On the Edge

by Michael Ridpath

  ‘It’s pretty complicated. They call it an IGLOO note. It stands for Italian Government Lira Obligation Option. It’s a bond redeemable in euros in twenty years’ time if Italy stays in the euro, but if Italy leaves, then we get paid back in a year and the redemption price is based on a multiple of the devaluation of the new Italian currency against the euro. We also get paid a very high coupon if Italian interest rates rise above a certain level.’

  ‘So we make some money if the Italian bond markets fall, and a shitload if Italy leaves the euro?’

  ‘That’s the idea.’

  ‘Who’s the issuer?’

  ‘Doesn’t matter. It can be any top credit. The first IGLOO note will be issued by the World Development Fund, I think. It’s just a cheap way for them to borrow two hundred million euros. They don’t take any of the Italy risk, Bloomfield Weiss lays that off elsewhere for them.’

  ‘Bottom line?’

  ‘I checked the numbers on the plane last night. If Italy does quit the euro, and the new currency falls like we think it will, then we make four hundred million dollars on our two hundred million investment.’

  ‘And if Italy stays in?’

  ‘Then we’re left with a twenty-year note in euros paying us half a per cent. We’d lose about a hundred and fifty million.’

  ‘But Bloomfield Weiss will give us eighty per cent financing?’

  ‘They sure will. I told them any less and I’d do the trade elsewhere.’

  ‘Nice, Vikram, very nice,’ Martel said, rubbing his hands. And it was. This last concession meant that Bloomfield Weiss would lend the Teton Fund eighty per cent of the money to buy these IGLOO notes. So Martel only had to put up forty million of the two hundred million IGLOO notes he wanted to buy. If things went according to plan, that forty million dollars would become four hundred million. Ten times his stake, what was known as a ten-bagger in the trade.

  And if it all went wrong? Martel didn’t think about that. It wasn’t an issue.

  He looked out of his window, at the great wall of rock that was the Teton Range, and the chiselled peak of the Grand Teton at its eastern edge, wisps of cloud swirling in an ever changing dance around it. The mountain was new in geological terms, thrown up from the flat plain of the Snake River by a fault at its foot. It emitted a power, a kind of primeval magnetism, that enthralled Martel and inspired his greatest decisions. He had set up his Teton Fund in this mountain eyrie to give distance and perspective from the world’s markets. In this pure air and pure snow, he could see clearly. And clarity of vision was what running a successful hedge fund was all about. In these days of optical fibre and broadband communications information travelled instantaneously anywhere on the planet. It was what you did with it that mattered.

  Two thousand miles to the east was the financial sweatshop of New York, and a few thousand miles further on, Europe. He smiled as he thought of those finance ministers, those central bankers, those bureaucrats who didn’t yet realize that the future of their beloved euro was in his hands.

  His phone rang. He grabbed it.

  It was his assistant, who must have just arrived for work. ‘Jean-Luc. I’ve got Lawrence Baldwin of the Wall Street Journal on the line. Do you want to talk to him?’

  ‘Of course,’ said Martel, taking his seat. Time to tell the world what he was up to.

  4

  The room in HR had comfortable armchairs, potted plants and soothing prints on the walls, but the atmosphere was tense. Apart from Calder, there were five people present: Jen, Carr-Jones, Linda Stubbes the head of Human Resources, Benton Davis the head of the London office and Tarek al-Seesi, head of Fixed Income in London and Calder’s boss.

  Linda handed Jen’s letter to everyone present. Calder took his without looking at it. He distrusted Linda Stubbes, if only because she was in HR. By its very nature HR dealt with all those aspects of corporate life that Calder hated most: recruitment policies, salaries, bonuses, reorganizations, redundancies. He knew that many of the employees at Bloomfield Weiss lived and breathed these issues, and it was Linda’s job to involve herself in all the negotiating, plotting and back-stabbing that surrounded them. But he had to admit that in a world where loyalty was increasingly rare, Linda had plenty of it. She had joined Bloomfield Weiss’s London office twenty years earlier, when it took up no more than one floor of a building near the Stock Exchange, and had worked her way up to the position of power she now occupied.

  Benton Davis had also done his time at Bloomfield Weiss. He was an American, a tall, athletic black man in his late forties who had spent the last ten years in London. Always immaculately dressed, he affected an interest in higher things than the day-to-day money-grubbing activities of the firm he worked for. But the opera, the nice house in Holland Park, the expensive clothes, the ‘cottage’ on Martha’s Vineyard, required big bonuses, and Benton never forgot that. Although Head of the London Office was a grand title, it meant that he was one step away from the revenue-generators, the likes of Calder and Carr-Jones. This was not necessarily good news at bonus time.

  The third boss in the room, Tarek al-Seesi, was a friend of Calder and the likely owner of the job lot of Homer Simpsons. The third son of a Saudi merchant family, he was a canny trader and had run the Proprietary Desk before being promoted the year before to take over Fixed Income. He and Calder had made a powerful team when they worked together on the Prop Desk: Calder’s aggression complemented Tarek’s subtlety and intuition. The two men respected each other; Calder had learned much from Tarek and missed the way they used to toss trading ideas back and forth all day.

  Tarek was still building his political base. Calder reported to him, as did all the other bond traders and salesmen in Europe, but Carr-Jones didn’t. The Derivatives Group in London reported directly to the Derivatives Group in New York. Although he was nominally the big boss, no one who mattered reported to Benton Davis. As in some fifteenth-century royal court, power and influence at Bloomfield Weiss were constantly shifting. But if in the time of the Wars of the Roses power ultimately lay with the leader of the strongest army, in Bloomfield Weiss it lay with the man who produced the most revenue.

  And that was Justin Carr-Jones.

  ‘I’ve called you all here to discuss the complaint made by Jen in this letter,’ Linda began. ‘Very often it’s possible to deal with problems like these face-to-face. This avoids the need for a full-scale investigation that can be painful for everyone.’ She looked directly at Jen as she said this. Jen was perched on the forward edge of her armchair, legs together, hands folded on her lap, briefcase at her side. ‘Perhaps you can tell us what happened?’

  ‘It’s all in the note,’ Jen said. ‘Justin accused me of sleeping with Alex. I found that deeply offensive. Especially since it was just the latest of many similar remarks.’

  Wait, this was in a bar, wasn’t it?’ Benton Davis said.

  ‘Yes.’

  ‘So it wasn’t on Bloomfield Weiss property?’

  ‘It’s my understanding that that doesn’t matter in cases like this,’ Jen said, glancing at Linda.

  Linda nodded minutely.

  ‘And you had been drinking?’ Benton Davis went on.

  ‘Yes.’

  ‘As had Justin? And Alex Calder?’

  ‘Yes,’ said Jen.

  ‘You’re a trader, aren’t you? Isn’t this the kind of comment that goes on in trading rooms all the time?’ There was a note of distaste in Benton’s voice. He came from the more cultured world of corporate finance, and was scarcely ever seen in the trading room.

  ‘It does,’ said Jen. ‘But that doesn’t mean that it should.’

  Calder glanced at Linda Stubbes. She was looking increasingly uncomfortable at Benton Davis’s questioning, but she kept her mouth shut. She was one of the few who did report directly to him, after all.

  ‘Weren’t you being a little over-sensitive?’

  ‘I don’t believe so.’ Jen’s reply was hoarse. Benton was an imposing figure and this was an
important moment for her.

  ‘Oh, come on. You live in the twenty-first century. You have to be tough to be a trader at Bloomfield Weiss, everyone on the street understands that. Now I know you’ve had a difficult patch these last couple of years, you didn’t make the cut in derivatives, but you just have to put that behind you. Not let it upset you. Perhaps you should drop this complaint, take a couple of weeks off, come back and we’ll see what we can do for you then.’

  ‘No!’ said Jen, her face reddening. ‘I was doing really well in New York before I was transferred here. I would have gotten on fine in the Derivatives Group if Justin had let me. But he did everything he could to undermine me. He picked on me.’

  ‘I can understand your frustration,’ said Benton. ‘We all go through bad patches in our careers. But you shouldn’t let it drive you on to petty revenge.’

  ‘This is not revenge!’ Jen shouted in a voice an octave too high. There was silence as everyone in the room stared at her. She stopped herself. Clasped her hands in front of her. Her chin wobbled. A tear appeared in the eye closest to Calder. He desperately wanted to put his arm around her, but he feared that that would only make things worse, underline Jen’s weakness. He had intended that he wouldn’t get involved, but he had to say something.

  ‘Jen’s allegations are perfectly clear. Perhaps we should hear what Justin has to say about them.’

  Benton frowned. ‘At this stage we’re exploring ways of avoiding an investigation.’

  ‘Perhaps Justin would be prepared to apologize,’ Calder went on.

  ‘There’s no need for that,’ said Benton.

  Calder ignored him. ‘Justin?’

  Carr-Jones sat still. ‘I have nothing to apologize for.’

  ‘Do you deny that you accused Jen of sleeping with me?’

  ‘I don’t confirm or deny anything,’ Justin said. ‘But I do know that this is wasting all of our time. It’s been blown out of all proportion.’ He checked his watch. ‘Now, I don’t know about you guys, but I have some deals to do. Can we wrap this up?’

  ‘So you won’t withdraw your complaint?’ Benton Davis said to Jen.

  ‘No I will not,’ Jen said. Despite all her efforts, her eyes were watering. ‘It’s like you’re accusing me. It doesn’t make any sense … I haven’t done anything wrong here … I…’ She blinked once. A single tear slowly made its way down her cheek. She made no movement to touch it, as if by ignoring it none of the rest of the people in the room would notice.

  There was silence. Jen was still sitting upright, her eyes lowered, focusing on Linda Stubbes’s shoes. Red blotches had appeared on her cheeks. The tear swerved into the corner of her mouth and she touched it with the tip of her tongue.

  ‘Hormones,’ said Carr-Jones. ‘She’ll be fine in a day or two. Let’s just ignore it and go back to work.’

  Jen sniffed and raised her eyes defiantly. Linda Stubbes glared at Carr-Jones. ‘That was an inappropriate remark,’ she said.

  ‘It may be inappropriate, but you know it’s true,’ he replied with a knowing smirk.

  ‘Linda,’ Tarek said, speaking for the first time. ‘It looks like we’re not going to get agreement on this. Justin has made it clear he doesn’t want to apologize, and it seems Jen doesn’t want to withdraw her allegation.’ All eyes turned to Jen, who shook her head. ‘So where does that leave us?’

  ‘The company policy on sexual harassment is clear,’ Linda replied. ‘We implement a formal investigation.’

  ‘Thank you,’ said Jen, managing a small smile.

  Benton Davis frowned at Linda, and Carr-Jones raised his eyebrows, but Linda was busy writing notes on the pad of paper on her knee. ‘If it’s OK with Alex, I suggest that you don’t spend too much time in the office until the investigation is over. As I said earlier, these situations can be difficult.’

  Calder nodded, as did Jen.

  She had won round one. But Calder somehow doubted she would last the distance.

  ‘Benton? Simon Bibby.’

  ‘Ah, Simon, old man, how the devil are you?’ Benton Davis smiled as he spoke. It was a fake smile. Speaking to Simon Bibby, the Englishman based in New York who headed Global Fixed Income, was never any fun.

  ‘I’ve just been talking to Justin,’ Bibby said. ‘I want you to make this problem with Jennifer Tan go away.’

  ‘I understand, Simon,’ Benton said. ‘I was speaking with her only this morning and I suggested she think again.’

  ‘Because there are rumours. Leipziger Gurney Kroheim are looking to hire a derivatives team. They’ll pay top dollar. And they’re going after Justin. If he goes and he takes his team with him, we’ve got at least a hundred-million-dollar hole in the P&L right there.’

  ‘Hm. That would be a blow.’

  ‘Too right,’ Bibby said. ‘Can’t we just fire her? It’s not as though she’s any good anyway, is it?’

  ‘You’re right. We wouldn’t miss her. I’ll look into it, Simon.’

  ‘You do that. Because if we lost London’s top revenue-producer as the result of an HR cock-up, that would look bad. Very bad.’

  ‘Of course, don’t worry about a thing. I’ll take care of it.’ Benton’s voice was deep and reassuring. ‘You know, Simon, I did want to tip you off about the Mondrian exhibition. I went to see it at the Tate Modern the other day, and it’s really jolly good. I understand it’s travelling to New York next month …’

  Benton paused as he heard a muttered ‘Jesus Christ’ and the phone went dead. He frowned and placed his own receiver into its cradle. He shut his eyes. His skills, which had won many a deal, were becoming obsolete. Benton was the master of the civilized conversation, the subtle prod, the gentle suggestion. He had charmed the British corporate establishment with his deep American voice peppered with Anglicisms, and his knowledge of the British cultural scene. He knew Glyndebourne, Covent Garden, Lord’s, St Andrews and the polo fields of Windsor intimately. But the British establishment was changing. American-educated MBAs were taking over from the clubbable knights. Suddenly, at under fifty, he was too old.

  There had been whispers about moving him back to New York, sitting him on a trading desk to win deal mandates from the black leaders of America’s big cities. Benton shuddered. Because if they told him to, he’d have to do it. He needed the money.

  He flipped the intercom. ‘Stella, can you tell Linda Stubbes to come up here, please?’

  Two minutes later Linda was sitting in the comfortable upright chair across the wide expanse of his desk.

  ‘I just wanted to have a little chat with you about this problem with Jennifer Tan,’ Benton began.

  ‘I see.’

  ‘It’s a shame we have to launch an investigation.’

  ‘It’s unavoidable, I’m afraid. It was clear this morning that there’s no chance of the two of them sorting it out between them.’

  ‘Can’t we just…’ Benton paused, ‘I don’t know, get rid of her somehow?’

  ‘No, Benton. We can’t. We could be badly exposed on this one. If it went to trial we could be hit for hundreds of thousands. The publicity would be horrible. I’ve been in touch with our lawyers, and they say it’s vital that we do things by the book.’

  ‘I see. OK. Well, we’ll have the investigation if you insist. By the book. But I’ve just been speaking to New York. It’s very important that we don’t upset Justin.’

  ‘He should have thought before he said what he said.’

  ‘What he is alleged to have said.’

  ‘Whatever. But in the twenty-first century we can’t afford to have bankers around who treat women like that.’

  ‘In this case, Linda, we can’t afford not to. Do I make myself clear?’

  Linda looked at her boss. She had been in situations like this before. She knew how to deal with them. ‘Yes. You do.’

  ‘Wonderful,’ said Benton with a smile. ‘Wonderful.’

  Justin Carr-Jones went to work. He could see trouble coming, but he was certain he could h
andle it. First thing was to gather his troops together. A dozen extremely brainy and extremely greedy young men, and one young woman, clustered around their leader.

  ‘As you know, bonuses are paid at the end of this month. And as you also know, we had an outstanding year last year. Thanks to Perumal and the IGLOO transaction things are starting well again this year. So I think you can all look forward to good news. I just want to remind you all that I believe in rewarding individuals, but I also believe in rewarding the team. I think one of the truly best things about the Derivatives Group, and one of the reasons we are so successful, is that we all stick together.’

  He smiled at the eager faces.

  ‘On a separate note, you may know that Jen Tan has decided to pursue a complaint against me about some minor incident that occurred at Corney and Barrow the other day.’ Everyone turned to stare at Jen, sitting at her desk a few feet away, just out of earshot. ‘It’s a silly thing, no big deal, I just mentioned the relationship between her and Zero, which, as you all know, is very close.’ At this he winked, and was pleased to hear a titter in response. ‘You might be asked some questions over the next few days by HR, who are carrying out an investigation. I’m sure you’ll know how to answer them.’

  He looked around his people to see whether they understood him. They did.

  Next stop was Tarek al-Seesi’s office, just off the trading floor. Tarek and Carr-Jones kept a respectful distance from each other. Neither really liked the other, but neither wanted the other as an enemy.

  ‘It’s a shame Jen Tan brought that complaint,’ Carr-Jones said.

  ‘It’s a shame she had cause to,’ Tarek replied.

  ‘Oh, it was nothing. She’s blown it out of all proportion.’

  Tarek raised his eyebrows and reached for his well-worn worry beads.

  ‘It’s not going to do her career any good,’ Carr-Jones went on. ‘Those kind of things never do. It’s a pity you couldn’t have explained that to her.’

  ‘Zero did try to talk her out of it.’