This isn’t happening to someone I know, he thought. This isn’t happening to us.
He settled on channel five, though most of the channels were airing the same feed. Pedestrians passed aimlessly across the screen; the street corner was being filmed in real time. The cameras focused on one town house, its bright red door punctuated by a door knocker shaped like a stag’s head. Flanking the entryway were two round topiaries. They were meticulously clipped, like green poodles, and potted in stone urns.
He knew that town house. It belonged to Morty and Julianne Reis. On the television, it looked at once familiar and remote.
Morty Reis had been one of Delphic’s outside managers since its inception. Until he’d joined Delphic, Paul hadn’t realized how much of the fund was under Morty’s control. The Frederick Fund, Delphic’s only single-strategy fund, had 98 percent of its assets invested with Reis Capital Management; other Delphic funds had varying smaller percentages. Paul wasn’t sure of the numbers, but he would have estimated that about 30 percent of Delphic’s total assets under management were held by RCM.
Morty was a brilliant investor. Year after year, RCM produced consistently strong returns. In large part, Delphic’s success was directly attributable to RCM. Clients jostled for “admission” to RCM as though it were an exclusive golf club, and Carter’s fund of funds provided them the access they were looking for. There had been quarters when Delphic actually turned away money, though those heydays felt far away now.
Over the years, Morty and Carter had become close friends. On Carter’s desk sat a photograph of Morty toasting Ines on her birthday; another showed the two men in waders and baseball caps, fly-fishing in the brilliant sunlight of an autumn weekend in Jackson Hole. They dined together, they vacationed together, they celebrated milestones together. The Reises were frequent visitors to the Darlings’ home in East Hampton. Paul had seen Morty only a few weeks ago, at a surprise birthday party for Julianne.
The party had been held at the Reises’ town house, the image of which now was glaring at him from the conference room television. Paul remembered making a passing comment about the door knocker on the way into the party. Merrill, his co-conspirator, usually had a greater aversion to ostentation than he did, especially when it came to interior design. She smirked at first, but then whispered, “Julianne just redid the house,” in the tone she used when he was being rude. “Just tell them you like it.” Merrill and Lily had always been quietly respectful of Morty, perhaps because he was one of the only people to whom their father deferred.
Julianne was a self-proclaimed interior decorator, though this was a subject of some controversy among Morty’s close friends. As far as Paul was aware, Julianne had never decorated any interior that didn’t belong to Morty, though these alone provided her with ample canvas. The town house was her first top-to-bottom job. Previously, Morty had limited her to smaller projects with reasonable budgets, like a pool house or a guest room. Julianne’s taste was ornate and obvious, heavy on gilding and marble, and in direct contrast to Morty’s bland aesthetic. She had been begging him to do the town house for years. The project must have taken her months, and Paul couldn’t imagine how much financing.
The Reises were like many couples in New York. Morty met Julianne at a charity event, shortly after his first wife left him. Julianne was pretty in an obvious way, the kind of beauty that read better from across a room. She had large, wide-set eyes and high cheekbones; her auburn hair was highlighted and coiffed into a veritable mane that she wore layered around her shoulders. Her body was phenomenal, tanned and cross-trained within an inch of its life. She was taller than Morty, and her thinness gave the impression of a B-list actress or model. Julianne was the kind of woman Paul’s mom would call “a showstopper,” the kind of woman who was a dime a dozen in Manhattan.
At first blush, Morty and Julianne seemed like a mismatch. Morty was a recluse and a schlubby dresser. He loved to make money but he didn’t particularly care to spend it; he wasn’t cheap, but he didn’t seem to derive much pleasure from personal acquisition, either. Among his possessions, he seemed only to care for his extraordinary car collection. He wore off-the-rack suits from Bloomingdale’s and shirts bought in bulk online. He had no hobbies except for collecting cars, and rarely traveled except on business or to one of his four houses. His houses were all built like fortresses, with state-of-the-art security. He opened them to guests infrequently, typically only when Julianne demanded it. Carter had seen him disarmed by only one person: Sophie, his first wife. He had loved Sophie deeply. When she left, he had sunk into a terrible depression, one that had lasted for months. He wasn’t the type to take solace in a trophy wife, and Julianne seemed to bring him headaches more than anything else. Now that Sophie was gone, Carter sensed that Morty really enjoyed only two things: working and being left alone.
Paul tried to remember where Julianne was now. The Reises were so often apart that he thought of them as loosely affiliated but separate entities.
Aspen? Paul thought. It was earlier there. She might be skiing.
Paul wondered if she knew that Morty was dead.
Someone should tell her; someone she was close to, preferably. But anyone really, before she saw it on the news.
There was no movement in or out of the town house. At the bottom of the screen was the caption: 23 East Seventy-seventh Street, Home of Morton Reis. Paul half listened as a reporter described Morty’s business: “Reis Capital Management opened its doors in 1967, trading mostly penny stocks in the over-the-counter market . . . Firms like RCM made their bread and butter by capturing what’s known as the ‘spread’ or gap between the offer and selling prices on these stocks . . . It wasn’t until a regulation change in the 1970s that RCM was able to capture market share on the New York Stock Exchange and began to trade in more expensive blue-chip stocks . . .”
The reporter’s head bobbed up and down as she spoke, her hair tousled by the wind. She gripped her microphone tightly and frowned, indicating that she was reporting something of a serious nature. It sounded like a lecture in the history of securities regulation; no real information there.
Paul flipped to another channel. This time he heard: “His wife, Julianne, is said to be vacationing at the couple’s home in Aspen today . . . It remains unclear how much time elapsed between when his car was found and when he allegedly took his own life . . .”
Paul felt a cold chill ripple through his body, like a wind off the water. He glanced through the glass door of the conference room into the semidarkness of the hallway and realized he was alone in the office.
Morty Reis killed himself.
Morty Reis. Killed himself.
Holy shit.
He wanted to be able to bounce that off someone, just to hear himself say it. In his head, it didn’t sound plausible.
He changed the channel, but the news was the same.
“Morton Reis managed in excess of fourteen billion dollars . . . He produced consistently strong results for a number of high-profile institutions, families, and charities . . . Reis was born in Kew Gardens, the son of Jacob and Riva Reis . . . He graduated from Queens College in 1966 with a degree in accounting . . . His father was a well-known professor of mathematics at Queens College until his death in 1980 from lymphoma . . . Mr. Reis had no children of his own and was married to Julianne Reis of New York and Aspen . . . His car was found parked near the Tappan Zee Bridge early this morning, a bottle of pills was said to have been found on the floor of the car . . . No one from his firm, Reis Capital Management, was available for comment . . .”
Eventually, a new topic was introduced: drilling in Alaska. The screen filled with the tranquil purples and brilliant blues of the Arctic sky, and the slow, loping migration of a herd of caribou. Paul stood frozen for a few minutes, watching as the caribou traversed an ice-filled river. The littlest ones were kept to the center of the pack. When they were safely across, he switched off the television. He dialed Merrill’s office line from the conferen
ce room phone but got no answer. As he listened to the sound of the phone ringing, he stared at his reflection in the conference room window. He looked tired, and thinner than he thought himself to be. He felt the life draining out of him as he stood, receiver to his ear, phone ringing over and over until her voice mail picked up.
He didn’t leave a message. He couldn’t think of anything to say.
Carter wasn’t answering his cell phone, either. Paul was momentarily grateful. He didn’t want to be the one to have to break the news to Carter. Morty’s death would be devastating; Carter had many acquaintances but few friends, and Morty was probably the closest of those. There was also the unfortunate but undeniable fact that RCM was holding up Delphic’s performance. While most of the other managers were losing money daily, RCM was only slightly down on the year. His heart fluttering, Paul wondered if Delphic could stay afloat without RCM.
As he walked back to his office, Paul tried to recall whatever details he could about RCM. Was it possible that the business was failing? He didn’t think so. Two of Delphic’s outside managers—Lanworth Capital Management and Parkview Partners—were considered the dogs of the Delphic portfolio. Both funds had frozen redemptions after severe net losses. There were rumors that Lanworth might fold altogether. E-mails about both funds circulated between senior management on a daily basis. Paul hadn’t seen anything like that about RCM. In fact, he had heard very little about RCM at all.
From what Paul had seen, Alain handled the RCM relationship by himself. He had brought RCM to Delphic’s platform years ago, and was quick to remind everyone that the relationship belonged to him. “RCM’s his golden goose,” one of the other managers had explained to Paul when he had started, his voice dry with irritation. “No one deals with RCM except him. I mean, look, RCM’s knocking it out of the park, and Reis is supposed to be difficult as hell. So if Alain wants to deal with him, fine with me. Long as it keeps making us money.”
Now that he thought about it, there had been some e-mail traffic about RCM in the last few weeks.
Andre Markus, a senior sales guy, had been concerned about increased investor inquiries into RCM’s counterparty risk. Specifically, a few of Markus’s clients had asked about the liquidity of the counterparties who bought and sold RCM’s options trades. A valid concern given the stability of some of the financial institutions, but Alain wouldn’t give Markus the names. Markus balked: How could his investors rest easy until they knew who was on the other side of the RCM trades? As he pushed harder on Alain to produce the names of the options counterparties, the e-mails had become increasingly heated.
Not getting the answer he wanted, Andre had cc’ed Paul and Sol, Delphic’s outside counsel, midway through the dialogue. Paul couldn’t tell whether Alain knew who the counterparties were and was just being stubborn, or if he didn’t know them and was being irresponsible. Sol had been handling Delphic’s risk management far longer than he had, so he figured if there was a problem, Sol would speak up. But then Andre asked Paul to weigh in, and he was general counsel after all, so he felt he ought to say something. He decided to raise it with Carter first, before he stepped in to mediate what appeared to be an ongoing office power struggle.
“Alain and Andre butt heads a lot,” Carter explained kindly. “I wouldn’t get too involved. Andre’s kind of a lapdog with his clients.”
“I understand. But the counterparty names . . . Alain should at least know who RCM is trading with, right? Even if he doesn’t want to give the names out to clients, we should know just for our own peace of mind.”
Carter hesitated. “Look,” he said. He rubbed his temples, which he did at the onset of one of his tension headaches. “Alain’s been working with Morty a long time, and Morty can be very private. He’s had a tough life in a lot of ways and he gets paranoid about disclosing information, even to us. So you have to know how to play him. If I were you, I’d tell Andre to back off. Things are pretty stressful right now, for everyone. Alain will get the counterparty names eventually. In the interim, just have the client service teams tell investors that, while we don’t give out the names of counterparties, they are all well-established financial institutions rated A or better. Or something like that. That’s all they want to hear.”
Paul wondered if that wasn’t playing it a bit fast and loose, but he had let it go, too tired and unprepared to propose an alternative. His response to Andre and Alain was met with radio silence from both. Paul found this to be a quiet relief; he was learning quickly that the general counsel role meant a lot of mediation and political navigation, often in situations on which he wasn’t fully briefed. Quickly, he forgot the counterparty issue altogether, tabling it beneath a long list of other items requiring immediate attention.
Now everything seemed relevant. What if one of RCM’s counterparties was about to default? What if one already had? The fall of Lehman Brothers had made it painfully clear that no counterparty was too big to fail. While some funds had seen the writing on the wall and reduced their exposure to Lehman before the collapse, others hadn’t. The ones that hadn’t faced a deluge of redemption requests from investors on assets that had vanished into the ether.
Who was to say that RCM wasn’t one of these funds? If Morty played as close to the vest as everyone said he did, God knows what he had been hiding from his investors. They could already be dead without anyone knowing it, like a plane than had lost its engine midflight and was still cruising silently along on momentum alone.
Delphic had nearly a third of its assets invested with RCM. If RCM went up in smoke, in all likelihood, so would they. Paul shuddered, reliving the feeling of freefall he had experienced when the Feds showed up at the Howary offices for the first time. It had happened before. It was happening all over the Street. As he walked back to his office, a lightheadness came over him, and the halogen glare of the hallway felt dizzying.
When he opened the door, his phone was ringing. The sound buzzed in his ears like alarm bells.
“Merrill?” Paul said, snatching up the receiver.
There was a pause. “It’s Alexa,” the voice on the other end of the phone said stiffly. Paul could hear traffic in the background; she was calling from a cell phone on the street. “I guess I shouldn’t even ask if it’s a bad time.”
“I’m sorry,” he said, flustered. “I’m just in the middle of . . . a family situation. I know I owe you a call.”
“That’s okay. I know I’m bugging you. So you’ve heard about Morty Reis.”
“Yes. Horrible. He was like an uncle to Merrill. Was. How did you—?”
“That’s why I called you so early this morning. Look, I need to talk to you. In person. I know you’re busy but it’s important. I’m in midtown, near your office. Can we meet?”
Paul paused. “Alexa, what’s this about?” he said, slightly exasperated. “If this is just a friendly phone call, it needs to wait.” He took a deep breath. He was being rude, perhaps unduly so, but it bothered him to think that she’d use her job at the SEC as an excuse to see him. Ever since their last encounter, just the thought of Alexa Mason set him on edge. That was a year ago; they had spoken only twice since. He felt guilty about it, cutting her off as he had. But she had to understand that he was married now, and that being friends with her just simply wasn’t going to be possible. Not in the same way.
“This isn’t a friendly phone call,” she said testily. “I’ve never asked for anything from you before, have I? Just trust me. It’s important.”
He pressed the receiver between his ear and his shoulder, and squeezed his eyes shut. She was right: She had never asked him for anything. Not even an explanation when he stopped returning her calls, something she had certainly deserved. He regretted the acidity in his voice, and the haughty assumption that she still had feelings for him as anything more than an old friend.
He had a short fuse lately. He had barked at a cabdriver over the weekend. He hadn’t realized how gruff he sounded until Merrill had put a soothing hand on his fo
rearm. Then Katie, his sister, had called asking for help with her mortgage. Though ordinarily he would have done anything for her, he had very nearly bitten her head off for interrupting him during work. He had called her back and apologized, but the smallness of her voice made him feel like an ogre. And now he was snapping at Alexa. Sweet Alexa, who had never been anything but devoted to him since the ninth grade. Sweet Alexa, who still sounded excited to talk to him, even after he had told her that he no longer had a place for her in his life.
He sank into his chair. Paul had thought it would get better after he had started at Delphic. Nothing could have been more stressful than Howary, particularly after the indictment. But he was sleeping worse now than ever before. Sleeping pills made him sluggish. Instead, he wrestled through the nights, his thoughts pulling him in and out of consciousness. The constant mental fight made him irritable. He had never had a temper before. Some days, he felt as if his entire body were a raw nerve, its membrane receptive even to the smallest passing slight.
“Listen, Alexa, I’m sorry,” he said. “I’m just having a really bad day. I can meet. Not for long, but I can meet. How close are you?”
He heard the plaintive wail of an ambulance through the phone, and then realized that he could hear it just outside his window, too.
“I’m a couple of blocks from your building,” she said. “Near MoMA. Can we meet there?”
“I’ll be right down,” he said. “I’ll meet you just inside the doors.”
WEDNESDAY, 3:06 P.M.
Marina Tourneau stood in the doorway, watching her boss. Duncan was hunched over the light-box table in the corner of his office. It had been custom built to match his desk, and the glow from it illuminated his silver hair. Her eyes were instantly drawn south to his argyle socks. Duncan didn’t like to wear shoes while he worked. He typically took them off before entering his office and left them in the hallway, beneath the coat rack. No one knew whether this was a matter of comfort, or if he was trying to preserve the pristine white carpets that he had also had custom installed, or if it was simply one of his cultivated eccentricities. Duncan’s socks were like most men’s ties: a flash of color, a punctuation. Argyle was his favorite.
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