering, Stuart skipped to a corner and opened a small index-card file, resting on a bookshelf. “This’ll be no problem,” he said. He took a small key from the file. A moment later, he unlocked the side-drawer of Muller’s desk. He removed the sophisticated remote that Peter had seen at his first formal meeting with Stenman’s CIO. “I can’t focus, Petey. Need your help.”

  Having to reach over a mound of disorganized papers atop Muller’s desk, Peter took the slim ten-inch device from Stuart’s outstretched hand. He moved slowly, not wanting to disturb, drop, or knock against anything. He noted where Stuart had lifted the remote and reminded himselfto return it exactly to that spot.

  “What in God’s name is going on?” Peter asked.

  “Ain’t about God, my man. Backtrading is all. Not a big deal. Aim at this.” Stuart pointed to Muller’s timestamp machine.

  “Why?”

  “Please, Peter. Give me a break. If those tickets had gotten
booked the way I wrote them, I’d be fired. I need you to program in the sell time on that first ticket.” Stuart slumped onto the floor in a near corner, looking the part of an exhausted man nearing total collapse.

  Peter shook his head in defeat. “Now what?” he asked. “I want to get my sorry ass out of here.”

  “Uh, was that the sell time we just entered?” Stuart asked.

  “Goddammit, Stuart. Pay attention. Yes, that was the sell time. What’s next?”

  “Okay. Stamp that time on a buy ticket. You get what we’re doing?”

  “Yeah. I get what we’re doing. We’re reversing the times on these trades by using a programmable timestamp.”

  “Bingo. You’re catching on. Better hurry. I didn’t tell you, but Howie-Boy is due back any minute.”

  “Muller’s due back? You got to be shitting me.”

  “Don’t ever shit my friends.” Stuart pulled a tissue from a box on a side-table and wiped his brow. Peter’s eyes widened as his friend then dropped the Kleenex onto the tabletop. Peter grabbed the damp discard— evidence of their intrusion—and shoved it into his pant pocket. “Three more tickets to write,” Stuart continued. “Better get them stamped, Old Paint.”

  With his hands shaking, Peter entered the date and time for the last three trades. The buy times became the sell times, the sells became the buys.

  When he finished, Stuart popped to his feet, looking halfway sober. “See over there?” he asked, gathering up the tickets. He raised his eyebrows at a far wall.

  “Over where?” Peter asked.

  “There.” This time Stuart pointed. “That panel retracts. I once had to make a delivery for Melon-Head. There’s a safe full of cash. Lots and lots of big bills. I’d love to get my hands on some. That’d be cool, but no use dreaming. Let’s blow this Popsicle stand before my cousin comes back and finds out I’ve shared a few of the family secrets.” Stuart sounded jovial.

  “I do not want to know details,” Peter said, as a thick pain hit him in the gut. “Ever.” That what they had done stunk in the extreme wasn’t lost on him.