Wall Street Noir

by Peter Spiegelman

  “Everybody’s always talking about the Russians,” the driver said. “I don’t get it.”

  Pain now. And the back of the driver’s head and the radio voices and the great steel towers of the George Washington Bridge and his bloody suit and the handcuffs and the back of the driver’s head and his eyes closed and the car moving faster and his knee with the bones shattered and on fire and the car moving faster and a little dream about the river and then moonlight and then, yes, just a little better. Okay, the driver didn’t want to hear it. But he was just the driver. There was bound to be another guy. There was always another guy, the guy who was really in charge. That was the guy he had to think about it. He was a serious guy, obviously hardcore. It wouldn’t be easy and it wouldn’t be cheap. All right, fine, whatever it takes. He could have it all. Yes, that was it. Give him everything. The Caribbean accounts, the Florida house, all of it. What the hell? Why not? He’d make it all back again eventually. And more. No way the guy turns down a deal like that. Four million total, maybe more. Not the most money in the world, but enough, a nice pile. The knee was bad, but he could live with it. Get a new one. Titanium. No problem. He’d be back on the tennis court in a few months.

  They drove up the Palisades Parkway a few miles to a defunct rest area, its entrance blocked by a chain strung between two posts. The driver bumped over the curb and went around the post on the right. A hundred yards in was a small parking lot that overlooked the Hudson. There was a low wooden guardrail and ten yards beyond it was the edge of a cliff. Beyond the cliff there was nothing, just a 350-foot fall to the rocks. The guardrail had a gap where one of the crossbeams had been cut out. The driver stopped the car in front of the gap. He took a handkerchief from his pocket and wiped down the steering wheel, the gear shift, and the front eat.

  “Is your boss here?”

  “He’ll be here in a minute,” the driver said.

  “Good, I need to talk to him. We’re going to straighten this whole thing out.”

  “Glad to hear it. Now sit back and relax.”

  To keep the car straight, the driver rigged a piece of rope between the steering wheel and the brake pedal. He used a chunk of stone for the gas pedal and it all worked just like it was supposed to.

  PART II

  UPTOW

  THE QUANT

  BY RICHARD ALEAS

  Times Square

  It was night, and the trading floor outside Michael Steinbach’s office was empty. The TV screens suspended from the ceiling, which had been playing CNN and CNBC nonstop throughout the day, were turned off. But around the perimeter of the floor, from behind closed doors, you could still hear the rapid patter of keyboards in use. Traders keep trading hours; hackers keep hacking hours.

  Steinbach himself was a hacker, though he’d been known to put on the occasional position himself, just to show he still knew how. He’d written the original trading system the company used and devised the first of the company’s quantitative trading strategies, a pairs-trading algorithm that looked for mispricings across global equity markets. Arbitrage opportunities were few, small, and short-lived—but with a powerful enough set of computers hunting for them, you could make a business out of exploiting the handful you could find.

  And a business is what Michael Steinbach made. Starting with a few million dollars from a single large investor, he parlayed his original pairs-trading strategy into a billion-dollar fund with a dozen different strategies and a staff of nearly one hundred. Each year, the company’s Human Resources team identified the top graduates in math and computer science from the country’s best universities with the same single-minded efficiency his computers used in locating trading opportunities on the world’s securities markets. Each year, the firm interviewed several hundred prospective employees; each year, the firm made zero, one, or two offers—no more—to join their quantitative research staff. A job as a quant at Quilibrium Investment Partners, L.L.C. was a prize not easily won, nor lightly cast aside.

  Which made what Simon Kurnit had to do that much harder.

  He stood with one hand poised to knock on Steinbach’s door, the other hovering inches away from the knob. It’s not that he had any doubt about the decision he’d made—he just dreaded having to break the news. But there was no way around it.

  “Yes?” Steinbach shouted when Kurnit knocked.

  Kurnit stuck his head into Steinbach’s office. “Is this a good time?”

  Steinbach lifted his PDA from his desktop, glanced at it, and laid it down again. “For a few minutes.”

  Kurnit came in. Steinbach’s desk was covered with papers, a mixture of computer printouts, pages torn from professional journals, and post-it notes filled with jagged scrawls. The man looked nearly as messy as his desk. His hair was nominally parted but flew away from his scalp in several directions. The whiteboard on his wall was covered with formulas and figures, and his fingers were smeared with its erasable ink. But the appearance of disorder stopped at the man’s eyes, which were penetrating and intense and felt as though they were systematically peeling you apart like a lab experiment on a dissection tray.

  “What?” Steinbach said.

  “Listen,” Kurnit began, “I’m sorry to do this—I wanted to tell you sooner—but …” He raised his hands, palms up, hoping for a sympathetic nod, a gesture, something—anything—that would make this easier. But he didn’t expect any help and didn’t get any. “I really appreciate what you’ve done for me—”

  Steinbach’s eyes narrowed. “You’re leaving.”

  “I don’t want to,” Kurnit said. “Honestly, I’m happy here, you pay me well, the work’s good. If it were just me, I’d stay forever—”

  “But you’re leaving.”

  “You know Maureen’s been looking for a teaching position, and it’s just … they’re hard to find in her field. NYU’s not hiring and Columbia, they just, they won’t hire you onto the faculty if you got your degree there, it’s their policy …”

  “You make enough money,” Steinbach said. “She doesn’t need to work.”

  “It’s not the money,” Kurnit replied, “it really isn’t. It’s just … she’s a teacher. That’s what she does, it’s what she’s always wanted to do. She put it on hold for me, for my sake; she spent the past five years here for me, but now … she got an offer from the University of Texas in Austin. It’s a good offer and … I’ve got to do this for her. You understand.”

  If Steinbach did understand, he gave no indication of it. His face, generally affectless to begin with, was entirely blank. Except for those eyes, ticking away, trying to get under his skin.

  “I’ve been offered a position at Blackshear. It’s not as good as the job here, but it’s … it’s fine. I’ll do fine. Obviously, I won’t take any of the algorithms I’ve developed here—I hope that goes without saying. I’ll start fresh there, do all new work. You’ve got my word.” Kurnit paused. “I’m sorry to leave this place, I’m sorry to leave you, but …” He didn’t have an end for the sentence, so he just stopped, looked up, and waited for Steinbach to say something. Anything.

  Steinbach looked at his PDA again. “I’ve got a call in three minutes.”

  Kurnit took an envelope out of his pocket. “I don’t know if you need a formal letter of resignation, but I wrote one, just in case. I’m giving thirty days notice, but if you need more—even, I don’t know, sixty days—I’m sure I could get Blackshear to agree.”

  “Thirty is fine,” Steinbach said. And he reached out across the desk. At first Kurnit thought Steinbach was reaching for the letter, but after a second he realized the man was trying to shake his hand.

  He stepped forward cautiously, reached out, shook.

  “Simon,” Steinbach said, and something like warmth came into his voice, though it didn’t sound at all natural there. “You’ve done excellent work for us. Without you, we wouldn’t be trading warrants at all, and you know you’re responsible for most of the alpha in our foreign exchange strategy. It’ll be a real
blow to lose you. The one thing I ask is that if anything changes, you remember you’ve always got a home here.”

  A home? Quilibrium offered its employees many things: the possibility of making a fortune, the chance to work in an exciting, fast-paced environment, intellectual challenges … but no one would have used the word “home” to describe it, and certainly no one had ever heard Michael Steinbach talk about it in those terms.

  Kurnit looked into Steinbach’s eyes and saw nothing there—nothing bad, nothing good. It was like looking into a computer screen after the plug has been pulled.

  “I appreciate it,” Kurnit said. “You’ve always been good to me—”

  Steinbach released his hand and turned back to his keyboard. Whatever warmth there had briefly been was gone. Kurnit waited for a moment before deciding that Steinbach had, with his customary grace, ended the conversation. Well, no matter. At least he’d gotten it over with. And it could have gone worse.

  Kurnit stepped to the door. “Closed or open?” he asked.

  “Closed,” Steinbach said.

  When Kurnit had left the office and drawn the door shut behind him, Steinbach lifted his PDA again, screwed a foam-covered earpiece into his ear, and tapped a few times on the screen with a stylus. He had to let the phone ring seven times before it was finally picked up. It was only 9 o’clock, but the man sounded as though he’d been woken up.

  “Perlow?”

  “Who is this?”

  “This is Michael Steinbach.”

  “Oh, Mr. Steinbach, I’m sorry.” The voice woke up in a hurry. “What can I do for you?”

  “Simon Kurnit just came into my office to quit. He says he’s following his wife to Austin, where she’s accepted a teaching job.”

  “Aw, jeez.” Silence. “Did he say where he’s going?”

  “Doesn’t matter. He’s not going anywhere. We need him here. And there’s no fucking way he’s taking what he knows to one of our competitors. Period.”

  More silence. “What do you want me to do?”

  “Kill the wife,” Steinbach said.

  Alec Perlow had graduated from Amherst with a 4.0 GPA, but his degree was in English and Comparative Literature and he could no more have programmed a computer than he could have stepped off the ledge outside his window and flown. Nor did he have the mathematical skills to be a quant or the personality to be a trader. But he was smart—Quilibrium smart, as they liked to say in the office when evaluating a candidate (Yes, he’s smart … but is he Quilibrium smart?)—and Steinbach himself came out of the interview saying they had to hire the kid. So they hired the kid. But what to have him do?

  At the time, the company was small, just a few dozen people, and Steinbach couldn’t launch half the strategies he wanted to, not without doubling or tripling in size. And good luck getting a quant or a trader to spend time on recruiting. So that’s the job they gave to Perlow. While they were at it, they dumped the rest of Human Resources on him, too: benefits and space planning and employee relocation and, well, who the hell knew what else, but there was plenty of it, plenty of work that wasn’t financial or technical but needed to get done in a firm this size. And Perlow got it done. Exceptionally well. If there had been grades in the world of business, he’d have maintained his stellar GPA.

  He also excelled in another dimension, and that was loyalty. He was good at keeping his mouth shut. Everyone in the firm knew this, not least of all Steinbach. It’s why they could trust him with all personnel matters, even the delicate ones.

  When a trader needed to be poached from a rival shop, it was Perlow they called, and only Perlow knew about it until the news broke over AP and Reuters. When an offshore investor was in town overnight and needed tickets to a sold-out Broadway show, it was Perlow’s extensive Rolodex they mined—he knew every scalper in town. And if this investor wanted a little in-room entertainment after the show, there were entries in his Rolodex for that, too.

  What of the really sensitive matters, the rare cases that crossed the boundary between merely questionable and flat-out illegal? Well, Perlow was a prudent young man—no telltale entries in the Rolodex for men who would eliminate an employee’s wife, say. But that didn’t mean he didn’t know such men, or that he’d never had cause to retain them.

  He kept a steel cashbox in the bottom drawer of his desk, out of which he now drew ten thousand dollars in non-consecutive hundreds. One of the benefits of being a billion-dollar financial firm was the close relationships you had with all the big banks in the city. Occasional favors were traded in confidence; nothing illegal, understand, but merely agreeing not to record the serial numbers of a de minimis cash withdrawal, where’s the harm in that?

  This was the cash with which Perlow paid his scalpers and his procurers, and it was the cash that would wind up in the pocket of the man Perlow was e-mailing now, one anonymous Hotmail account talking to another across the Internet.

  New job, the message ran. Ten men want to meet you this afternoon to discuss it, and ten more will want to talk with you next week after it’s done. F&J’s at 3 p.m.?

  The reply came in half an hour later: OK. That was all.

  Perlow grabbed his coat, rode the elevator down to the street, and walked out of Quilibrium’s offices into the heart of Times Square. The crowds were swarming beneath the giant computer-controlled video screens and animated signs. Fifty years ago, the signs would have been advertising singers and cigarettes and stage plays and such, but now in direction you saw the giant Nasdaq board pouring out its endless torrent of stock quotes and in the other you saw the Morgan Stanley ticker streaming its financial data the side of a building. Not to mention the Reuters screen and the Lehman Brothers ticker and … hell, even the sign in front of Toys “R” Us periodically flashed the stock prices of Disney and Mattel. This was the twenty-first century Times Square, and Alec Perlow couldn’t get enough of it. Wall Street wasn’t confined to Wall Street anymore, and it wasn’t confined to fat middle-aged guys in suits either, with their Harvard MBAs and their secret handshakes. Now there was room for a new type of company to shake things up, as long as it had the right technology and the right people and the right contacts—and even an English major from Amherst could be part of it, if he found way to carry his weight.

  As he crossed the narrow concrete mall separating Seventh Avenue from Broadway, he saw Simon Kurnit coming the other way, a couple of folded-up cardboard packing boxes in his arms. Alec waved at him as he went past, got a smile and a nod in return. Poor bastard, Alec thought. But who the hell told him to quit?

  Kurnit dragged the roll of packing tape across the top of the box, cut it off, and pressed it down. At this point, his office was basically packed—what was left were papers that belonged to the company and a few items too large to pack. He lugged the box to the corner of his office and lifted it onto the stack already there. He dialed his own phone number one-handed while uncapping a Sharpie with the other. The marker squeaked as he wrote his name and new Texas address on the side of the box.

  Maureen answered on the first ring. “Hello?”

  “Darling, it’s me. I’m finishing up here. I should be able to leave in, I don’t know, ten minutes.”

  “Is that a real ten minutes,” she asked, “or one of those ten minutes that turn into an hour because Michael asks you to do something as you’re walking out the door?”

  “Michael’s not here. He left early for some charity benefit. Put on a suit. Even combed his hair.”

  “So it’s a real ten minutes.”

  “Yep.”

  “I can count on it.”

  “Yep.”

  “As in, I can order food now and you’ll be there to pick it up before it’s all cold and disgusting.”

  “Yes,” he said. They had this conversation nightly, and neither of them actually meant the mock annoyance in their voices. Except when they did.

  “I’m going to order Chinese, okay?”

  “Sure.” He snapped the cap on the marker and dropped i
t on his desk. “Get me beef with broccoli—no, wait, if I got General Tso’s would you have a little?”

  “I’ll get you beef with broccoli,” Maureen said, “not spicy, with brown rice. And I’ll get General Tso’s chicken for myself.”

  “I’ll pick it up. In ten minutes.”

  “Fifteen’s okay.”

  “I love you.”

  “But not twenty. I love you, too.”

  “See you soon,” he said.

  Kurnit left the office twenty-five minutes later—he hadn’t meant to be late, but there’d been e-mails to answer and an exit interview HR insisted on his filling out before he left. Fortunately, he lived close to the office, on West 44th Street near Ninth Avenue, and the restaurant was just down the block. He raced over to the place and caught his breath while the pregnant woman behind the counter sorted through a batch of bagged orders to find his.

  “Beef with broccoli, General Tso?” She repeated this to herself while peering at the characters scrawled on the receipts stapled to each of the paper bags until finally she found the one she was hunting for. “Beef with broccoli, General Tso chicken. Twenty-one fifty.” He counted out three bills and pocketed the change she handed back to him.

  It still felt warm, for whatever that was worth. Maureen had probably allowed an extra ten minutes before calling in the order. She usually did, even when he told her it wasn’t necessary, because, well, it usually was.

  At the front door to his building, a squat fourteen-unit co-op with paired fire escapes zigzagging down the front, Kurnit had his keys half fished out of his pocket when a man in a black turtleneck swung the door open. He was carrying a bulging plastic garbage bag and held the door as they squeezed past each other in the tight vestibule.

  “Good night,” Kurnit said. The other man didn’t say anything.

  The building was pre-war but it had an elevator, a relatively recent addition that had added two thousand dollars to their monthly maintenance bill for a year. Kurnit stripped off his gloves and crammed them in his coat pocket as the elevator slowly carried him to the fifth floor. He still had his keys in his hand.