Ben remembered he owed Winston a call back.
“Ben, you remember you asked me to look into the ownership of Further Online Gaming?”
“Yep.”
“And I found out that it was owned offshore by Paul Towse’s Farther Frontier Fund?”
“Winston, just show me the baby!”
“Multiworld! It’s the same thing!”
“Huh?”
“You mentioned you were also looking for a company called Multiworld? Well my contact at Further Online Gaming finally sent over the email he’d promised, explaining it all: Multiworld is the offshore entity tied to his Farther Frontier Fund, that owns Further Online Gaming.”
What the hell was going on around here? – how could Paul Towse fail to disclose – but another call was incoming: Serene! – “Winston, I gotta take this call,” and he clicked over. “Serene, I saw the spike in the oil price and the situation in Tehran; not an ideal day so far I know, but –”
“That’s not the problem, Ben,” the Sheikh’s CIO said in her perfectly rounded vowels.
“Then what is the problem?”
“We received an anonymous tip that there would be some very bad news about Clamor during the current trading session.”
“Serene –,” but Ben didn’t know where his sentence was going.
She said: “We recognize that this may just be noise. The Sheikh is a long term holder. I have another meeting with him in five minutes. We may be willing to take even more, if the price is favorable.”
“That may work. I’m not authorized to speak on behalf of Carmichael, but – hold on, Serene …” With his free hand he swung round the doorframe into Cavanaugh’s office.
“We’ve both put a lot into this,” she was saying into his ear, “let’s see if we can still make this happen…”
But the hope was short lived. Cav was staring at his screen, the ‘related activity’ part of it. Ten thousand short-dated ‘put’ option contracts, giving the owner the right to sell shares at a given price, had appeared. Right in front of their eyes the number doubled, and doubled again.
Someone out there was beginning to bet big – to bet big against Clamor.
CHAPTER 26
John Cavanaugh hit speed dial again, got Steven Schweitzer then Leonard Carmichael on the line. “The pivot’s back,” Schweitzer said. “He’ll take the rest – all twenty million, at ninety-three dollars a share.”
Carmichael: “At cost, no profit? We had a deal.”
“He’s agreeing you had a deal, and he’s saying you still do have a deal, only that the market has since turned, which the price needs to reflect some,” Schweitzer said. “I’m not saying we should agree. I’m just saying that’s what he said.”
Carmichael: “The market has turned – by seven per cent?”
Ben looked at the market information area of Cav’s screen: the Dow and ’DAQ futures were pointing down 1%, not even.
“With all due respect gentlemen,” Cavanaugh spoke up, “and please pardon my French here, but we may be about to get fuckin’ flattened: some bastard’s piling into at-the-money puts equivalent to half the issue in volume, and counting. These at-the-moneys are not cheap to acquire. If some Middle Eastern son-of-a-bitch is willing to hold the bag on this one, I vote we hand it on and close out our position, now.”
Ben glanced over at the related-activity window: 130,000 put option contracts were now showing, short-dated, $100 strike. One contract covered 100 shares. He watched with amazement as the number grew: 136,500 contracts, 148,000…
“Jesus Christ,” Carmichael said. “Who?”
“We don’t know,” Schweitz and Cav chorused.
Cavanaugh asked to call Carmichael back, just the two of them. Ben turned away.
Outside: a swampy San Francisco dawn with purple-grey canyons between tall buildings, the red light atop the pyramidal Transamerica tower blinking sleepily. Far below, he thought he could make out a black Lincoln Town car, waiting at the bottom.
The wheels were coming off this thing.
He turned to Cavanaugh: “Can I asked you a question?”
“Why do people always ask that?”
“What?”
“Just ask the question!”
“Why do you call me Spiderman?”
“Because, God help us all, you’re climbing the building – all the way up to floor 39. Or were rather, while the building was still standing…”
Ben opened his mouth but Cav waved him quiet, handset pressed to his ear: “Leonard. We need to close this thing out now. We need to keep our powder dry, for another day. And we’ve been through enough cycles to know that other day will come.
“Let’s close up shop, call it a family day for the troops. I have to explain to my wife that her custom colored McLaren now belongs to a summer intern,” and he laughed, humor having apparently worked on Carmichael before. “And if there’s any shred of truth in that online rag, your daughter may be about to make her movie debut, and not in a way you’d want. I’ve no doubt there’s time to turn that situation around too. Let’s fold up our tents.”
There was a pause.
“Leonard –
Pause.
“Len–”
Cavanaugh gripped the handset then replaced it. Carmichael had apparently hung up on him.
“What’d he say?” Ben asked.
“Said we’ll give Yasan half the issue at 96. Said with that discount, he could add another Airbus to his fleet. Said that any more dissent, and the price is a hundred and six. Who the fuck does he think he is, John Pierpont Morgan?”
The number of put option contracts out over Clamor stock had now reached 245,000, equivalent to the entire, new-issued share capital. It was a massive, multi-billion dollar bet against the stock sale and Clamor’s fledgling market debut. “Who?” – came the owl-like chorus from across the salesfloor: “Who?” For only a frighteningly well-resourced investment concern could ‘lean’ against them like this. And in an already nervous market, the signalling effect was deadly persuasive.
A ‘grey’ market had now opened up in Clamor stock. Led by one of Carmichael’s own market makers, there were now bid/offer quotes to buy and sell Clamor’s stock, priming the liquidity pump, getting a jump on the official open.
The bid price was settling, lower.
96.875 … 97.125 … 96.375 … 96.5 … 95.625 … 95.125 …
Ben detected a whiff of panic as fragments of conversation ricocheted round the room, as the sales guys sought to sweet-talk, cajole and threaten prospective clients: “Is this Ethical Investments 2050? Mary Rosen? How many dead cert deals have we put you into over the years, Mary? You are invited to take a million. That is an order!”
95.25 … 95.0 … 94.875 … 94.5 … 93.875 … 93.375 …
The price was edging closer to cost. Investors who’d climbed aboard were beginning to step off, to hedge, reduce their exposure – exerting further, downward pressure on the price. Conversely, the big option buyer was moving deeper ‘into-the-money’ – the money that Carmichael Associates should have been making, in the opposite direction.
Carmichael Associates’ world was beginning to turn upside down.
At 08:30 Eastern, just an hour before market open, a news release crossed the wire:
TRUMPINGTON BUGLE EXPOSES CHILD SEX TRAFFICKING RING ON LEADING SOCIAL NETWORK SITE
– an investigative feature about several thousand young girls for sale on the Clamor.us web site. Dealers and salespeople read the 3,250 words fast, trying to make sense of it:
“... and a related, confidential inquiry by the Federal Bureau of Investigation, following the mysterious recent deaths of security head Yuri Malovich and early investor John Vogel...”
The stock was suddenly 83.0 bid.
– but no volume, just one trade of 10,000 going through, market makers absolutely not wanting this stuff sitting on their books –
79 bid.
The price drop was staggering, ghastly. A hushed silence
pressed down on the dealing floor. People stood suspended, phones on shoulders or idle on cradles. Ben saw John Cavanaugh run a finger under the back of his collar like he couldn’t breath. At $79, the rump 20 million shares on his books was $280 million dollars underwater. Adding to the feeling of chaos, a fire alarm was sounding in some part of the floor. Judging by the smell, someone couldn’t wait to go outside for nicotine.
Senior salesman Carl Samuelson was calling Cav: “Sir, it’s fuck’n’ Omaha Beach out here, time for a tactical withdrawal?”
“Negative Samuelson, now man up! Man those Goddam phones!”
“Yessir!”
This was hand-to-hand combat. Pretty soon every man for themselves. “Omni-Investors?” Samuelson was yelling into his phone; “I’m trying to reach Omnipresent Investors in Oman – hello?”
Ben approached Francesca’s desk on 39 further to another summons from Schweitzer. Walking down the corridor to his boss’s corner office, he suddenly thought to call Natalie. He got her voicemail: “It’s Ben. You’d better turn on your TV. Gotta run. I’ll call you.”
Francesca’s graceful neck turned towards Ben. He stopped at Schweitz’s door. Inside, a conference call was underway. He recognized the voice on speaker: Sara Harding, chairperson of the Credit Risk Management Committee. Evidently, she was playing catch up. It was astonishing, the concentration of resourcefulness and intelligence in an investment bank like this: Sara was a gifted Stanford double major, now having to sort out what exactly had been agreed with Bob Swaine and the Clamor boys eight hours before. Also on the conference call was David Hannah, Carmichael’s thorough if timid General Counsel. He had been involved in finalizing the IPO terms – if not exactly an architect of them, as he was now quick to point out. Ben stood. Fran’s head stayed up. That impeccable carriage, questioning.
Ben just couldn’t bring himself to go in there, for the end game – the blame game. They were now discussing whether they could hedge their position. Anything they tried to do in the derivatives markets would simply place further pressure on the price. It was too late for any syndication. Or could they offload a large block onto another, better-capitalized bank? What’s going on with that oil sheik, Sara was asking. And who was this mysterious put option buyer? Then a shrill voice shrieked: “If it’s Josh fucking Hartman over at American fucking Millennium, I will rip that prick’s fucking face off!”
Schweitzer’s auto-censor had apparently flipped to OFF.
Conversation resumed, on another subject – something else Sara hadn’t been made aware of: that if the price fell below $75, the bank was contractually obligated to engage in ‘price stabilization’ activity. To begin buying Clamor stock. It was the quid pro quo for the Over Allotment Option. “Jesus,” Sara said, “We bet the farm.”
Ben turned to Francesca.
Her glacial beauty, inquiring.
He searched her eyes for something, anything.
They seemed to register vague surprise. But nothing more.
He suddenly wondered what he’d found attractive about her. In the eye of the storm came this insight: that a woman like Francesca Horniman would never slake his thirst. Her goal in life seemed to be keeping him thirsty! Like a shallow pool, where there’s never enough water. For all her refined hotness, she only reduced him to his base drivers: money – for things, and sex. The idea of marrying someone like her suddenly made him think of a genome sequence spiralling out of control: after all the cars, vacation homes, kids and toys would inexorably come the arguments, affairs, medication and divorce.
Standing there in Schweitz’s doorway, he felt like a tree with shallow roots. He thought about that. There was some profound truth in it, someplace. How trees thrive in certain environments, wilt in others. Which environments? What did that mean! People, of course. How some people grow us, others deplete us. But there didn’t seem to be any rhyme or reason to it. His dad, awkwardly raising him up. His mom – loving – curiously diminishing him; his best friend Todd from college –
Natalie! Had that ability, to draw out his higher purpose in life – whatever that was.
Natalie. Of course! He felt a weird energy current burst back through his limbs. But how do you win a woman like Natalie Chevalier? He’d no idea. None of the opening lines he’d finessed around the bars and clubs of San Francisco were going to work on her. What would?
He needed time to think through his play here. They’d worked well enough together, hadn’t they? Perhaps in the first instance they could start some sort of techno-financial security start-up, or something. No, that didn’t sound right at all. He mussed his hair.
“Ben!” Francesca was yelling; “Steven wants you in there, now!”
But the call had already disintegrated, Sara Harding insisting that someone call Barclays, Bank of America Merrill Lynch, Butt Fuck Anybody! – “and offload whatever we still can! We have to close out! We do not have the capital base to withstand this kind of pounding!” Schweitz asking about the meaning of “best efforts”, the term that Clamor’s Bob Swaine had insisted on putting into the price stabilization agreement; just how would “best efforts” be interpreted by a court of law? David Hannah saying that a judge had ruled “best efforts” to entail entering bankruptcy in support a contractual obligation if need be. “We went through all this last night,” David Hannah said.
“And Len Carmichael signed off on it,” said Schweitzer, signing off himself.
Ben returned to 36 to get his bag, taking the stairs down four at a time.
The sales team had left their terminals and were gathering around TV screens relaying the Trumpington Bugle story, taking it from online prattle to worldwide headline news. Any remaining investor confidence now collapsed. The price fell like a failed parachute. It was unreal, cartoon-like. Bruce Battistuta giggled.
68.0 … 55.0 … 43.0 … 34.0 … 32.5 …
The Carmichael market maker was no longer making bids. Before the markets had even opened, Clamor was closed to further trade.
Ben Silverman left the building.
CHAPTER 27
The irritating buzz of her cell phone woke Natalie at six.
She dozed, then dialled voicemail: “It’s Ben. You’d better turn on your TV. Gotta run. I’ll call you.”
Suddenly awake, she remoted the TV on to a breakfast news channel. A news anchor with suitably stern look was announcing the unfolding Clamor IPO/sex trafficking drama. She pushed on her elbows, sat upright – the other news channels were running the same story. She grabbed her laptop and found Brie DuBois’ widely cited article. The only bright spot was that it seemed much milder than the news anchors suggested, mostly involving what was already observable on Clamor’s website, seasoned with some law enforcement hearsay.
She tried Nguyen, left him another message. Then, via the Clamor automated switchboard, she left voicemails for Wu, Michael Marantz, Wisnold, anyone she could think of – while trying to sound as serious as possible, shuffling round her room in a hotel dressing gown and slippers.
Eventually it dawned on her. The wake that would be taking place down in Sunnyvale. The IPO party that wasn’t to be. Corporate birth-to-death in one morning! Famished, she rang room service and ordered salmon eggs Benedict, a tall glass of fresh orange juice and a large cappuccino. Perhaps it would all make sense on a full stomach.
A stock market correspondent on TV was now reporting that, after a series of hastily convened calls with the Securities and Exchange Commission, Clamor would be allowed to start trading at the open. Market makers had apparently found support as vulture investors picked away and as the ‘mystery options trader’ betting against the issue unwound his (or her) position. Still the price floundered in the mid-$30s. She padded round the room, pondering what it meant for Ben, but – given the tense tone of his earlier voicemail – she decided not to call him back yet.
By late morning, it had become clearer why neither Nguyen nor anyone else at Clamor was returning phone calls. Beneath a radioactive-looking Breaking Ne
ws! graphic, the news anchor was reading an announcement that Clamor CEO Dwayne Wisnold would be going on sabbatical “effective immediately” as the company dealt with the Trumpington Bugle allegations. Chief Connectedness Officer Nancy Wu would also be stepping down. Interim-CEO Thomas Nguyen thanked her and Wisnold for “their contribution towards making Clamor.us the world’s leading social networking site –” Interim-CEO Thomas Nguyen! – his statement concluding: “We will vigorously defend the company’s reputation and unmask the slander being propagated in the blogosphere.”
The stock price had fallen to $19.
Natalie couldn’t hold off any longer: “Ben! – Ben? Hello?”
A flight departure announcement drowned him. “Can you hear me?” Then: “– is that better?”
“Yes! Where on earth are you?”
“Heading off to the cabin in Tahoe for a coupla days, to clear my mind.”
“Are you OK?”
“No, not really. But my dad always cautioned me against making rash decisions – either from positions of unusual strength, or weakness.”
“Oh.” The news cut away from the studio to live pictures showing a cortege of black Lincoln town cars leaving the base of Ben’s office building. The commentary was not encouraging: “losses exceeding one-and-a-half billion dollars … clear breach of capital adequacy ratios … the question now being whether Carmichael Associates can open for business tomorrow?”
“Listen Natalie, I really do have to run for my flight,” Ben was saying; “But I’ll call you when I get back to town, OK? I really wanna talk to you about something.”
“OK,” she said glassily.
Coverage had now moved to a suave-suited reporter standing in front of the columnar, Coliseum-like entranceway to the Federal Reserve building at California and Market, barely eight blocks from the last scene – and even fewer from where Natalie now stood, transfixed by the TV report: “We understand that Leonard Carmichael will be attending, along with General Counsel David Hannah, and Credit Chairperson Sara Harding. Technology Head Steven Schweitzer will not be attending, having pleaded a pri-or engagement!” A can-you-believe-it expression – then the camera unsteadily swung round to catch Leonard Carmichael being hustled through, looking like Richard Nixon during his last hours in office.
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