Man in the Middle

by Ken Morris

  “Thanks to you, I’ve participated. I might as well understand how it works.”

  “I said no.” Stuart pushed himself back. “Let’s end this—”

  “Let’s not.” Peter grabbed his friend’s hand from across the table and pulled. “What am I going to do? Turn someone in? I’m not stupid. I know I’ve bent the laws—broken a few with this Uhlander Pharmaceutical trade.”

  Stuart grinned. “That’s true. No exceptions for profiting from material non-public info—doesn’t matter that you shorted stock and covered. But ain’t ever gonna be anyone who can prove anything. So I wouldn’t worry if I was you.”

  “I’m not worried. I know you’re a pro. Same as the others in this room. No footprints.”

  “That’s right, dude. Walking on air.”

  “If I’m in, then I’m in. Backtrading. You haven’t answered my question. What is it?”

  Stuart hiked his shoulders into his neck. “You didn’t hear it from me. Capiche?”

  “Agreed.”

  “Last chance. You sure you want to know? Kind of like losing your cherry. Once it’s gone, it’s gone.”

  “I’m no virgin.”

  “Ask and you shall receive,” Stuart said, setting up his pharmacy for another dose of enlightenment. “Backtrading is pretty simple. Someone, let’s say Boris Yeltsin’s bum-fuck girlfriend, is part of a syndicate—you know, Russian Mob, say. She’s smart and wants to get a few hundred million out of that piece-of-shit country. How? She does these trades with a bank—a bank that knows how to keep secrets. Say a Swiss bank. She loses everything in the trades. Every ruble.”

  “How and why?” Peter pressed.

  “Booking trades after-the-fact guarantees loss. Yesterday, the price of manure went down fifty percent. Today, Joe-on-the-take books trades as-of yesterday, getting Bum-Fuck long manure. She then simultaneously sells out for a huge loss. The bank she lost all her money to does another series of similar trades with a second bank, maybe off the coast of Africa. That’s what we call a two-trade.”

  “Another layer of security?” Peter asked.

  “Very good, dude. That second bank then trades with Howie-Boy, or Morgan, or me, or you. We make back all that money lost by Bum-Fuck a day or a week earlier. Bum-Fuck’s got a tiny account with us or with one of our outside managers. Maybe offshore, maybe not. Depends on her pedigree. Suddenly she has a tiny investment that trades into a great big ol’ giant one. All legit as far as the eye can see. Everyone takes some vig along the way, but Bum-Fuck ends up with clean money. Eventually she can buy a building if she wants to.”

  “The trades are bogus,” Peter said. “All we do is shuffle paper, create paper losses in the home country, then create a gain somewhere else, later. Once classified as trading profit, everything’s untraceable?”

  “Congrats. Like the former First Lady making a hundred grand on commodity trades with squat as an initial investment—difference is: we’re dealing in tens of millions, and we don’t leave paper trails that can be followed. Adds up to billions in no time. That said, I’m outta here.”

  Stuart stood, saluted, then exited the conference room.

  “Sweet,” Peter had to admit. “Not my problem, but still sweet. No wonder there’s so much damn money floating around this place.”

  The walk from the conference room was thirty feet. Peter crumpled into his seat and turned on his computer. An incoming phone line flashed. He picked up.

  “Hello. Neil, here.”

  “Morning, Peter. It’s . . .”

  Peter scanned the scene still underway in Muller’s office. Muller’s was the only back not turned. His big mouth widened in Peter’s direction— leering, it seemed, like a fox cornering an injured rabbit.

  “Hello, Peter? You still there?” the phone voice asked.

  “Huh. Oh yeah. I’m here. Who’s this?”

  “You weren’t listening? I told you. We’re going to raise our rating on . . .”

  Peter again tuned out and watched Muller’s distant head nod against a phone, pressed to his ear.

  A moment later, Muller said something to the other two. Ayers spun and looked at Peter. Stenman didn’t move.

  The insistent broker speaking at Peter continued. “Peter? What’s going on? You okay?”

  “Raising your rating?” Peter mumbled into the mouthpiece.

  “Yes. This is big. If you can get some stock overseas, you’ll make some quick cash.”

  “Thanks.” Peter hung up.

  When the meeting in Muller’s office broke half an hour later, Peter was engaged in exaggerated activity. He punched out quotations and read lines of data, all the while working into and out of ten equity positions.

  Ayers exited first. He came by the desk. “Peter,” he asked, “you have time for lunch? After the close. Around two. Won’t take long.”

  “I’m busy—”

  “It’ll take less than an hour. Please.”

  Peter reluctantly agreed to meet.

  Ayers’ Lincoln Town Car was waiting when Peter made it downstairs shortly after two o’clock. A uniformed driver opened the rear door and Peter slid in, next to Ayers. The attorney reached across and shook hands. Ayers’ fingers still felt like thick, pliant noodles.

  “Thanks for coming, Peter. I wanted to get caught up. After all, I’m the one who got you this job. How’s it going?”

  “I love trading. By far the best job I’ve ever had.”

  “Morgan’s happy with your development.”

  “I’m glad to hear that, Mr. Ayers.”

  “I think it’s time you called me Jason. I hope we’re friends.”

  “Yes. Certainly, Jason.”

  They spent several minutes speaking of nothing relevant, then Ayers asked, “Any questions you have concerning the firm? Morgan and I go way back, to when she had only a few million under management, and I was an overworked intern.”

  “Not really. But thanks for asking.”

  “Would you like to discuss how they operate? They’re aggressive.”

  “I’ve picked up a few of those habits myself.”

  “Good for you. This is like war.”

  “That’s what everybody keeps telling me.”

  “The rules of trading are different, depending on where you play,” Ayers said.

  He’s trying to sound too much like a best friend, Peter thought.

  “Take Russia, for example,” Ayers continued. “Under the table payoffs are a fact of life. Anyone who plays there, from IBM to the U.S. government, knows the game.”

  “I’ve got nearly half a brain. I guess I already figured most of these things out on my own.”

  “You sound cynical and sarcastic, Peter. Am I reading you correctly?”

  “Not really,” he lied. “Just wondering where this conversation is heading. Look, I appreciate your concern. And I’m sorry if I’m as subtle as a chainsaw, but I’m tired. If you don’t mind, can we cut the crap? I know this business isn’t whistle-clean, so save your breath. The way to win a war is by going all-out. Now, I guess that means we’re in agreement. I intend to go all-out, all the time.”

  “Whoa,” Ayers said, shaking his head. “Slow down, son. I’m trying to counsel you to be careful with the securities laws, not break them.”

  “Maybe you need to talk to someone else first. I don’t make policy.”

  “Are you referring to Morgan, perhaps?”

  “Perhaps. Look, Jason, I like Morgan, but your preaching to me is disingenuous. So let’s drop this line of bullshit.”

  “Let me state something for the record, Peter. It is Stenman Partners’ policy to discourage inappropriate use of information. If you have a question—it’s in the employee handbook—you are to ask Compliance. Compliance is undertaken by Leeman, Johnston, and Ayers. Our law firm has someone available twenty-four hours a day.”

  “Whatever you say. We’re encouraged to be aggressive but not overstep the line.” Peter rolled his eyes.

  “Exactly,” Ayers s
aid. “A fine distinction exists between doing good, hard, investigative research and gaining inside information. Even the SEC is having a hard time deciding which is which. Let’s take the example of . . . .”

  Ayers spent ten minutes clarifying what he meant. It sounded convincing enough on the surface, and Peter nodded in rhythm to Ayers’ words while staring out the window.

  “Now,” Ayers said, switching to another topic, “let’s take this Brazilian thing.”

  Peter focused back inside the car and on Ayers’ face. “Good idea,” he said. “I’m interested in your spin on what Stenman did in that situation?”

  “Again, you sound critical, Peter. Do you think some rules were bent?”

  “Bent? Good euphemism for... never mind. Go ahead. I’m all ears.”

  “I will say this unequivocally: Morgan did not have advance word on the loan package, if that’s what you think.”

  “Come on. I’m not saying I care, but the consultant had worked for her, for God’s sake. She was the solitary human being in the world who made money on this play. Josh Robinson’s hedge fund got hammered, and he’s as savvy as they come.”

  “Listen and you’ll understand,” Ayers said. “This former employee of Morgan’s shares her economic beliefs and values—as former co-workers, that stands to reason. Morgan anticipated his recommendations. That’s not illegal. She also knows how the IMF and the U.S. Treasury work. She understood that a major country in this hemisphere, one that has taken on massive reforms—political as well as economic—is important to the U.S. Again, she anticipated that a bailout was more likely to be granted here than in Indonesia. And was correct.”

  “Okay. Let’s say I buy that.” Peter had to admit it sounded plausible. “What about Indonesia? Who the hell was on the other end of the phone— the person I passed specific messages from? It sounded like someone inside the central bank.” If it shits like a duck, and quacks like a duck, Peter thought, it’s gotta be a duck.

  “I wasn’t there,” Ayers reminded him, “but I do know Morgan has people in every country who follow capital inflows and outflows. They poll major market players—including bankers willing to be polled—to gain insight. Deducting bank outflows from estimated hard currency reserves is a game everyone tries to play. Nothing illegitimate in that.”

  “Down to the last billion, at a specific moment in time?”

  “This is a sophisticated world, Peter.”

  “Fine. You’ve explained Indonesia and Brazil, counselor. Explain back-trading?”

  Ayers shook his head and said, “No such thing. I think I know what you’re referring to. Whenever a ticket is incorrectly written, or an error discovered, we file an as-of ticket to correct or backdate legitimate trades.”

  Ayers wrote something on a piece of paper as he spoke, using his briefcase as a table. He handed the note to Peter, keeping his hand below the back of the front seat, out of view of the driver’s mirror.

  Peter kept the slip of paper in his lap and read:

  Drop this line of questioning. Conference room is monitored. So is this car. Discussions overheard. You are in 100%, or you are out. Decide and state your decision clearly.

  Peter studied Ayers’ face. Deep lines creased the attorney’s forehead as he said, “Surely you are aware that errors need to be corrected.”

  “Yeah, corrections. I guess Stuart’s explanation confused me.”

  Ayers mouthed the word good, then said, “It’s possible I should review how these error tickets are written and processed. You don’t have a problem with any of this, do you?”

  “No. Of course not,” Peter said with an actor’s conviction. “This has been helpful, Jason. Sometimes, when a person is new to something, it gets confusing. But I’m a team player. I’m totally on board.”

  “That’s good, son. On another topic, how has settling your mother’s affairs gone? Anything I can help you with?”

  With the knowledge that others had overheard earlier discussions, Peter guessed this was meant to be a leading question. Ayers nodded as if confirming the insight.

  “Uh, as a matter of fact,” Peter said, recalling what he had already admitted to Stuart, “I found a letter from Mom, but I threw it away. It made no sense. She wrote something about the law and clients and such.”

  “Did she mention that she sent some papers to the SEC?”

  Peter’s chin dropped. This was a frontal assault for information. How should he answer?

  Ayers wrote out another note:

  Say, no.

  “No, she didn’t say anything about that,” Peter replied on cue. “She did mention something about some documents, but not what or where they were.” Did that sound convincing? Peter wondered.

  “If you come across anything, you can always run it by me.”

  “Sure. I’ll do that.”

  Ayers reached for the notes and retrieved them from Peter’s lap. He opened his briefcase and put them inside. Clamping the case shut, he spun the locks. The car pulled up to a small restaurant, two blocks from the beach at the north end of La Jolla, close enough for the ocean breeze to ruffle their hair.

  As they entered the restaurant, Ayers asked, “And the rest of your life? How have you been?”

  They took a booth and faced each other. Peter discussed a few recent events, his new apartment, his car. He then asked, “How’s Kate? I’ve been meaning to call, go see her.”

  “I don’t know if you’ve heard, but Kathryn passed the Bar.”

  “That’s fantastic,” Peter said. “I should ask her to dinner to celebrate.”

  “I don’t think that’s a good idea.” Ayers shook his head.

  “Why?” Peter sounded confused. “I was halfway hoping she’d come back to San Diego after the exam.”

  “She’s staying in LA. Accepted a job with the PD’s office. And . . . she’s engaged.” Peter’s body whiplashed. “To be married?”

  “Yes. That kind of engaged.”

  “Who? When?” Peter really wanted to ask: why? “The professor she worked with on the textbook. Wedding’s scheduled for late January.”

  “That’s a month and change away. I can’t believe this.” Peter slumped. “It’s so sudden.” Lunch was brief. When finished, Ayers said, “I’m going to call for a cab. My driver will take you back to the office.” He handed Peter a last note.

  Without looking at it, Peter palmed the piece of paper while shaking his head. “Makes more sense for me to get the cab,” he said. “Thanks for lunch.”

  “You sure?” Ayers asked.

  Peter insisted.

  A few minutes later, Peter’s cab sat in traffic while he read through the note Ayers had slipped him in the restaurant:

  You must not allow anyone to think you have documents from your mother. They are afraid—those papers potentially have trails that go back many years. Do your job and do not rock the boat.

  I recommend you destroy anything you have. Whatever you do, do not contact regulators. It would do little good anyway. I have done all that I can for you. Please, for God’s sake, do what I ask.

  Destroy this message before you get back to work.

  Ayers had written his message before meeting Peter outside of Stenman’s at two o’clock. That meant the attorney had planned this covert communication all along, but why?

  “Relax,” Peter told himself. “Everything’s going to be fine.”

  Do not rock the boat. Peter reread the words. He had never intended to rock the damn boat. What was in those envelopes his mother had left behind? This was one question he had no interest in answering. As the cab struggled to advance, Peter looked out the window. All the cars in his line of vision were crawling, yet all the drivers were desperately changing lanes. Pass, brake, get passed, switch lanes. Catch up, tailgate, stand still. Fall behind.

  Katie Ayers engaged: why had that news hit him so hard? Although he had done nothing to further their relationship, her engagement felt like a mortal wound to his heart.

  “Mind yo
ur own business. Do not rock the boat,” he said to himself.

  Katie Ayers. Secret messages. Kate. Messages.

  “Damn it all,” he said, loud enough for the cabby to hear. “Every single thing hanging over my head: damn it to hell.”

  CHAPTER NINETEEN

  AT HIS DESK AFTER HIS CAB RIDE, PETER SQUIRMED AS IF SITTING ON A nest of fire ants. He looked around every minute or two, wondering who was watching. Did Stenman think he was a security risk? Maybe he should say something.

  But, no. Ayers had said to do his job. That meant head down, continue to work hard, make money. That was the one thing Peter understood could help right things: make some major profit. Thank God he had already proven he could do that.

  And what about Ayers? The man filled Peter with suspicion. Could he be trusted? Was Ayers simply doing what he was told by those he worked for? Maybe this whole thing was a test, engineered by Morgan Stenman. If so, had he passed? The day’s conversations saturated Peter’s mind the entire afternoon. When he left work, it was dark. Because it was Friday, he understood the commute home was likely to be gridlock. A fifteen-minute drive in good times might take half-an-hour or more now. But he didn’t care.

  “Time to think,” he rationalized.

  At least things couldn’t get any worse, could they?

  The better part of an hour later, Peter pulled into the driveway leading past several other condominiums terraced along a steep hillside. He made his turn and accelerated the last few yards, reaching for and depressing the automatic door opener, then watching. He slowed and timed it so that the roof of his car just cleared the rising door. A dim light illuminated the interior of his garage as he turned the engine off, retracted the garage door, and got out of his BMW.

  “Don’t say anything.”

  The muffled words startled him. He spun and defensively raised a hand.

  Several feet away, appearing from behind the water heater, stood Agent Dawson. A .38 dangled from a hand draped along his side. He made certain Peter had a good view.

  Dawson stepped forward. With his free hand, he grabbed Peter’s shirt, at the neck, and pulled. His torrid breath blew across Peter’s ear, the clamp on Peter’s collar strong.