“Look, Jo,” continued Ben in a more conciliatory tone, “I’m sorry I can’t help you more. I’d better get back inside. Purdy’s waiting.”
Jo nodded, shivering. She began to take off the shawl, but Ben wrapped it back around her shoulders.”
“Keep it. Purdy won’t mind.”
With nothing left to say, Ben moved away and disappeared back inside the mêlée. Jo hailed a cab for the return trip to Butterfly. She contemplated that she had been on a foolish mission. Ben was still practically a stranger, even though his media presence made him seem more familiar, and she had to admit, when told aloud, her story wasn’t exactly compelling.
Jo allowed the motion of the cab to lull her tired body and mind as she meditated that Purdy’s shawl, like its original owner, was soft, luxurious and smelled divine. She thought in Ben’s circumstances, she would want to get back to Purdy too.
The clock read 1.07 a.m., by the time Jo was back at her desk. Armed with another cup of strong coffee from the department’s vending machine, she set her mind to completing her, by now, very pressing assignment.
Two hours later, Jo had figured it out. Even though the stocks traded on the two exchanges represented identical ownership rights in Mortenag, for the past three days the price on the LSE hadn’t fully reflected the recent run up in price of the company’s holdings, namely the stock in the acquisition target company. An arbitrage opportunity currently existed, therefore, for buying shares in London and selling them in Oslo, assuming no sudden exchange rate movements between placing the trades.
Jo spent an hour detailing her findings and trading recommendation. With just three hours to go before she was scheduled to present her report to Bray, Jo took a nap at her desk and made an attempt to freshen up in the ladies’ bathroom. Jo wasn’t alone and she gratefully accepted the offer of some mouthwash from a colleague, who seemed to have come prepared with an overnight bag.
“Better get used to it,” was the uplifting advice.
CHAPTER ELEVEN
With her shirt wrinkled and her skirt still damp from the night’s excursions, Jo awaited the arrival of Charles Bray with great trepidation. He arrived at 7.45 a.m., only fifteen minutes before the London markets opened.
Bray asked Jo to walk with him to the trading floor and summarize her findings on the way. He strode briskly and Jo scurried behind, struggling to keep up and to read and explain her analysis at the same time.
For much of the time, Bray appeared to be paying no attention to Jo whatsoever. He oscillated between barking orders at passing junior colleagues and shaking hands with senior co-workers. At various points, he motioned to Jo to move more quickly and speed up her explanations, especially when her technical analysis became too detailed. Jo reminded herself that Bray’s success in business was based on a brilliant, analytic mind; so obviously she could afford to skip over explanations of correlations in stock betas.
“If my findings are correct,” Jo finished, “we should be able to sell short the Mortenag stock in the Oslo market and use the proceeds to buy stock in London to close out the short position, locking in a profit equal to the price differential times the number of shares bought, minus trading costs.”
“What position size should we take?” fired Bray.
“I hadn’t considered that.”
“Well consider it now. What’s the market cap of Mortenag?”
Jo began to fumble in her notes. Bray began to snap his fingers, which didn’t help Jo’s concentration.
“Preferably today, Miss Lavelle.”
“Er, here it is. Two hundred and sixty-two point four sterling.”
“What’s one and a half percent of that? We want to be able to swoop-in and complete the trade before anyone else notices unusual market activity.”
Jo felt utterly exhausted, but she rose to the challenge.
“Three point nine four million.”
Bray stopped abruptly just before the entrance to the trading floor. Jo was still looking down at her papers and almost collided with him. Bray swiveled and their faces were close. Jo was thankful for the earlier gift of mouthwash.
“What’s your level of confidence in your work?”
Jo hesitated. “Maybe seventy per cent,” she ventured cautiously.
Bray bent down slightly to make closer eye contact and motioned his arms upwards.
“Eighty-five per cent, possibly,” Jo conceded.
Bray turned, programmed the keypad to open the doors to the trading floor and made a grand entrance at precisely 8.58 a.m. He rang a large metal bell and the trading floor fell deathly silent. Jo was struck by the thought that the bell was the least technical piece of equipment on the floor, but its effect was impressive.
“Gentlemen,” Bray announced. Jo wondered if Bray intended to exclude the female members of the audience, or if he was taking it for granted that they must all possess enough testosterone to work on the floor so that the distinction became irrelevant.
“We have an exciting trading opportunity this morning. My group has identified a zero capital, risk-free investment play, otherwise known as a perfect arbitrage, in which we have one hundred per cent confidence.”
Jo was alarmed and wanted to stop him, but this train was already in motion and thundering ahead.
Bray went on to explain and justify the basis and particulars of the trade in impressive detail, in spite of the fact that he had appeared to be paying little attention to Jo earlier. He then instructed the relevant desk to place the trade based on the position size he had arrived at with Jo.
Within thirty seconds the trade was being executed.
“Nervous?” asked Bray.
Jo was biting her lip and her fingernails at the same time, and she was aware that Bray was enjoying her obvious discomfort.
Two minutes later the firm had logged a profit in excess of £200,000. The arbitrage opportunity immediately disappeared as other participants noticed the anomalous market inefficiency and closed the trading differential gap.
Jo experienced an immediate rush of exhilaration and, despite the lack of sleep, she felt vividly awake. Any nagging ambivalence she had felt about choosing to work in the City vanished in a flash as she relished the feeling of victory.
Bray’s praise was muted, but sufficient for Jo.
“Very adequate work, Miss Lavelle.”
As they left the trading floor, Jo noticed a small plaque under the bell acknowledging the fact that it originated from L’Orient, a Napoleonic ship.
Back in the department, Bray, surveyed Jo’s disheveled appearance, and told her to go home and take a shower.
“Dr. Bray..”
“Charles will do. We’ve both escaped from the University hierarchy now.”
“If you don’t mind me asking, did you already know the arbitrage existed?” ventured Jo.
“Of course. But you did well, not everyone would have figured it out, especially on their first day in the group.”
“How long did it take you?”
“Three minutes.”
Jo looked impressed.
“That’s why I make the big money. Now go home.”
Jo was seriously tired, so she took a cab for the short ride back to the Barbican. As she looked out at the passing parade of City workers, she caught sight of a striking female figure, about ten years older than herself. The work out bag swung over her shoulder revealed the provenance of her toned physique. The immaculately cut suit, perfect hair and flawless make-up exuded confidence and the means to maintain it. As Jo’s cab stopped at the next set of traffic lights, the woman who had caught her attention came to a standstill on the pavement just outside Jo’s window. Jo heard fragments of her conversation relating to Eastern European government bond prices.
Jo found herself wondering if this is what the future held for her, and if so, she thought that perhaps it wasn’t at all bad. The rush of adrenalin she had experienced on the trading floor had been intoxicating. Knowing that it was her mathematical analy
sis that had translated into real profit had been gratifying, as had Bray’s acknowledgment of her work. In that moment, Jo tentatively conceded to herself that maybe she would enjoy this career she had embarked on.
As the cab moved on and the image of the female banker faded, Jo swatted away several witticisms against her profession and its capitalist underpinnings that arrived unbidden by her thoughts, irritatingly delivered in Ben Faber’s voice.
Jo managed a smile when Claude, the apartment block security guard, quipped that he was “Too, too, too pleased to see her”. Making puns on residents’ apartment numbers, unlike offering assistance with their luggage, was evidently included in his job description.
Jo opened the front door of the apartment to the sounds of “Om” emanating from the living room. Her mother was conducting a meditation group; her father had apparently found a pressing engagement elsewhere.
After a long numbing shower, Jo decided to lie down on her bed for a few minutes while listening to the sounds of Tibetan bowl music drifting down the hallway. Two hours later she awoke with a start to a silent apartment.
In a decidedly un-meditative fashion, Jo flung on some clothes and skipped the make-up on the premise that she still had a few years to perfect the polished, professional look she had earlier admired.
On her way back to the office, Jo ran into a small store to grab a banana, a packet of chips and a bottle of water for her lunch. She reasoned that the nutritional input of the banana would compensate for the absence of vitamins in recent meals.
Jo also picked up a copy of the early edition of the London Evening Standard. She scanned the pages of the newspaper as she walked, enjoying this brief contact with the outside world and relishing the sunlight.
On reaching the business section, however, Jo stopped cold, and the warmth instantly drained from her face and the day. The bold letters of the headline swam before her, “THE WHISTLE BLOWN ON MONEY TRUST.” In slightly smaller text below, the article opened with “Allegations That Chinese Wall Is Not So Solid.”
Jo went on to read, as if from memory, that early that morning Gary Dawson, a junior trader at Money Trust Securities, had come forward and made a statement alleging that this small investment bank had violated statutory regulations by trading on their own account using confidential information obtained from unsuspecting corporate clients.
A specific example cited by the trader in support of his allegation was the case of a pharmaceutical company, on the verge of securing an important patent, approaching the bank to seek advice on raising capital to expand production facilities. This news had been shared with members of the trading department, enabling them to garner large amounts of stock prior to the inevitable run-up in price that occurred when news of the patent became public.
News of these allegations triggered a suspension of the bank’s activities pending a full investigation by the Securities and Futures Authority, the City watchdog. Money Trust’s shares tumbled immediately, prompting dramatic falls in share prices throughout the sector.
Jo entered Butterfly Investments in a daze, the feeling of belonging she had felt earlier that morning shattered and left in a trail from the newsagents to the building door. With sickening déjà vu, Jo picked up the two page document sitting on her desk. It was the Money Trust investment report she had inadvertently come across the previous evening, except in this version, all the numbers were final, no longer in parentheses.
Jo held the paper slightly in front of her, as if it had toxic qualities, as she approached the secretary outside the office of Charles Bray. Handpicked by Bray himself, Jo was not surprised to find she was model material.
Jo waited patiently, but apparently invisibly, as the secretary slowly extricated herself from a personal telephone call.
“Yes?” she finally asked Jo. She looked expectantly, then pasted on a smile as if she had just remembered her training from executive secretarial school.
Jo, confronting at least five different shades of purple eye shadow, momentarily forgot her question.
“Um,” began Jo, mutely proffering the report in her hand.
“It’s Am-an-da,” the secretary sounded out. “Do you have a question about this?” she added, pointing at the report Jo has thrust forward.
“Yes,” Jo recovered, “why was it on my desk?”
“Because Dr. Bray asked me to put it there.”
Jo looked alarmed, and Amanda looked around, as if scouting for reinforcements.
“Why?”
“I guess he thought it was important. I was asked to put a copy on everyone’s desk in the department.”
“Not just mine?”
“No,” the overly patient tone returned, “not just yours.”
Jo backed away. Amanda pasted her smile back on.
Jo’s learning that she hadn’t been singled out to receive the good news about Butterfly’s latest trading achievement failed to alleviate her panic to any great extent. The fact remained that Jo now knew that at least one person at Butterfly had known that a particular individual at Money Trust Securities was going to act as a whistleblower, and had acted on this information before it became public, while claiming that the trading positions built up by Butterfly were on the basis of other circumstantial evidence.
What Jo didn’t know was if anyone now knew that she knew this. All the knowing and the knowing about knowing all began to swim in Jo’s thoughts creating a spinning vortex with an immovable center that Jo could not ignore. At the core of her discoveries, two words loomed ever larger. Insider trading.
CHAPTER TWELVE
Jo closed the door to her office and swiveled her computer screen so that it could not be seen through the glass of her office wall. Her fingers hovered above the keyboard ready to do a search on the phrase ‘insider trading definition’. She paused, suddenly paranoid about using the firm’s technology, and instead punched the words into a search engine on her phone.
She scanned through a couple of the results.
‘Insider trading is the illegal buying or selling of securities on the basis of information that is unavailable to the public.’
‘Insider trading is buying or selling a security while having material, nonpublic information about the security.’
The definitions were neither surprising nor reassuring. Money Trust had now been accused of committing violations of this nature, and it was also public knowledge that the authorities were investigating. What wasn’t public knowledge however, was that at least one person in Butterfly was perpetuating the same offense. The burden of this knowledge weighed heavily with Jo.
The evidence she had seen regarding Money Trust was pretty damming, and Jo wondered whether the conversation she had heard between Bray and Ives about IBG could now be considered a coincidence.
Jo opened the Quantitative Group database and entered the stock symbol MTR, for Money Trust. The directory appeared immediately, no longer subject to restricted access. Jo opened the file she had gone to the previous night. It now looked exactly like the document in front of Jo, with all the numbers filled in.
She looked at the file statistics to see who had created or last modified the document. The fields both read Butterfly. Jo randomly opened documents related to other stocks and checked the author information. The information was always the same.
She went back to the Money Trust document and looked to see when it had been created or last modified. The date and time were from that morning.
Jo dialed Adam’s internal number.
“Can’t go a full day without me hey?” he answered.
“Wow, sounds like you need to add E.G.O. to that list of acronyms on your card. Actually, I was just calling with another boring question regarding files,” countered Jo, keeping the tone light.
“Shoot.”
“I created a document last night, or rather early this morning. But the events after 2.00 a.m. are a little hazy and I can’t remember where I saved it. Anyway, I did a file search under the ‘created by�
�� query, but no files came up under my name, even though I know I created some. Ok, I’m not explaining this very well. The thing is ...”
“No, it’s OK. While you don’t get the prize for technical brevity, I get what you’re asking. The search won’t work.”
“Why? Am I doing it wrong?”
“No. When files are created, the author information isn’t saved.”
“A glitch in the system?”
“Careful what you’re insinuating. Accusations of technical imperfections in our system can lead to some unexplained ‘glitches’, as you say, occurring just on your computer. No, didn’t you read the philosophy part of the HR manual?”
“Remind me.”
“There’s some blurb about how everyone at Butterfly Investments is one team, working for the same goal, which presumably is to make vast amounts of cash, and that no one individual can claim the credit for any of the firm’s accomplishments. Anyway, due to this fact, we in IT were instructed to replace all file ownership information with the universal name of Butterfly.”
“Is there any way around it.”
“Of course, but your drinks bill is rising. The information is still recorded, you just can’t see it, but I can get special clearance from my head of department …”
The mention of any authority figure immediately alarmed Jo.
“No, that’s OK. Oh, look I just found the file name.”
“Well glad I could help then. And Jo, you really should get more sleep tonight.”
“Yes, you’re right. I will. Oh, one more thing. What about the date created and modified information for files. Is that always reset for the current day?”
“OK, you really should get a lot of sleep. No, it records the actual days that the files were created and modified.”
“Yeah. Of course. Well thanks. Bye.”
Jo surmised that whoever had created the file had deleted the previous version and made a new copy, which, she supposed, if she were committing securities fraud, she would also do to hide the trail.
The Girl Inside Page 7