The Banker's Dilemma: She promised him Paris in the spring

by Roman Klee

  The Trust obviously had its own tried and tested way of handling these kinds of family crises.

  “Before I forget, there’s one further piece of good news,” added Cunningham, “they found an iPhone at the crash scene, and it looks like it belongs to Budd.”

  Nathan’s first reaction was one of skepticism. From his experience, most people above the age of fifty found it difficult to use cell phones. Then he remembered that Budd was famous for his love of the newest and latest technology.

  “We’re gonna have the guys in the lab examine its location tracking file. It’s a neat feature … it records everywhere a user’s been.”

  Great, thought Nathan, finding Budd Wright was not exactly going to be the hardest task of the century. In no time he expected to be back in New York.

  And on his return he would have the task of fitting out his new partner’s office—who could have imagined that in a few short months, Nathan had put his life back on track.

  He just had to make sure he didn’t ask for a forty-thousand dollar credenza, or ninety-thousand dollar Persian rug. The accounts department at the Trust would never wear that kind of extravagance.

  After all, he was no longer working on Wall Street.

  Δ = T –27,979,200

  The metal studded front door opened and a girl dressed in a clinging gold and silver silk dress, bowed and said, “Hello sir, my name Phuong Nhi. Follow please sir.”

  She led Nathan down a long corridor, with coral pink marble tiles and unadorned white-washed walls. The narrow entrance then opened up onto a large inner courtyard garden, with a sunken pool in the middle surrounded by rich tropical vegetation.

  Nathan noticed a vibrant collection of what he assumed were tomato plants, in earthenware pots arranged neatly along one side, although none of them appeared to be ready to bear fruit.

  He breathed in deeply, detecting a strong smell—a little like burned lawn clippings mixed with incense.

  Then he spotted a very large incense burner shaped in the form of a blossoming lotus, the petals decorated with fish, heavenly beasts, and birds. It probably formed part of some ritual he knew nothing about.

  Phuong pulled back a large teak framed screen and showed Nathan into a perfectly square room, with a view across the courtyard.

  “Mr. Forkher see you shortly. You like tea, sir?”

  Nathan said yes, though he felt he could use something stronger. After a while, his head started to buzz. He put it down to the effects of the tea.

  The room had been carefully arranged to create a feeling of calm, a place where someone could sit cross-legged on the Persian rug and meditate. In the center of one wall, a golden Buddha sat in the lotus position.

  Directly opposite and twice the size, was an emerald Buddha, carved from rare jade. While he waited, Nathan noticed a large fish tank in the center of the room and walked over to look at it, expecting to see brightly colored fishes, with rainbow stripes and iridescent tails. But there weren’t any.

  Then he noticed the sign: Danger! Piranhas bite!

  Nathan remembered a story about a hedge fund manager, who maintained a secret love nest. One of its design highlights was a fish tank headboard filled with piranhas. When his wife found out what he was up to, she paid the apartment super to gradually weaken the tank’s frame.

  One night during a very passionate session with his latest hooker, the glass cracked. The bed was flooded and the couple had to defend themselves against the razor-sharp teeth of the fish and their voracious appetites. It was a novel way to get a pedicure.

  Nathan waited and nothing happened. He waited some more and still there was no sign of Faulkner. The guy was about to stand him up.

  Phuong reappeared and told him, “Mr. Forkher, so sorry, he have new meeting.”

  Nathan tried unsuccessfully to conceal his annoyance. He was not used to being treated in this way. When he made an appointment he expected it to be honored, and if the other person could not make it, then they should politely inform him and reschedule.

  He was also conscious of his own limited time—Cunningham said he had no more than forty-eight hours. And he felt the pressure of having to deliver on his first major assignment for the Trust. Phuong instantly read the displeasure on Nathan’s face.

  “Mr. Forkher … so sorry inconvenient to you. He said meet tomorrow evening. He invite you to Scato la Nera. Buku buku boom boom. Very good no?”

  Nathan smiled. Phuong was doing her best and now he felt like he was the one being rude.

  He agreed to the new meeting, and then thought about how he would spend the following day.

  Δ = T –27,892,800

  A row of stunning Asian ladies, each one wearing fewer clothes than the next, bowed gracefully.

  “Much pleasure seeing you again Mr. Forkher.”

  Nathan was surprised that the girls knew Ted from his previous visits, though his name was obviously causing a few problems. So this was where he regularly hung out.

  The club was not exactly what Nathan had imagined. He was surprised by the interior, expecting it to be some dark seedy establishment with tacky dayglow neon lighting. Instead, it looked like a throwback to the 1970s, with its orange and brown decor, shag rugs, leather and chrome furniture, lava lamps and revolving disco balls suspended from the ceiling.

  Photo montages of concerts performed by David Bowie, the Mamas and the Papas, Jimi Hendrix, Bob Dylan, Debbie Harry and Janis Joplin lined one section of the wall behind the main seating area.

  After spending an uneventful night at the Shangri-La hotel, and then a day visiting Buddhist temples, Nathan was starting to get concerned that he had very little to show for his visit to Thailand. Finding Liz was his priority. He might just as well have stayed in New York City.

  The Scatola Nera was like the kind of establishment cocky young Wall Street traders went to on Thursday nights, in search of rest and relaxation after a hard day at the office. They liked watching girls spin around poles or paid for them to sit on their crotches, grinding away as if they were having the time of their lives.

  A Eurasian girl, approached the table and introduced herself. “I’m Trinh,” and she took their order; Sang Som for Faulkner and a bottle of Singha for Nathan. When she returned with the drinks, she asked, “You like dance later? Very nice girls. Give very head good …”

  She seemed to be directing her question at Nathan, and not wanting to offend, he cut in, “Why not? … but not now.”

  Faulkner grinned and Nathan assumed his host had his own special arrangement at the club since he was a regular. The guy was not quite how Nathan imagined he would be. For one thing he wore a pony tail, held in place with a rubber band. And then he seemed so relaxed about everything.

  Nathan praised Phuong for her help, and Faulkner explained that she was originally from Vietnam. Finally, Nathan got to ask his question, “How do you know Budd Wright’s daughter?”

  “Budd and I go back a long way. We first met at Stanford. Our paths separated, but we always keep in touch. We exchange ideas on the markets. And of course, I’m an avid reader of his wife’s Christmas letter.”

  Nathan said nothing. He was not about to reveal that he too had read one of her letters even though he was certainly not a friend of the family.

  “Budd first sent Liz over here when she was on her gap year. Later I learned she never intended going near university. And then from time to time she came to visit me. I think she enjoyed the food and sense of freedom, being close to nature. It offered her a kind of spiritual satisfaction … well I can’t be certain about that of course … but maybe it helped.”

  Nathan didn’t want to sound like some kind of amateur detective, but because he was conscious of the time, he needed to get a few quick answers, even though he was at a loss to see how Faulkner could really help.

  “When was the last time you saw Liz?”
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  “Ah yes, Pete said you wanted to know that. She stayed in my villa six months ago. She left to go to a retreat on the Koh Chang islands. Believe it or not, it’s run by a guru called the Great Bhagwan Suri.”

  “How do you know she’s still there?”

  “We hired a guy to watch the place. Liz doesn’t like modern day communications. She’s trying this alternative lifestyle thing. I know Budd has a hard time understanding it, but there you are. If you want, I could let them know you’d like a meeting.”

  Nathan accepted the offer, eager to speed things along.

  “Now there’s something I want to ask you,” said Faulkner. He paused, taking a long slug of Sang Som. Then he fixed Nathan firmly in the eyes and said, “Do you know what ladies are?”

  Nathan grinned. He thought the question was dumb, because the answer was so obvious. Faulkner noticed Nathan’s visible amusement and didn’t wait for a reply.

  “No, I’m not talking about the ladies you have in mind. I mean a totally different kind.”

  The evening was getting stranger and stranger for Nathan, but he knew he had to play along.

  “I’m talking about a new kind of financial instrument, Life After Your Death Early Endowments. I know, it’s a mouthful. They call them L-A-Y-D-E-Es for short, it’s the fashion these days. Do you know what they are?”

  Nathan shook his head. He’d come across a huge number of acronyms in his time at Solomon, but this one must have been invented after he left.

  Faulkner explained that L.A.Y.D.E.E.s were Wall Street’s latest innovation, a way for investors to protect themselves against a stock losing value if a key company executive like its founder or CEO had a fatal accident, or simply passed away after contracting a terminal illness.

  L.A.Y.D.E.E.s were like corporate originated life insurance, only much better. To start with, there was no need to ask for consent. And then because they were financial instruments, they got around pesky technical and legal obstacles.

  Anyone who satisfied the accredited investor rules could buy protection and benefit if the person, referenced by the L.A.Y.D.E.E. died before the expiry date. They didn’t need to have any connection to the person or any interest in their company.

  “But it gets better,” continued Faulkner. “The referenced person doesn’t have to meet their maker to trigger a payout. Traders can still have fun placing bets. They can mix and match tranches to achieve their desired correlation exposures. To be sure, there’s a bunch of factors to consider, but in the case of L.A.Y.D.E.E.s, I figure rumor and gossip trump most things.” Faulkner stopped, sensing he didn’t need to talk the finer points of synthetic derivative construction to a former member of Solomon’s DPG.

  And he was right. Nathan needed no 101 refresher about the models his team used to measure risk and fair valuation—if only they had worked!

  What he instantly grasped however, was that there was no end to the mischief making these new products could create. Or their potential for enriching investors who understood precisely how to play with them.

  “I got some quotes from a dealer at Solomon for equity protection on the December Wright L.A.Y.D.E.E.s. The CDS-to-cash basis is showing a positive bias and the Z-spread implies several tranches have value. They expire on Christmas Eve—only another three hundred and twenty-six days to go.”

  Nathan suspected that Faulkner was probing about his former ties to the powerful Wall Street firm, thought by some to be the chief architect of every financial scam and manipulation ever invented. But he ignored the mention of the Solomon name.

  The Swiss may have promised to delay the release of the news about the plane crash, but Nathan was surprised to discover that Faulkner already knew about it and was devising a strategy to profit from the possible demise of a famous investor.

  The price of Wright’s Brenton Davenport stock had fallen by more than the market. Once investors knew the full story, the price was guaranteed to plummet.

  Even before the plane accident, a number of factors made it sensible to hedge the risk that one day Budd Wright would no longer be the CEO of the company he had created. A L.A.Y.D.E.E. offered the very best in downside protection.

  “This is speculation on my part, but with Wright gone missing, some guys could have an incentive to place a few side bets. They may start some funny money games.”

  “Well, if anyone bought protection in volume before his plane took off from Zürich, the S.E.C. could easily trace the trades. They’d be pretty dumb to do that.”

  “You would think so, but they do nearly all L.A.Y.D.E.E.s trades in dark pools—anonymity guaranteed. It’s a tough one to crack. Anyway, the S.E.C.’s in Wall Street’s front and back pockets.”

  Nathan had no arguments.

  He knew how the S.E.C. behaved when someone else was really calling the shots. But as much as he wanted to, he resisted adding to Faulkner’s negative comment about the guardian of U.S. stock markets.

  Faulkner’s description of dark pools was interesting. They might cover the identities of traders and investors, but Nathan suspected there were ways around any system claiming one hundred percent effectiveness. And naturally, front running was almost impossible to eliminate when highly motivated guys were chasing fast bucks.

  “Sure, most of the price rise is the usual knee-jerk. I mean, once they find the guy alive and well, the premiums will collapse. The person who finds Wright first, better call me and I’ll sell protection like the sucker’s going out of business!”

  Nathan smiled. He understood what Ted Faulkner expected in return for him providing this latest piece of information.

  “Ya know son, these guys are not just greedy short-term, they’re greedy long-term!”

  Nathan wanted to ask another question, but couldn’t because the DJ had cranked up the volume. Versions of Hot Chocolate’s You Could Have Been a Lady followed by Disco Queen came blaring out from ten-foot high loudspeakers—the floorshow had started and reviving the 1970s was well underway.

  And then Nathan’s cell phone went off. He looked at the number and knew he had to take the call.

  Δ = T –27,889,200

  Nathan found a quiet spot outside the club, where he could talk in peace to Cunningham. The new senior partner sounded excited by what he had just discovered.

  “We got a whole bunch of stuff. From the first day Budd used the phone, we can see the places he visited. Thank God the guy was a real technophile.”

  Finally, someone was making progress, thought Nathan. This was good, but it would have been even better if he had made the breakthrough.

  “We have the last calls Wright made while in Davos. And he also went to the Steinberger Hotel a bunch of times. We made a record of the meetings he had there.”

  Nathan assumed his boss would ask him to take a trip back over to Davos, which he was reluctant to do for a number of reasons. Cunningham carried on talking, and to Nathan’s relief mentioned nothing about Davos. Instead, he told him that Wright’s last call was to a number in Bangkok.

  “I think we just struck lucky,” said Cunningham.

  When Nathan returned to the club, he tried to find Faulkner again, but the guy seemed to have disappeared.

  He looked at the wall of pop montage posters, and didn’t want to sound critical, but he felt like telling someone that only a few of the acts had been really big during the 1970s. But what the heck?

  On the way over to his table, he noticed in the far corner of the room a group of young western guys, dressed in sharp suits. They were surrounded by a group of bikini dressed lap dancers, who skillfully encouraged their new dates to buy multiple bottles of the club’s most expensive champagne. The scene reminded him of the time when a couple of the Delta Zedd desk traders had taken him along to Strikes in NYC.

  Several members of the Russian crowd were in that night, sons of newly minted oligarchs. They had noticed
a big shot actor from Hollywood sitting at an adjacent table, and this Russian guy, who was celebrating his twenty-first birthday, ordered a Nebuchadnezzar of Armand de Brignac champagne for the Hollywood table.

  The price? A cool one hundred thousand dollars. Twenty bottles of the world’s best champagne, that was a neat way to get anyone’s attention. By the end of the evening, the Russian guy’s tab was so big, the tip alone came to a hefty thirty-five thousand bucks.

  There was competition and then there was competition. None of the Solomon traders could swing a tab that big past accounts for a single bottle, not unless they pulled off the Greatest Trade of All Time, the fabled GT-OAT.

  Nathan was just about to return to his seat, when he heard a female voice say, “Your friend, he say I show you good time … yes?”

  The line was a let down considering the beauty of the girl now standing in front of him. But hell, what did that matter? He didn’t expect her to talk like an English professor.

  Nathan had given up on Faulkner and was about to leave the Scatola Nera arm-in-arm with the amazingly beautiful Thuy. That was until she suddenly turned to say goodbye to one of her friends, and in the harsher fluorescent light, Nathan glimpsed the faint outline of a bump on the girl’s throat.

  He felt a mixture of disgust and self-loathing.

  Obviously, his choice was not so lucky.

  He made up a quick excuse and left Thuy standing by the club entrance—all the while suspecting that Budd Wright’s old friend had set him up and must have paid the bar fine.

  No doubt the guy was back home, laughing his head off and feeding his pet piranhas pieces of raw steak.

  Δ = T –27,867,600

  “One day, you shall understand,” said the Great Guru Bhagwan Suri, “there is no need for struggle, no need for conflict.”