Rogue Code

by Mark Russinovich

  Jeff took the unconscious, bleeding Oscar by the arms and began dragging him. He knew he had little time but could move only so fast. He’d drag him, stop, then drag. All the while the fire raged, the smoke stinging his eyes and filling his lungs. He coughed until he thought his guts would come out; then he’d coughed some more.

  Finally, he was at the door. Frank lay there unmoving. Jeff raised an arm, felt the white-hot handle, disregarded the shooting pain, and turned it. He tried to push it open with no success. He moved, leaned against the door with his back, and pushed.

  A draft of cold night air was sucked into the inferno, creating a strong breeze that momentarily drove the flames and smoke back. Jeff drew a lungful of fresh air, staggered to his feet, and with all his effort pulled Oscar out of the building into the night. He kept dragging him until he was satisfied he was clear.

  He could hear sirens now. The sound of emergency vehicles. Help was coming.

  Then he turned and ran back in for Frank, pulling him to Oscar.

  He looked up and could see flashing lights. He looked back at the mansion. The infusion of air had whipped the fire into a frenzy. The doorway was a wall of flames. Jeff turned, and for the last time, plunged into the inferno.

  81

  TRADING PLATFORMS IT SECURITY

  WALL STREET

  NEW YORK CITY

  1:39 A.M.

  Back at her workstation, Daryl was beginning to feel something close to normal. It was as if what had happened in the alley was a bad dream, not an actual event. She’d had three cups of black coffee and forced herself to eat half a breakfast at the coffee shop. When she finally left to return to the office, she’d passed the entrance to the alley, not looking into it, sensing and seeing nothing that told her Iyers’s body had been discovered.

  She’d scanned Iyers’s badge, the sleepy security guard paid her no attention, then ridden the elevator up. She found perhaps a third of the day shift was still at it. Everyone looked exhausted. She’d thought to check on Campos, but there was no reason. The man was busy. With his helpmate out of the way, he would be busier than ever.

  Now she turned to the rogue code. She’d had time to think about it and believed she could stop its functionality, but she still had a lot to learn about the deployment system first. Also, she’d have to sabotage it at the last minute, as it landed on the jump server; otherwise, Campos might discover what she’d done and override it.

  Her plan was simple enough. Once she understood the key functions of the code she planned to obfuscate them by corrupting the files. She’d didn’t want to delete them, since there might be automated checks for missing files.

  But first, she had to find these key files, and she had to do it in just over one hour.

  * * *

  Marc Campos couldn’t understand what was going on in Rio. There’d been no updates for hours. He’d sent work to Pedro earlier and heard nothing back. He’d tried calling with no luck. The call simply went to voice mail. He’d tried Skype and again there’d been no answer.

  It was possible the system in Rio was down but that was highly unlikely. He had expressly selected the location for Grupo Técnico with that in mind. The company had the services of two Internet companies. It also had a backup electric generator system. It was important it never be offline or unable to function.

  Something was wrong.

  He tried calling Jorge César. He’d rather not but it had to be done. No answer.

  Did he dare call el chefe? It was the middle of the night in Brazil as well. And what could Bandeira do in the short amount of time left? No, he’d make do.

  His other problem was that Iyers had vanished. He’d done nothing on Carnaval for nearly two hours. The time for the upload was rapidly approaching and Campos needed him for that. Campos could do it himself in a pinch but it was a job Iyers had always done in the past because it fit his job function. Campos would be running a risk of getting noticed.

  He had tried calling Iyers with no luck. He’d sent him secure e-mail and text messages. Again, nothing. He’d finally risked going to Iyers’s workstation. Empty.

  Where could he be?

  Campos returned to his work. If Iyers didn’t show soon, he’d have to go with what he had. The code was 90 percent there. Carnaval would function as it was. He’d have to do without the other 10 percent. He checked his watch. He’d spend the next hour fixing what he could; then he’d follow up with Iyers. If he still couldn’t find the man, he’d handle the insert himself.

  Then a thought came to him: What about the woman? Had Iyers seen to her? That would explain his absence. Maybe he was being too hard on him. He couldn’t be in two places at once. Maybe he’d decided he couldn’t risk having her in the building. That would explain everything except his failure to answer his cell phone.

  Campos resisted the impulse to check on the woman. Unless she was already dead—the thought startled him with the ease with which it came to him—she’d be at that workstation. He could drop by later. Right now, he had more important work. Iyers would show. Too much was on the line for him not to.

  * * *

  Daryl was now satisfied she’d identified the files that were key to the function of the rogue code. It was only twenty minutes until the scheduled 3:00 A.M. deployment, so she assumed the final version was already on the jump server waiting to be copied into the trading engine. She doubted the last update would change the structure in any significant way, so she corrupted two of the files. When she merged her changes with the final deployment, she would in effect render the malware inoperable.

  She looked at her watch. Less than ten minutes to go. How long could she wait before pressing the Enter button? If Campos was working on or watching the code, he’d see the change. It would take him only a few seconds to replace it with an untainted version.

  On the other hand, she didn’t dare wait too long. If the update took place early, she’d miss her chance. Still, she was certain the malware was going to ride in with the IPO and standard nightly updates. She had to have a target opportunity, and that was it.

  Her work was nearly done. She ached from head to foot. She wondered if she should go to a hospital. At the least she needed to see a doctor.

  And what about Jeff? And Frank? What were they doing in Brazil? Had they acted on the new address she’d given them? She knew Frank had once been a man of action, a super-secret special agent as she’d once called him after too much wine. Everyone at the table had laughed, though Daryl knew it was largely true.

  But Jeff was no secret agent. He wrote code. He understood computers. Sure, he was in good shape, and she knew from previous experience that when everything was on the line, he rose to the occasion, but still … how much could reasonably be expected of him? He was barely out of the hospital.

  She wished she had a message from Jeff and Frank telling her everything was fine. In a few minutes, she planned to send one telling them that she had the evidence to clear them and that the rogue code had been stopped in its tracks.

  She leaned back in her chair and closed her eyes.

  * * *

  Campos had still heard nothing from Iyers or from Pedro, so proceeded on his own. He would check on the woman when he was done.

  He completed his work fifteen minutes before 3:00 A.M. He went through the steps to make the insert, steps designed in part to conceal the fact that he was doing it. Then he copied the rogue code onto the jump server. The master stroke was in position, all that was needed for Carnaval to be in place when the market opened was the last Exchange update.

  * * *

  The hallways were largely empty as Campos made his way to Daryl’s workstation. She’d picked it carefully as he recalled.

  There she was. Her arms were crossed and she looked asleep. He was amazed at her audacity, simply insinuating herself into the offices of Trading Platforms IT. In theory this should have been impossible, but he’d long noted how lax security had become. He and Iyers had obviously taken advantage of i
t many times over the years.

  He looked at her monitor and was shocked at what he saw. It was a core part of Carnaval, files essential to its operation. She’d done something to them, he knew. That’s why she was here. He stepped toward her.

  * * *

  Daryl jolted awake, experiencing an instant of vertigo as she did. It took a moment for her to realize where she was. She immediately checked her watch. 2:57 A.M. Time to go to work.

  Just then, she sensed movement behind her. She turned and there was Campos, looking wild-eyed and angry. “What are you doing?” he demanded as he barged into the small work space.

  “I don’t know what you mean. Just a second and I’ll be right with you.” She reached for the Enter button.

  “Stop! Stop!” Campos shouted as he lunged at her.

  The two toppled off the chair onto the floor, Daryl experiencing a sense of déjà vu. But Campos wasn’t the psychopath Iyers had been, nor was he as strong. The two wrestled on the floor, grunting in effort. Daryl struggled to get to her feet, Campos pulled and tugged at her to keep her away from the keyboard.

  Finally, Daryl rolled on top, briefly pinning Campos. She struck him in the face with her fist. An image of Iyers flashed in her mind, and she struck the man again and again, no blow enough to knock him unconscious but the flurry momentarily dazing him.

  Still, Campos was both bigger and stronger than Daryl, and her superior position didn’t last long. He heaved her up and off him, then moved to place himself between her and the computer. “I’m calling security,” he said breathlessly. “You should leave.”

  Daryl reached onto the desk beside her and grabbed her purse. Fumbling inside she removed the pepper spray and before Campos could react, she sprayed him, right to left across the eyes just as she’d practiced. He screamed, grabbed his eyes, and all but fell to the floor.

  She leaned around him, reached for the keyboard, and pressed Enter.

  She stood back as Campos danced in a circle screaming for help and looked at her watch. 2:59 A.M.

  82

  MITRI GROWTH CAPITAL

  LINDELL BOULEVARD

  ST. LOUIS, MISSOURI

  10:00 A.M.

  Jonathan Russo stood with most his employees, watching the giant monitors arrayed across the wall of the office. Everyone was tired, but they’d made it. The new algo was in place. Over the next two or three hours, all the recent losses would be recovered and Mitri Growth would earn upward of $100 million. It was the most exciting day in Russo’s life.

  He looked around. Everyone was sitting at their desks or standing and watching the screens. In fact, they’d not know the outcome for at least an hour, but they would be able to confirm the algo was functioning properly. It had worked in the tests, but the sting of their failure the previous week was still with them. Nothing was certain.

  “Here we go,” someone said as the IPO trading began. No one said a word for some minutes.

  Colored graphs arrayed across the displays grew in height as trading volume surged. The Toptical stock best bid and offer prices, known as National Best Bid and Offer, or NBBO, which were displayed in a large font on the primary wall screen began to change. The initial Toptical price had been set at thirty dollars. Speculation was that too much stock was being made available and that the price might very well fall at first. And that’s what happened. But not for long. The Mitri algo was designed to take a large position at the start of trading. It responded at once to the drop by executing thousands of small sales, a process called quote stuffing.

  This move was part of Russo’s secret sauce. Mitri’s sophisticated statistical algo was based on past market behavior to determine optimal sale sizes and price drops, the small trades incrementally squeezing money out of the system and slowing the reaction of other algos with their sheer magnitude. Only collocated algos like theirs would be immune to the delays in getting an accurate view of the NBBO.

  The pent-up demand of regular investors now kicked in as the price looked like a bargain below thirty dollars, joining Mitri and no telling how many other high-frequency traders following the same course of action. The impact of the HFTs was greater than they’d calculated but they’d allowed even for that possibility. The price began to rise. A small cheer went up.

  Mitri Growth’s special Toptical IPO algo assumed that it possessed an advantage in latency over everyone else, that is, it acted based on the programmed belief that it knew the true price just slightly ahead of everyone else. The increase in HFT trading was pushing the limits of that advantage but Russo and Baker were convinced they still possessed it.

  Next the combination of regular investors, both institutional and personal, taken with the high-frequency activity, caused the quotes even to the collocated algos to start to lag behind actual prices, just as in 1929 with the ticker tape. Unknown to anyone until days later, the lag was initially just a second, but it was soon five seconds, then fifteen, then a minute, then three to four minutes.

  Nearly all of the HFTs algos immediately moved into a rhythm with the other high-frequency trading algos that were seeing different prices and as was the case in the infamous Flash Crash the price was quickly driven down. In usual trading the New York Stock Exchange applies artificial “brakes” in such a situation, to allow latency to catch up, to permit traders a few moments for reflection or to override their computers, but such safeguards don’t apply to IPOs. This was a free for all and the stock, for now, would be allowed to go where the trading took it.

  Toptical rose to $32.43, then at 10:21 A.M. began to fall steadily: $31.19, $30.44, $29.56, $28.23, $28.02, $27.06, $25.37, $24.01.

  “My God,” someone said, “look at that.”

  $23.46, $22.43, $20.09, $18.33, $12.56, $9.07.

  The free fall continued until 10:33 A.M., when the New York Stock Exchange suspended trading. Toptical’s price was frozen at $2.22. Those watching were stunned by what they’d witnessed.

  A pall of gloom spread across all trading on Wall Street. The market recorded a loss of 11.2 percent, one of the largest in history. But there was no collapse, no worldwide panic, no end to the international financial market as it was known.

  Later that morning, Baker brought Russo the figures. “We made a hundred thirty-seven million dollars,” he said with a grin. “A lot more if you include Toptical, but we have to wait to see what the Exchange does with it.”

  “What a collapse,” Russo said. “I never imagined.”

  “No, but the code we wrote did. Congratulations.”

  83

  TOPTICAL

  JACKSON STREET

  SAN FRANCISCO, CA

  10:51 A.M.

  Samantha Mason was in her office. She’d seen the writing on the wall much earlier, and left what was supposed to be a celebratory party. She was sitting at her desk, playing around with a game she’d been designing in her free time when Brian came into her office, shut the door, and took a seat.

  “How bad?” she asked as she looked up.

  “Two twenty-two,” he mumbled.

  She could barely hear him. “I’m sorry, Brian. I know how much this meant to you.”

  “What happened?” he asked. “I just don’t understand it.”

  “I’m not exactly sure. Morgan Stanley did us no favors. They were serving at least two masters, and I think we were the less important one. We may find out it was the Exchange’s new IPO algo. It was buggy. But my guess right now is that it was the high-frequency trading algos. Their greed, and recklessness, finally caught up with them. We just paid the price.”

  “Two dollars. How do I go out in public?” Brian said.

  “How’s Heather taking it?” Heather was Brian’s former model live-in girlfriend, Sam’s replacement in his life. It was nasty to ask she knew. She didn’t care.

  “Heather?” Brian looked at her as if hearing the name for the first time. “I don’t know. We haven’t talked. I think…” He paused. “I just don’t know.”

  “We’ve both still made
a lot of money, Brian. We’re rich, just not mega rich.”

  “I don’t think so. Gordon talked to his people at Morgan Stanley. They think the whole trade’s going to be voided, like it never happened.”

  “Wow. That’s something. I didn’t think of that.”

  Brian said nothing for some time and Sam left him alone, waiting. “I’ve been thinking,” he said finally. “I hope you’ll reconsider your decision to leave. I need you. We all need you. This IPO thing was a mistake. You were right. I should have listened. We’re back to square one now. We’ve got to make Toptical a sustainable business model. I think together we can do it.”

  “I’m leaving, Brian. I’ve had enough.”

  “Sam…”

  “Listen to me. I don’t want to spend any more of my life on this. I don’t even understand what’s been going on this last year. It simply isn’t what I want to do. I’ve got other plans. I’m sorry not to get the money but I’ve got other dreams, and I’m going to go after them. This—” She gestured grandly.

  “—is in my past, even if I’ll still be here for a few weeks or a month or so to help in the aftermath. I still owe some of our people.”

  “Sam—”

  Just then, Gordon stuck his head in without knocking. “Brian, you’re needed on a conference call right now.”

  “What’s going on?”

  “Morgan Stanley needs our consent to announce the IPO is canceled. We need to work on the language of the press release.”

  “Okay. I’m coming.” Brian looked back at Sam. “I need you.”

  “Yes, you do,” she answered. “But I’m still leaving.”

  Brian stood motionless for a moment, then quietly left.

  Sam sat at her desk without moving until there was a knock at the open door. It was Molly. “Isn’t it wonderful?” she said as she came in and flopped in a chair. “The whole thing just collapsed! Now we get rid of all those finance assholes and get back to building Toptical. I know I shouldn’t show anyone how happy I am—everyone’s so depressed—but I know you understand. This really is the best thing that could happen to us.”