Authors: Carey Green
“Call the FBI. We’re in the book.”
Dylan turned his back towards Conroy and walked ten feet away. He flipped out his cell-phone as he faced the wall. He dialed information, and he spoke as softly as possible. “FBI please.” He was connected to a live operation within seconds.
“FBI.”
“Yes, May I speak to a special office Tim Conroy.”
“Hold the line.” Dylan glanced back over his shoulders at Conroy who was phone as he retraced his steps. The voice seemed to be the same as the man who had just approached him. Dylan hung up the phone as he walked back towards Conroy.
“Let’s go. But I have a party later, and I can’t be late.”
“Don’t worry. This won’t take long.” Dylan followed Conroy around the corner to where his vehicle was parked.
At his previous job, the trading scheme for which Dylan was fired had begun with the purchase of a single listed name. A lone symbol was mentioned on the desk and within hours the volume mysteriously started to rise. He would never learn the source of the information, but he would eventually befriend the men behind the scheme.
It had begun simply enough. The trading desk had reorganized, and Dylan had been sent to work for a notorious equities trader by the name of Jerry Matland. Matland was known as a rogue leader of a fearless band of trading desperados, and Dylan had found himself in a nether world of loosely supervised cowboys. Matland and his group were proprietary traders; they devised their own trading algorithms and used them to trade the bank’s own money. Matland had made a great deal of money for the firm in the past, and had thus been granted the status of untouchable. On his first day in the group, Dylan and his trading assistant, Binky, had landed in a new location, next to a young group of traders he would later refer to as Jerry’s Kids, in homage to the famous comedian’s telethon to raise money for the mentally handicapped. Their real names were John, Matt, and Ryan.
Every group had a leader, and the leader of Jerry’s Kids was Ryan. Ryan was about twenty-eight, dark black curly hair, rail-thin and always wearing a blue Oxford shirt untucked in the rear. He wore it as a badge of honor. Ryan had somehow gotten the job despite never going to college.
As the days and weeks unfolded, Dylan adjusted to the rhythms of his new location. After a while, he had noticed the trio constantly huddled and whispering in front of Ryan’s computer screen. One day, Dylan wandered over to his colleague’s workstation.
“What are you guys looking at?”
“This,” Ryan said, as he pointed to the screen. On it was a Bloomberg graph of a stock that was trading at seventy-eight cents and pointing straight up. It was a penny stock: a high-risk speculative investment whose cost was often less than a dollar, hence the name. These stocks were not traded on the New York Stock Exchange, but on smaller, less regulated exchanges, referred to as Bulletin Boards. The stocks that were traded on these exchanges were often minimally funded companies, some of which were barely on the brink of existence. Most of these companies did not meet the strong financial standards required for the larger exchanges. This particular stock had gone up at least ten times during the preceding twelve months. Either it was going to make you rich, or leave you broke.
“You own that?” Dylan asked. “How much? Fifty shares?”
“’Do I own this?’ I own over one million shares. When you’re filthy rich, you don’t worry about nickels and dimes.”
“How did you find out about this stock?”
Ryan laughed. “It’s a long story.”
“I got a little time.”
“Not today,” Ryan said. And with that, the conversation was over.
Over the ensuing weeks and months, he would learn the details of the scheme. Ryan, the older kid, had a connection with the market maker, the dealer of the security that helped to stabilize the price in the open market. On the New York Stock Exchange, market makers were highly regulated. In the world of penny stocks, the market makers regulated themselves.
Ryan’s contact on the exchange would text message him during the day, and would dictate the general flow of the stock, or if any unusually large orders were coming in. Ryan would then call several retail brokers who would place buys and sells in the accounts of Ryan’s relatives. It was as easy as one, two, three. Later on, Matt and John had become involved.
“So who is your contact?” Dylan asked. He was amazed that Jerry’s Kids could be so brazen.
“Why do you want to know?”
“I’m just curious.”
“Curiosity killed the cat. You want in?”
“Me?” Dylan asked, half-hoping he could be included, half afraid that he would.
“There’s always room for one more.” Ryan smiled at Dylan and took out a yellow Post- it note. He wrote three letters on it: “XMQ”. He then handed the piece of paper to Dylan. “Hold onto that,” Ryan said.
“I will,” Dylan said. He folded the Post-it note and placed it in his pocket.
For a while, Dylan forgot completely about the deal. Jerry’s Kids quieted down, and Dylan put his head down and began to focus on his work. The equities markets were robust that summer, and he kept plenty busy with the activities on the desk. He had no indication that anything was wrong until the morning that Jerry Matland called him into his office.
Jerry Matland’s office was a corner job in the midst of the trading floor. Though it featured a fantastic view of Times Square to the East and downtown to the south, Jerry was seldom in the office. He preferred to work directly on the trading desk.
“So what’s up Dylan?” Jerry asked, as Dylan walked into his office. “Having a good summer so far?”
“Pretty good, Jerry. And you?”
“I’m good. Terrific. Couldn’t be better.”
Those were always Jerry’s words: He couldn’t be better. This was Dylan’s first trip to Jerry’s office since he had joined the group, and Jerry was sitting on the front of his desk, arm’s folded with his lasered white teeth gleaming. Though Jerry’s suits were always handmade, and his shirts were always impeccably white, Jerry’s hair was always a little past the shoulders and begging for a ponytail. He belonged in advertising.
“Listen, Dylan. We have a problem. Could you please shut the door?” Dylan complied, then returned to the seat in front of Jerry’s desk.
“What’s up Jerry?”
“Dylan, do you know the symbol, XMQ?” Dylan’s heart began to beat a little faster. Jerry’s demeanor quickly shifted from that of class clown to that of executioner.
“I think so. Yes, I know it. It’s a penny stock.”
“That’s correct. Have you been trading in this security?”
“No, I have not.”
“Do you know of any trading activity of this stock by members of this desk?”
Why was Jerry asking him this? Dylan began to calculate the probabilities of the situation, and surmised that the illegality of Jerry’s Kids had finally caught up with them. Somehow the powers that be had discovered their scheme, and now they were in trouble with management. He was relieved that he was not a target of the investigation. But why was he being questioned?
“Nobody has said anything to me about it, so I don’t think so.”
“Well,” Jerry said. “It’s complicated. You see, certain members of our desk seemed to have been obtaining information from the market maker who worked for the firm on the OTC accounts. It would also seem that some of these gentlemen have been trading these stocks out of their own account for personal gain. This is an obvious example of what is referred to in legal parlance as insider trading. Do you understand?”
“Of course, Jerry.”
“So, I ask you again, Dylan. Did you know?”
‘Did I know what?”
“What was going on with some guys on the desk. Did you know?”
“No, I mean, I don’t know.” Jerry’s mouth was open in bewilderment. Dylan could see why he was so successful as a trader. He was nearly dancing now, his body all kinetic and rasping with energy. His suit and his clothes could barely contain him, and Jerry was on the verge of jumping Dylan’s chair. “Dylan, come on. How the fuck do you expect me to believe that? You sit right next to these guys. ‘Jerry’s Kids’: that’s what you call them, right?”
“Yes.”
“So you sit right next to ‘Jerry’s Kids’, you don’t know what the hell is going on, right?”
“You asked a question. I’m just trying to answer it.”
“Dylan, I’ll rip your fucking head off if you sit here and lie to me like that! Here,” Jerry said as he picked up a sheet of paper from his desk. “XMQ was in three of your emails. You were dumb enough to go into the company website and download a research report on this company to your desktop. What were you thinking? You think emails don’t get preserved?”
“Jerry, I---” Jerry was in his face now, red and raging. Dylan’s bluff was failing badly. He needed to move onto Plan B.
“Ryan, John, and Matt have already been suspended. Should I fill out the form right now for you, or do you want to tell me what you know?”
Dylan hesitated for a moment. “Okay,” he said. “I knew. I knew about their scam. What do you want me to do?”
“I want you to deny everything. The emails aren’t conclusive if you didn’t buy the stock. If compliance comes to you, say you heard something on the desk about it, and you looked at research. But drop the bit about Jerry’s Kids and what you know.”
“What?”
“You’re not involved in the trades, and two wrongs don’t make a right. It’s enough that I’m losing three of my guys, I can’t have you involved in this too. John, Ryan, and Matt are done. That leaves me with you and Binky.”
“So is Binky in trouble too.”
“Yeah, you sent him the emails, dumb ass.”
“So what about him?”
“I can’t protect both of you. I can transfer you to a different group. But If I try to move both of you, it will look too suspicious. Let Binky deal with compliance on his own. If he goes down, he goes down.”
“Jerry, I can’t throw him to the sharks like this!”
“This is not friendship. This is business. Fuck him.”
“Jerry, come on---”
“Dylan, please, that kid has the silver spoon so far up his ass, when he blows his nose, money comes out. You need to be worried about your own fucking neck.”
“He’s my best friend.”
“Best friend?” Jerry mimed him. “What is he? Your boyfriend?”
“Fuck you, Jerry,” Dylan said as he got up from his chair. “I don’t have to listen to this.”
“You sit back down in that chair!”
“You don’t own me!” Dylan slammed the door as he left Jerry’s office. Half the trading floor watched him as he went back to his desk, collected his wallet, and headed for the elevator. When he reached the lobby downstairs, it hit him: Hh career at the firm was finished.
Conroy’s sterile white office in Brooklyn was devoid of windows or any type of view. No pictures were on the walls. His desk was centered in the middle of the room, and cluttered with files and books.
“No windows here?” Dylan asked.
“No, we don’t want the bad guys to see us,” Conroy said.
“Look,” Conroy said, as he stopped walking. “I’m glad you’re talking to us. It goes without saying that you won’t mention any of this to anyone. Vanessa Remmerling will be joining us shortly.”
“Is she your partner?”
“We don’t have partners, at least not really. She’ll be working on this case, along with several other people in my group. Vanessa’s kind of taken the lead with some of these complex securities cases. She went to Princeton by the way. ”
“Is that supposed to mean something to me?”
“Not really, I just know how you Ivy Leaguers tend to adore one another.”
“Guess you didn’t go to Yale.”
“Penn State to be exact.” Conroy smiled as Vanessa Remerling entered the room.
“Dylan,” Conroy said, “this is Vanessa. Vanessa this is Dylan.” They exchanged hellos.
Vanessa Remerling was dressed in black slacks and a white blouse that was tied at her hip. She was tall, at least five ten, and her long slender legs were attached to a shapely torso and well-toned arms. Her dirty blonde hair was slicked back into a long ponytail that was held together using a black scrunchy. She smiled discreetly as she walked into the room.
“First let me explain: Vanessa is our resident expert on white collar crime, particularly securities fraud and the NASD. She’s going to back me up on this case. Anything that you share with me will also be shared with Vanessa. Obviously, we know this stuff, but not nearly as well as you. That is why we like to talk to people who have subject matter expertise, Conroy said. “Again, I may ask some simplistic questions, so pretend I’m an idiot.”