His office was almost homey. The furnishings were all a dark cherry, offset by a rich Middle Eastern carpet. On the wall behind his desk hung framed pieces from his collection of bonds that had never paid off: Confederate States of America bonds; Patagonia Economic Development Bonds from the late 1800’s—backed by gold that was presumably still in the ground; and a Chinese Railway zero-coupon bond from the 1920’s that was denominated in guilders. Financial innovation is as much recycling as it is invention.
“What do I need to do to get you out of my life soonest?” he asked.
“I need someone—maybe a junior trader, or a sharp trading assistant—to sit with me and go over the trading records. To tell me what I’m looking at. A translator. Next, I will want to talk with some of this guy’s buddies. Other traders? Salesmen? Sometimes people see things they don’t know they saw.”
“And sometimes there was nothing to see.”
I nodded. “I’ve got no axe on this. If there’s nothing there, I will be happy to say so.”
“All right. No problem. I’ll set it up. What else?”
I had him cooperating. I leaned back in the chair and made myself comfortable.
“Tell me about Sanders.”
Barilla let out a long breath. “I meant it. He was a good kid. I thought he was a straight arrow.”
“Where’d you find him? He have a rabbi?” Wall Street had become much more inclusive over the twenty-some years I had been in the business, but nepotism was still the most common way to get a start.
“No. He came in through the training program. Usually, I don’t have much use for MBAs unless they have some great quant credits—MIT or Chicago. They’re all too eager to please. They do all right in sales. But Sanders stood out. He had balls and a bit of flash. And he could crunch numbers.”
“What did he trade?”
“Bond basis. He was part of the proprietary trading group. There’s a small group of senior traders who report directly to me. They trade whatever they want as long as they make money. They take a lot of risk, but they’re the guys you want handling it. There’s a few junior traders who sit with them. They get the experience of working with some real hitters, and every once in a while, maybe, generate an idea for something new.”
“Sanders was one of them?”
He nodded. “It’s a good team. Rich Wheeler heads it. You might remember Neil Wilkinson. He was also at Case—back in the Dark Ages.”
I did remember Cornelius Wilkinson. He was a genius and a gentleman—a rare combination anywhere, but especially so on Wall Street.
“Back to the top,” I said. “Bond basis?” I had a vague idea of what he was talking about.
“The short version? He traded U.S. Treasury notes and bonds and arbitraged them versus the futures market. You did something similar in currencies, right?”
“In foreign exchange, we call it trading to the date.”
“Sharpies can buy in one market and sell in the other, for future delivery, and lock in some small profit. It’s a relatively low-risk, low-return strategy that demands quick reflexes and extraordinary attention to detail.”
“But all this is computer-generated these days, right? You don’t need a trader—you want someone who’s good at video games.”
He laughed. “Maybe so, but there’s enough moving parts that you’re always trying to hit a moving target. So there’s some art to it as well. Not everybody is suited to it.”
I wouldn’t have been. “Was Sanders?”
Barilla leaned back and looked at the ceiling for a minute before answering. “For two years, he was thoroughly adequate. He kept his risk levels low—spent his time learning the product cold. Then this winter he took off. The senior guys on the desk must have let him off the leash a bit. He went from racking up two or three mil a year to being up eighteen mil by end of second quarter. I’d say he figured it out.”
“So where was he screwing up?”
He gave me another hard look. “I don’t think he was screwing up. Remember? The Feds have it wrong, or they’ve got the wrong guy. Christ, years down the road and the whole mortgage market is still in disaster mode. So why is the SEC suddenly concerned over some junior guy who never made more than chump change?”
Exactly what I had said to Stockman.
“So why is Stockman so concerned?”
“Stockman is basically an empty suit with ambition—and he’s up to something. There are so many rumors going around, you could write a book.”
“It sounds like I’m going to have an easy few days. I’ll be gone before you know I’ve been here.”
“I already know you’re here, and I don’t like it.”
—
KEN TOLAND WAS
a sales manager. Not all sales managers are bottom-feeding lowlifes. It’s a tough job—they are constantly putting out fires, stroking huge yet fragile egos, and adjudicating disputes. Salesmen ostensibly report to a sales manager, but that doesn’t mean they listen to or respect him—or, in rare cases, her. Some are fair and hardworking—mentoring junior salespeople, keeping older warhorses productive, and willing to take a stand on what’s right. Those guys burn out fast. The politicians are the ones who last—the two-fisted hand-shakers, the ass-kissers, the promise-breakers, the glory hounds, the self-promoters. The markets are tough, and the clueless get ground up and spit out—or they manage to keep dancing and become sales managers. A sure sign that Toland was coasting was that he was the only person available to take me to lunch in the middle of the trading day.
We rode uptown in a Town Car. Toland gave me nothing but platitudes. Sanders had been “the star of his training class” and “every department wanted him.” As a trader, he was “very customer-friendly” and “kept the sales force happy.” A Boy Scout.
Ben, the maître d’ at Le Bernardin, didn’t recognize me, or was too polite to let it show. That was fine with me. Anonymity suited me. Toland made a show of speaking French and requested a table “out of the traffic.”
“May you live in interesting times,” he said, raising his glass of Sancerre.
I grunted.
Toland didn’t notice. He was busy playing with his wine, slurping and gargling like he’d learned to do in some expensive wine course he’d once taken.
It wasn’t until we were done with the first courses—grilled bacalao salad for me and the marinated Kumamoto oysters for him—that I got any relevant information.
“Most of Sanders’ business was done with only a handful of accounts—hedge funds and money managers. The salesmen generally let the clients speak directly to the traders on that kind of business. There’s not much value-added from the sales side.”
He had already finished the bottle of Sancerre. I was still nursing my first glass. He gestured for another.
Salespeople are the point men and women for the firm, and are responsible to their clients for the firm’s best efforts on their behalf. Traders are responsible for the firm’s interest. They set price and manage risk. Together they act as a counterbalance, like two kids on a seesaw. But Wall Street is a zero-sum game—there are always winners and losers—and the moments when the best interests of firm and client coincide are rare. Keeping the sales and trading functions separate allows human beings to concentrate on their own primary goals. Of course, everyone’s primary goal is to make as much money in as short a period of time as possible, so the system is far from perfect. Some kid is always jumping off the bottom end of the seesaw.
“You don’t run into compliance problems that way? Who resolves trade discrepancies? Who’s responsible for suitability? All the ‘He said, he said’ issues.”
“That is ultimately the salesman’s responsibility, of course, but these are all big boys. Sophisticated, savvy, institutional accounts.”
“So the client and the trader do some business and then they report it to the salesperson?”
“Essentially.”
“What do they do when there’s a fuckup?”
“As I said, these are all big boys. They resolve these issues themselves. Every once in a very long while, I am called in to settle a squabble.”
Not too often, I thought, if you’re out to three-hour lunches on a regular basis.
It sounded like a lot of trust and responsibility to be laid on a fairly junior trader. It also sounded like a breeding ground for shortcuts.
The main courses arrived and, for the next few minutes, my prison-starved senses were overwhelmed by the pan-roasted monkfish in red-wine brandy sauce. Toland was swilling his way through the second bottle of wine.
“If you like, we could set up a call with some of those clients. They might give you some insight on the kind of trading he was doing.”
I gave a polite cough. “Sorry, that won’t work. Direct contact with clients could get me in some serious trouble. I’ll have to get what I can from your salespeople.”
Toland seemed embarrassed at the gaffe—Stockman must have filled him in on my situation. He took another long swallow.
I kept eating.
“Yes, well,” he finally mumbled. “I’ll set that up for you first thing in the morning.”
“No chance of getting started today?”
“Afraid not. I have a client meeting here uptown after lunch. You take the car. The driver will get you back to the office.”
I thought he was going to have a tough time with a client meeting. The second bottle was down below the label. His face was flushed and his eyes a bit watery. In his condition, I would have been headed home to sleep it off.
We shook hands outside the restaurant like the best of friends.
I climbed into the back of the Town Car while he weaved off toward Broadway.
“This a regular thing with him?” I asked the driver.
“I’m his regular driver, sir,” he said, which answered the question.
As we made the turn onto Broadway, I caught sight of Toland, head down and shoulders hunched, ducking into a doorway in the next block. Flash Dancers—one of New York’s many gentlemen’s clubs. Basically a titty bar with pretensions. I supposed he could have been meeting a client—business gets done over cocktails more often than over the phone—or he could just have been another bottom-feeding lowlife.
—
IT WAS AFTER THREE
by the time I got back to Weld. Gwendolyn had arranged a tiny conference room for me to use as an office. It was smaller than my cell at Ray Brook. There was a small, round conference table, four chairs, and a credenza with a phone and a computer terminal. No window, no art on the walls, and no clock, though there was an overactive air-conditioning vent overhead that seemed to find me wherever I went in the room. I kept the door open, but the cold gray walls started squeezing in on me the minute I sat down. I kept my jacket on.
I wasn’t there long enough to start screaming before a serious-looking young man arrived bearing two boxes of reports.
“Did Stockman’s office send you?”
“No. Mr. Barilla said to help you.”
I could tell he wasn’t a trader—his tie was pulled up and tied, his sleeves were rolled down, and he neglected to swagger when he came in the room. “Are you the trading assistant? You worked for Brian Sanders?”
“Sometimes. They rotate us through the group.”
“Who do you work for now?”
“I’m still unassigned. I cover for whoever is out.” He projected eagerness rather than efficiency. He was young—just out of school, I judged. His dark brown hair was still a little too gelled for Wall Street, his shoes more fashionable than expensive.
“Perfect. You are now assigned to me. Sit down. Do you know who I am?”
“No. I guess you work for Mr. Stockman.”
“Jason Stafford,” I said. The name meant nothing to him. When I had last been famous, he was probably too busy beer-ponging to have seen my name in the press. “He’s hired me to look into Sanders’ trades. I report only to him.”
“Okay.” He seemed neither pleased nor displeased. Nor suspicious.
“What do you think about that?” I found that if I kept focused on him and the task, the walls tended to behave better and keep their distance.
He hesitated. “About what?”
“About somebody looking into Sanders’ trades.”
He shrugged. “He could be pretty secretive. I don’t know. I guess we’ll see.”
“We will,” I said. “What kind of secrets?”
He thought for a moment. There was an answer on the tip of his tongue, but he held on to it. When he finally spoke, I felt like I was getting the story he thought I wanted.
“Well, a lot of the traders like talking about what they’re doing in the market. Like bragging, but not really. Brian never explained. Even if I asked him something straight out, he would give me half an answer at best.”
“Anything else?” He was holding something back. “It’s all going to come out. Sooner is a lot better than later.”
“I guess it wasn’t that much of a secret.”
“What’s that?”
“Brian was a serious hound. Always in pursuit mode. It got weird sometimes when he was trying to keep all the different girls straight.”
Ah. That kind of hound. “A player.”
“Exactly.”
I had been a virgin when I graduated from high school—having been skipped ahead two years in elementary school and never quite recovered socially. My introduction into the mysteries of the flesh by Meagan Albright occurred during my second year at Cornell. She and I had several brief entanglements, the main purpose of which, as far as I could tell from her monologues on the subject, was to evoke jealousy in the heart of a fellow math major who had spurned her advances. And though I was far from celibate in the intervening years, before I was swept up into a state of slavering, perpetual concupiscence by Angie, I had never been a player.
The active pursuit of not just one woman at a time but many, with all the schedule and emotional juggling required, seemed more stressful than the job. I had the necessary calculating, predatory reserve, but I channeled it into my work, rather than sexual conquest. There was no jealousy on my part toward those who chose to live that way, no moral outrage, no need to defend the honor of womankind; it was more a sense of disbelief that anyone would devote themselves so single-mindedly to the pursuit of something so ephemeral.
Angie opened my eyes.
I looked at the young trading assistant. He seemed more than a bit in awe of Sanders and the games he played. I didn’t hold it against him, but I wanted information.