Alshon eyed him steadily. “I intend to do just that and don’t need to be lectured about my responsibilities. I’ve got a chartered flight to take all this stuff to my office. My staff will be up all night working on it. I’ll have him before this is finished.”
“Oh, I don’t doubt that.”
“Sir, there’s a security system,” the search team leader said to Alshon. He pointed to two discreet cameras.
Alshon stared at them as he processed the information and considered ordering the system disabled. “Leave it. We’re executing a subpoena, not burglarizing his house.” And the harm was done. The security company would likely alert Aiken, probably by some automated system. He’d know at once what was going on. Well, he had what he came for and there was nothing to be done about that now.
“Yes sir. We’re moving upstairs.”
“Fine. I’ll wait here.” Alshon checked his watch. Everything was by the book so far. If it stayed that way, he’d be back in his office in New York before ten. Then, he thought, then I’ll nail the bastard.
28
LENOX HILL HOSPITAL
EAST SEVENTY-SEVENTH STREET
NEW YORK CITY
3:06 P.M.
From somewhere down a long corridor, Jeff could hear his name. It was muffled, distant, like when he’d been in school and a faraway friend was calling out to him.
“Jeff. Jeff. You awake, big guy?”
Reality struck like a solid wall, or a speeding car. One moment Jeff was interacting with the gossamer existence beyond himself, now his world was filled with bright colors and sharp sounds. He heard the insistent beeping of an electronic machine. He could smell odors, not like home, like a hospital. He opened his eyes.
A man was in front of him—two of them, actually—but they were just alike, moving together though speaking with a single voice. “It’s me. Frank. Are you tracking yet? You came around a bit ago, mumbled something that made no sense, then drifted back into la-la land. The nurse said they want you awake now, so wake up.”
Jeff blinked his eyes, then blinked again as he tried to clear his vision. The two images merged and there was one Frank, blurry but a single mass now. “Water.” His voice sounded old, as old as he felt.
“Oh, right. I should have thought of that. I always come out of a coma parched. Here you go.” He lifted the water to Jeff’s lips.
Jeff drank, water never tasting so good. He finished the cup.
“Easy. I’ll give you more in a bit. How much do you remember?”
Jeff thought. “I was running. I think. Maybe I was planning on running. I’m not sure.”
“You were in Central Park, running. What happened then?”
“I don’t know. I had a stroke? I fell? Got mugged?”
“Now you’re getting there. You were attacked. How’s that for New York luck?”
“Attacked?”
“Yeah. Witnesses told the cops a man jumped out of the brush and attacked you with a heavy stick or club. He just missed. You jumped the railing and bolted onto the street. The cops think you were going to a cop car parked there but a car hit you on the way.”
“A car? I don’t remember that. Or any man.”
“The driver was late for something and was pushing forty. He just winged you but you were thrown in the air and banged your head really hard when you made a rough landing. They were worried for a bit and want to run some more tests on you now, but the scans and such say you’re okay.”
“My whole side hurts, and my arm.”
“Frankly, you’re lucky to be alive. It was a really close call. Your forearm’s not broken but it’s going to hurt like hell for a bit. Are you seeing double?”
“Not now. Before.”
Frank beamed. “That’s excellent.” He poured more water and held it to Jeff’s lips.
This time Jeff didn’t finish the glass.
“You know,” Frank said as he put the glass down, “this is no accident. I mean, I guess the car hitting you was sort of an accident but not the attack. Mugging a runner? You didn’t have anything on you worth stealing. No. Someone was gunning for you. You mug people out on the streets near an alley. Whoever it was wanted you.”
It took a moment for his thoughts to gel; then Jeff said, “You think it’s connected to what we’re doing now? That doesn’t seem likely.”
Frank shrugged. “We’re both Company so obviously it could be related to that. It’s never entirely out of my mind. But you’ve been gone quite a while, plus you worked in the dungeon and were not a case officer. But unless you’ve got enemies you’ve never mentioned, my best guess is that it’s related to our current work. When we last talked, you told me you think the code is related to trades. Do you have any idea how much is involved?”
Jeff thought about it. “No. But it could be a lot.”
“If it’s in the Exchange’s software, it will be a lot, but it doesn’t have to be that much to make it worthwhile killing someone.”
A trim nurse wearing too much makeup entered just then, and Frank moved away from the bed to give her room. She smiled at Jeff and made friendly talk as she checked the machines beside him. “No sign of bleeding on the MRI,” she said with a smile. “And that’s really good news. I’ll bet you’re going to have a headache for a few days, though. You took a hard knock.”
“Anything I should worry about?” Jeff asked.
“Not a thing, honey. You just relax. The doctor will be around in a bit. He wants to run more tests. You can ask him questions.” She moved his pillow a little, then adjusted the sheet.
“I don’t want to wear you out,” Frank said when it was just the two of them again.
“I’ve felt better.”
“The report’s finished from my end. I caught Stenton in the hallway earlier, and told him what happened. Maybe I should wrap this up tomorrow, unless you want to put it off until after you get out of here.”
“How’d he take it?”
“Frankly, he acted like he didn’t believe me.”
“That we penetrated? Or that we found a rogue code?”
“Either one.”
“That seems odd.” Frank shrugged again. “Go ahead and give him your report, tell him I’ll follow up with him after I’m out and feeling better, see if there is anything else they want us to do.”
“I wouldn’t count on that, Jeff. He’s not the only one acting funny there. It’s like all of a sudden I’m not welcome. Oh, your stuff’s in the top drawer over here. You can check messages when you feel up to it. Your phone’s been vibrating almost nonstop.”
Jeff reached over, the motion taking great effort, pulled the drawer open, and took out the cell phone. His home security company had been calling every five minutes for over an hour. “Hang on,” he said. He brought up the automated message, and it went to video. There were men and women in his town house in Georgetown. They were cleaning out the place. “Jeezus,” he said. “Someone’s broken into my house.” He handed the phone to Frank.
After a minute, Frank said, “Yeah, look at the jackets. SEC. I think that’s what they call executing a search warrant.”
“A search warrant? Why would they do that?”
“I’m not certain, but I’ve got a hunch.” Frank paused as his thoughts raced, then, “We need to act, then we can decide on options. If you don’t think you’ll die on me, I suggest you start getting dressed while I make a call or two. You don’t want to be at a location they know about, if you know what I mean.”
29
TRADING PLATFORMS IT SECURITY
WALL STREET
NEW YORK CITY
5:13 P.M.
Richards Iyers went to the vending machine in the break room. He’d begun to feel better, the deep fatigue he’d earlier experienced slowly disappearing. His apprehension had also faded, evolving into a mild uneasiness. He chose a Coke, wanting the sugar and caffeine. He opened the can, took a swig, and scanned the room. Spotting Rose, the office gossip, he joined her.
“Did you hear about those two?” she asked immediately, almost as if she’d read his mind, leaning forward, her voice lowered to a conspiratorial level.
“Which two?” Iyers answered, suppressing a sense of excitement. To his great surprise he’d heard nothing all day, either about what happened at Central Park or the two mystery men who’d been working on their floor these last weeks.
“Jeff and Frank.” She lowered her voice. “They’ve been stealing.”
“Really? How do you know?”
“Everyone knows! They were hired to do a pentest but IT found out that after they got in, they’d been emptying accounts.” Though officially confidential, major IT referrals to the SEC had a way of leaking into their department almost immediately. This was no surprise given the relationship between the SEC and NYSE IT security.
“They got in? You mean they penetrated to the core code?”
“That’s what I heard.”
“That’s not good. Someone’s going to get in trouble over that.”
Rose blanched. “You think so?”
“I do. Especially if they used the access to steal. Is the SEC on it yet?”
She leaned even closer. “I heard they did a raid in Washington today.”
“A raid? That’s pretty fast.”
“I guess there’s a lot of money missing and the SEC was concerned they’d take more if they were left free.”
“I saw their office was empty earlier.”
“Right. I think they were arrested. We just haven’t heard yet.” Rose’s eyes were wide.
“That’s really something.”
At his desk, Iyers accessed the jump server. To avoid the audit logs, he used the cover of the first stage of the new trading engine deployment. For the next hour, he scanned, searching for whatever alerted IT. When he found it, he smiled.
Campos. He’d done this. It was a bit bold, but he was glad to see the man stepping up. Planted in the system was malware very similar to the one used in Vacation Homes only this one rather blatantly manipulated trades at a steady rate that was bound to attract the notice of the security programs searching for just such behavior. After a few minutes, Iyers saw the code was moving shares into a brokerage account set up in the name of Jeffrey Aiken. Iyers cringed at that, thinking it too obvious. No one would believe Aiken would be so blatant.
But think whatever he liked, IT had bought it. On reflection Iyers realized it was so obvious they had to. It was not the way Iyers would have gone about it, but he had to admit it got the job done. He just hoped Campos had covered his tracks because once Jeff and Frank were in custody they’d deny their guilt. They knew what they’d done in the system and if allowed to, they could walk a skilled programmer through their process. After that, Campos’s hack work would stick out like a sore thumb. If an impartial investigator seeking the truth put his mind to it, he’d conclude pretty quickly that the two men were set up. And that would lead in a direction Iyers didn’t want to think about.
He grimaced, then closed his eyes. He should have made sure he killed Aiken when he had the chance.
30
MITRI GROWTH CAPITAL
LINDELL BOULEVARD
ST. LOUIS, MISSOURI
5:59 P.M.
Jonathan Russo left the staff meeting and made his way back to his office largely unhappy. Since the disaster on Monday, his team had yet to find an answer. For all the talk during the meeting, they had no idea what had gone wrong with their new algo. The old one was still operating without issues, but that was small consolation. And though his team believed the new algo was fine, that was what they’d thought up until the moment they’d launched it. The fact that they were unable to discover the problem was not reassuring and Russo had refused the tentative suggestion they relaunch it without a change.
“That’s real money we lost,” he’d pointed out, “not Monopoly play money. And we can’t tolerate another hit such as we had Monday. We need to understand what went wrong. If it’s our code, let’s find the problem and fix it. If it was something outside, something beyond us, we need to know that as well, so we can take measures to see that it doesn’t happen again. I’m not adverse to some level of risk, but we need answers.” Alex Baker, his chief assistant, had agreed with him, urging caution as well.
When it was clear they were no closer to a fix now than they’d been the previous day, Russo gave instructions to put all their limited resources on the Toptical IPO coming the following Wednesday. Like most HFT companies, Mitri Growth had long planned to exploit the launch. An IPO of this size, with this level of excitement, was tailor-made for them.
For one, there would be an enormous trading volume and each block of trades presented an opportunity for profit. The sheer size also made it easier for their orders to lurk in the computers unobserved. They weren’t doing anything wrong, certainly nothing illegal, but scrutiny was undesirable and you could never predict when the SEC might suddenly decide that a common HFT practice was now against the rules. It had happened before. A high-profile IPO such as Toptical’s was just the event when they might make such a decision, especially if something went wrong and they were looking for a company to blame.
The other desirable aspect of such a high-profile IPO was that the stock was all but sure to rise initially. There was always a level of pent-up demand for high-profile companies going public and though the underwriters appeared, once again, to have made too much stock available, the price was likely to increase in the early trading. In Twitter’s case, it had just kept rising. It was a situation ideal for one of Mitri Growth’s special HFT algos.
But as the Facebook IPO had proved, the stock could be overpriced, which meant that within a short time it would begin to fall. This was a less desirable possibility for a high-frequency trading company, but there was still a lot of money to be made selling short, especially once the pattern was set.
And their IPO algo was designed to make money in either direction.
The problem with short selling was that if too many traders got involved it became a self-fulfilling prophecy. Algos from different HFTs competed against each other for advantage at lightning speed. No one yet fully understood the consequences. HFTs had first caused, then exacerbated the Flash Crash with aggressive selling and actions intended to complicate the system, actions that quickly spun out of the control and comprehension of their algos.
Before computers, a broker made a bit of money on every sale, as did the Exchange. High-frequency traders now injected themselves into such trades, taking a small percentage of each transaction. Every high-frequency trader was in the game, and their numbers were growing every month. No one took a lot, but everyone took something. So when someone bought stock, it was as if the offer had to punch its way through a succession of invisible digital walls, each one thrown up by a high-frequency trader. It slowed the trade, skimmed money from the deal so that by the time it was consummated the buyer paid more than he thought he would, or the seller received less. High-frequency traders had taken the cream.
At first, the delays and amounts were insignificant but high-frequency trading was so profitable it continued drawing countless players, many of them offshore, shielded from scrutiny. Even Russo, who had thrived in the industry for years, had no true idea who many of the players were or, for that matter, the full extent of the holdings they put in play. There were rumors, accepted opinions, but in the end, it was all speculation. What he knew was that the delays and effects on pricing were now very noticeable to anyone paying attention. The trading public wasn’t on to the scheme yet but those who made their living on the stock market knew and were increasingly leery.
Russo sat down at his desk and placed his face into his hands with a sigh. When he took this job, he’d failed to comprehend the pressure he’d be under. He’d thought his team produced the finest algos in their industry and still believed they did. But when something went wrong, as it had Monday, high-frequency trading had the capacity to drain money from the company like there was
no tomorrow. He’d had a disaster already but if next Wednesday went the same way, Mitri Growth and his career would be ruined.
The problem, Russo had come to understand, was that all the high-frequency traders were acting in the same way. There was no need to exchange messages or read internal memos. They were all doing the same thing, playing on the same field with the same end in sight. Each of them might do something a bit different and occasionally one came up with a novel approach but essentially they were like sprinters. They wore the same shoes, the same clothes, bolted from the same starting blocks, and ran flat out. It was no surprise that most of them finished almost together.
And Russo realized that was the danger. High-frequency traders represented a majority of all trades and if they acted in unison, which was the danger when an IPO went south or had a glitch, the stock would begin to collapse, and the volume and the frequency of their trades could pile drive it into oblivion.
And it was an event like Toptical’s IPO that presented the perfect occasion for that to happen.
31
WEST 109TH STREET
MANHATTAN VALLEY
NEW YORK CITY
8:29 P.M.
Jeff eased onto one of the single beds more exhausted than he’d realized. For the last three hours, he’d been in a daze, led by Frank, first out of the hospital, then in and out of a succession of taxis, culminating in a subway ride uptown. They’d exited, walked three blocks, and checked into this cash-only hotel built from appearances at the turn of the previous century. Not that many years before now, it would likely have housed a den of crack dealers but then the area had been cleaned up. Now it was just run-down and management still asked no questions if your money was green.
“Do you want to eat?” Frank asked from across the small room.
“I’m not hungry.” Jeff’s head throbbed, his side ached, and his arm was ablaze.
“I understand. I need to go out and get you something for the pain. I’ll pick up food and bring it back. We’ll see then if you have an appetite. What you need most of all is rest. So don’t fight going to sleep. We’re okay here.”
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