Jo tried to think back to the classes she had taken in accounting and company research. It all seemed so academic and simplified compared to the scenario she was now confronted with. She went through a mental check list of financial statements, capitalization structure, trading history, recent events, peer comparisons, ownership analysis. Ownership analysis. Jo hadn’t yet examined the shareholding structures but, after refueling on the remains of the chocolate bar and a cup of sludge-like coffee, she made a start.
Before long Jo came across an interesting fact. Mortenag, one of the companies, wasn’t an active business as such, but instead was a holding or investment corporation, whose assets consisted of shares in a number of the other companies that Jo was analyzing. These shareholdings included a significant stake in Hörgaarten, one of the takeover candidates. What made this fact significant was that Mortenag happened to trade on both the Oslo and London Stock Exchanges. Jo already knew that the Quant Group maintained a database with financial and trading data on all companies listed on the LSE. Wondering if an unwarranted pricing differential existed between Mortenag’s stock price on the two exchanges, Jo looked up the company’s London trading symbol, or ticker. She wrote down MTR, hoping she was finally making headway.
Accessing the Quant Group database, Jo entered the symbol MTR into the database. A message immediately came up that access to the files was denied. Wondering if her account privileges hadn’t yet been properly activated, she tried entering the ticker symbols for several other companies she knew. The relevant file directories immediately appeared.
Sleep deprivation and the beginnings of a sugar crash ramped up Jo’s level of irritation more rapidly than the situation warranted, and Jo punched the phone keys with vigor as she entered Adam Carter’s cell number.
She checked her watch, it was 10.00 p.m. “Well, he did say anytime,” she justified to herself.
Adam answered promptly. Being on call was obviously part of his job territory.
“This is Adam,” he said as he turned down the sound of a soccer game on his TV.
“This is Jo and I don’t think you set up my account properly. I need to access some files that I can’t get into.”
“Well Jo, first of all I sincerely apologize for any error on behalf the IT department. We are, after all, only here to serve.” Jo sensed more amusement than contrition in Adam’s voice, but wasn’t in the mood to spar.
“It’s the MTR files in the Quant LSE database. I can’t get into it, but I can access BAA, BPL and CRP so it doesn’t make sense.”
“OK, OK, slow down. Let me just log on. The MTR files you said?”
Jo could hear Adam tapping on a keyboard.
“Yep, you’re right.”
“I’m right, you didn’t set up my account properly?” said Jo, allowing a little smugness to edge in.
“Nope. You’re right you don’t have access.”
“But I need to get to these files.”
“Yes, I understand. You’ll just have to ask Bray in the morning to e-mail IT to give you authorization to use that database.”
“No, you don’t understand.” Panic could now be detected in Jo’s voice. “I need to do this tonight. It must be some weird glitch; these are just trading database files. Why can’t you just grant me access?”
“I didn’t say I can’t, I just really need the authorization…”
Jo seized the opening, her tone suddenly pleading and, she hoped, persuasive. “Please, please, Adam, this means a huge amount to me. It may even determine if I have a future here. I swear I just need to look up data on a publicly traded company. I’ll take full responsibility for it.”
“Well,” Jo could sense Adam relenting, “I’d hate to see you leave so soon. But if anyone asks, you came around with a knife and some duct tape. Only in such circumstances would I be exonerated.”
Jo could hear more key tapping. “There you go, you now have access, but tomorrow morning I will have to cancel it until you get Bray to authorize it.”
“Thanks so much Adam. I’ll make it up to you.”
“Hmm, could be worth a drink or two. Don’t work too late, they don’t pay you enough. Oh, wait, I forgot, they do. Bye.”
Jo retyped MTR into the query box. This time a directory of files appeared. She immediately noticed one labeled ‘Trade Summary.” Jo suddenly wondered if this assignment was also merely an exercise. She opened the file.
The title on the first page of the document read “Notice to Investors”. Jo scanned down the page. It appeared to be a summary of trades made by Butterfly Investments, detailing capital invested, positions taken, monetary and percentage profits as well as various technical and risk indicator trade analyses.
Jo’s first thought was that another member of the Quant Group must have already completed her assigned task and that she was being put through another test. Feeling pleased with herself at having managed to curtail the hours of work ahead of her by finding the finished product, Jo read the next page of the announcement giving a description on the companies involved in the trade.
Something didn’t make sense. The description mainly focused on Money Trust Securities, not Mortenag. Money Trust appeared to be a boutique investment bank with advisory, research, and trading divisions. Several other small investment banks were also mentioned. There were no references to the paper sector.
Jo continued to read. The section entitled, Trading Justification, gave a brief description of how Money Trust had used knowledge gained from client Mergers and Acquisition advisory work to make trades on the bank’s own account, thereby violating the bank’s so-called Chinese Wall. This information had become public when a junior trader, Gary Dawson, had turned whistleblower, revealing the firm’s serious violations. However, Butterfly had apparently been tracking the company for some time, alerted to the possibility of wrongdoings by the highly erratic performance of Money Trust’s trading division over the past three quarters of financial reporting.
On this basis, Butterfly had built up a large short position in the bank’s stock, effectively predicting a sharp fall in the near to medium-term future. The prediction had paid off and the profits generated from the trade had been large. Butterfly also made smaller, but significant gains from short positions in other boutique investment bank stocks tarnished by Money Trust’s transgressions.
It was interesting reading which intimated that, based on past trades like these Butterfly did appear to be smarter than the average hedge fund. Jo felt resigned to a long night again as she realized she had accessed the wrong files. She looked up the stock exchange symbol for Mortenag again. It was MRT, not MTR, as she had written down.
Feeling somewhat foolish for having been so emphatic in her demands to Adam, but also deciding that she’d rather make it up to him with the promised drinks than an apology, Jo went to close the Money Trust file. Just before she did so, her attention was caught by the date at the top of the page. She checked her calendar, validating her initial reaction. The date on the Notice to Investors was the following day. She also noticed that the trading figures were all in parentheses.
Jo felt her breath become slightly shallower, and her mouth a little drier, as the realization dawned that she was somewhere she oughtn’t to be. She quickly ran an internet search on Money Trust. News articles contained no mention of any regulatory scandal. A search on Money Trust and Gary Dawson revealed nothing. She checked the company’s trading history over the past two years on the London Stock Exchange’s site. There were no sudden drops in stock price.
Jo sat back, convinced that there had to be a simple explanation. Maybe the whole thing was just a scenario analysis, a hypothesis and the date was just randomly chosen. Jo thought about asking some of her new colleagues about the file. At 10.45 p.m., most of the offices in the department were still occupied. It then occurred to her that none of them had come to introduce themselves, and she certainly didn’t want to get into explanations about accessing restricted files.
Mired in
deliberation, as she puzzled over the files she had just seen and the conversation she had overheard between Bray and Ives, Jo was startled by her cell phone ringing. It was her mother.
“Jo, where are you darling?” She sounded concerned.
“At work, Mum.” The world beyond Butterfly Investments had taken on a mirage-like quality and Jo had forgotten to call and inform her parents of her current internment.
“Well I hope you managed to get something healthy for dinner. You have to look after yourself.”
“Yes Mum,” Jo lied, surveying the carnage of wrappers and styrofoam cups on her desk.
“Well we’ll see you soon then. Bye for now.”
It sounded like something a parent would say to a child who had come to visit and left home again. Jo felt, at this point, that it was quite apt.
Jo went to retrieve some gum from her purse. She noticed the beer mat at the bottom of the bag and pulled it out. She looked at Ben’s number scrawled on the back.
With limited options, and a growing knot of unease, Jo wondered if talking to Ben might help. She immediately dismissed the idea on the basis that she hardly knew him. Simon Wright’s warning against fraternizing with journalists also came to mind. But just before dropping the beer mat back into her briefcase, another thought struck Jo. She wondered if maybe Ben already suspected something about Butterfly’s practices and the piece he was working on was actually an investigative exposé.
Jo entered his number on her cell, but hit cancel before it rang. She was tired and realized that the information she had was only speculative. And if she had stumbled across something serious, she didn’t necessarily want to be the one going to the media with it. More urgently, the recommendation due in approximately nine hours wasn’t about to self-materialize.
Jo opened the Mortenag database of files and began comparing trading histories on the London and Oslo exchanges, adjusting for currency exchange movements. Jo began to notice that there might be some anomalies, where, in an efficient market they should not exist. Jo couldn’t immediately pinpoint how to make a risk free profitable trade based on the discrepancies.
She sat back to think, absentmindedly turning the beer mat with Ben’s number over in her hands. It was no use. Thoughts of IBG and Money Trust kept intruding. She had to know if the information she had come across had anything to do with Ben’s anomalous interest in Butterfly Investments, which would make more sense given his penchant for explosive reporting. If not, at least his investigative experience could help Jo determine if she was overreacting. She decided that confiding in him was a risk she was prepared to take.
Besides, Jo justified to herself, Ben owed her a few reciprocal minutes of his time after dragging her from sleep that morning.
CHAPTER TEN
The dialing tone continued for a long time. Jo was about to hang up when she heard Ben shouting above the noise in a restaurant.
“Hello? Who is this?”
“It’s Jo.”
“Who?”
“Jo Lavelle. I met with you this morning.”
“Oh, yeah. I remember now. The exemplary banker. Loyal to the firm, lousy interviewee.” The effort required to pronounce ‘exemplary’ left Jo in no doubt this time that alcohol was a major influence.
“Can we meet?”
“I see. Now you’re up for some chasing. I like that, but I’m afraid I’m off again to risk life and limb first thing in the morning. Got to feed the masses with some more stories of rampage and terror.”
“I was thinking more like now.”
“Not possible darling. With the girlfriend.” After a pause, “Out for a few drinks,” he added unnecessarily.
“Where?” asked Jo, fishing.
“Opening of some pretentious, oops, fabulous new restaurant on the Kings Road. Artichoke? Avocado? I don’t know, some vegetable name.”
“Avocado is a fruit, actually.”
“What?”
“I said I’ll be right over.” Jo had hung up before Ben had time to object.
Before she lost her resolve, Jo made her way quickly out of the building. It was raining heavily outside and, in her haste she had inadvertently left her jacket in her office. It took a full ten minutes to hail a cab at such a late hour. Fortunately the cab driver knew the restaurant she was referring to since the Kings Road had been practically at a standstill all evening as the area was swamped by a number of celebrities and the entourages they commanded.
The driver eyed Jo in the rear-view mirror.
“I’m not sure you’ll get a table though, love.” She wasn’t sure if he was referring to her appearance or the popularity of the venue.
Jo arrived at the new trendy bar and eatery called Aubergine, bedraggled and dripping rain from the rat tails her hair had formed into. She picked up an invitation to the opening she happened upon on the sidewalk and presented it to the doorman. Jo was momentarily surprised by the flash of cameras that greeted her arrival, until she recognized a well-known socialite heiress exiting at the same time. Distracted, the doorman ushered Jo in.
Jo squeezed her way to the back of the restaurant toward the VIP area where she assumed Ben would be seated She was not mistaken. Jo spotted Ben’s table immediately, mainly due to the presence of Perdita Llewellyn, looking characteristically gorgeous, and tasting a gastronomic delight offered on a spoon by the chef himself. Purdy closed her eyes and pouted her lips, seemingly lost in culinary nirvana. Several cameras flashed to record the occasion.
Jo was prevented from continuing her approach by a bouncer with a solid frame and a sullen expression who was acting as a barrier.
“I’m with Ben.”
His features didn’t change.
“The Ben who’s with Purdy.”
This produced the desired reaction. The bouncer summoned a gofer, who scuttled to the couple’s table and talked to Ben, while pointing to Jo. Ben motioned Jo over, but there was no repetition of the effusive welcome from their encounter earlier that day.
“I recall it was a bit tricky to get you to agree to meeting up, but it appears much easier to get you to turn up uninvited,” greeted Ben.
“Oh, don’t be so hard on the girl, darling,” purred Perdita, motioning for a waiter to bring over a towel and offering her shawl to Jo. Despite her preconceptions, Jo felt herself drawn by the magnetic charm of Purdy.
Eventually prying her gaze away from his companion, Jo asked Ben if they could talk outside for a minute. Purdy motioned for him to acquiesce and Ben dutifully led the way out.
The rain had stopped and Ben immediately lit a cigarette.
“So what is it that can’t wait?”
“Well first, this is all off the record.”
“How cliché of you, but sure.”
Ben was already distracted by passers-by, some of whom stopped briefly to greet him. Jo made it brief, and non-technical.
“Look, a few nights ago I overheard Bray and Ives, you know the politician guy, talking about this German company – I won’t say which one – and arguing whether the timing was right for something. Anyway, the next day there was some bad financial news about the company and Butterfly made a ton of money as a result of their stock tanking.” Jo paused, putting her face in front of his to capture his wandering attention.
“And then tonight I came across a file that I was not supposed to see. It’s about a particular bank violating certain compliance rules, and after the stock takes a dive Butterfly profits in a big way.”
“So what?”
“Well, this second trade hasn’t happened yet.” Jo paused before delivering the punch line. “The file detailing the trade is dated tomorrow.”
The revelation failed to produce the desired reaction. After taking some time to digest the information, Ben eventually summarized his understanding of the situation.
“So, if I’ve got this right, you hear your boss talking about some German company and the next day Butterfly trades in their stock, as presumably did lots of other funds. Second t
hing is that you’ve come across some secret file predicting the future.”
“Well I didn’t specifically mention clairvoyancey, but yes, that’s pretty much it.” Jo tried to conceal her desperation as she clung to the diminishing hope that the burden of knowledge was already shared. “Look, tell me, do you know anything about this already? Has it got anything to do with your story?”
“No,” replied Ben, shaking his head and adding a yawn, “and frankly my journalistic radar isn’t exactly going haywire right now. The first part sounds like a plausible coincidence and the second sounds like you need some sleep. No offence, but you also look like you could use some too.”
“None taken. You look a bit the worse for wear yourself. But I know something isn’t right. Why would anyone at Butterfly go to the effort of describing a fictitious trade in such detail and then restrict access to the file?”
“Who knows? Surely the real question is - who wants to work there in the first place?”
Jo let it go. “Have you any suggestions on how to go about investigating it further? Can’t you start asking some questions for your story?”
“Sure. How about, ‘Well Dr. Bray, sir, did you use your firm’s connections to throw the German stock market and pocket wads of cash in the process? In other words, are you a big fat crook? And while we’re talking, do you amuse yourself in your spare time making up fake trades and imagine how exciting the fictitious profits would be?’ Does that work?”
“Oh, can you stop being so flippant for once?” snapped Jo. “How did you get your first at Oxford? Wowing the faculty with your scintillating wit and unbeatable beer drinking record presumably.”
If Jo was expecting a rise, she was disappointed. Ben looked genuinely amused. He reached out to touch her arm, stumbling slightly in the process, but Jo folded her arms, clasping the shawl.
“Darling, you’re getting way too worked up over this. I’m sure it’s nothing. And, judging by your homework on me, it doesn’t look like you need any help in the investigative department.”
Jo felt tears of exasperation rising. Her pride suppressed them.
The Girl Inside Page 6