“You pay your money,” he said, “and you take your chances.”
27
Dean asked me if I’d had lunch and I lied and said no. We walked across the street to Gabby’s and ordered a pitcher of coke and two pounds of hot wings. The weather was a bit grey and grizzly, but we sat right next to the open window anyway. Dean doesn’t mind the cold, he never has. It drives me nuts but I just left my jacket on, even though we were inside.
“How’s Jay doing?” I asked.
“He seems okay,” Dean replied.
“Dean,” I said. “I gotta say I don’t get it. You keep saying it’s no big deal, but it seems like a big deal to me.”
“I know it does,” Dean said, “but it’s not.”
“How could it not be a big deal for him to tell the board they don’t have to tell the shareholders the company is overvalued?”
“Jesus,” Dean said. “So Edenfree was a private bank and they sold asset-backed commercial paper, or ABCP. Do you know what that is?”
“Bundles of mortgages?”
“It could be mortgages, yes, but it could be all sorts of things. It could be credit card debt, or auto loans, or student loans, or I don’t know what. Now do you know what an IPO is? An initial public offering?”
“Yes.”
“Really?”
“No,” I confessed.
“There are two kinds of companies, public and private. The difference is that for public companies, you can buy and sell its shares on the stock market. And those companies have certain disclosure obligations. They need to tell everyone how much money they’re making and how their business is doing so people know whether to buy the shares. If you’re a private company you don’t have to tell anyone that. But if you decide to take your private company public, you do what’s called an initial public offering or an IPO and you have to disclose all this information before you sell shares to the public.”
“Right.”
“So back in 2006, before the shit hits the fan with ABCP, Edenfree is making tons of money and so they decide, hey, let’s take this company public. Let’s do an IPO! And so they go out and hire a fancy law firm and start working on their prospectus, which is a big book that has all the information that someone thinking of buying shares in the company should know.”
“Okay.”
“Now listen carefully. In a prospectus, you have to make full and true disclosure of all material facts. A material fact is any fact that an investor might consider important when making an investment decision. If a fact is not material, you do not need to disclose it. There is a pant-load of law on this issue.”
“Okay,” I said.
Our wings arrived. I started to dig in. Dean just lit a cigarette.
“At the time of the IPO, in the summer of 2006, the ABCP market was rather hot and Edenfree’s products were rated very highly by the ratings agencies for ABCP. The ratings agencies were all saying it was very low risk. But one of members of Edenfree’s board, guy by the name of Wes Nolan, a very odd duck, was worried. Wes didn’t trust the ratings agencies. He was reading a lot of things saying that the housing market in the United States was due for a correction and he was worried there could be a market disruption. That would mean that even a company like Edenfree that had little direct exposure to subprime might go down. Given these risks, Wes was worried that the price of the Edenfree’s shares was too high, and so he hired Jay, one of the most prominent corporate and securities lawyers in Canada, to give him an opinion on whether he needed to make his opinion public.”
“And Jay said he didn’t have to do it?”
“Now listen carefully,” Dean said. “At this point, Jay is not on for the shareholders of Edenfree. He’s not on for the company, for the bank, or for the public. His client is this one director, okay?”
“Yes,” I said.
“And the question is whether this one director has to disclose this opinion.”
“Right.”
“Well, Jay looked at the prospectus. And the prospectus talked about how there could be a housing bubble in the U.S. It talked about how much subprime Edenfree had. It talked about the risks of a general market disruption. It talked about the limited value of the ratings from the ratings agencies. In other words, the prospectus contained all the information upon which Wes had based his own opinion that Edenfree was being overvalued.”
“Right,” I said. “I think I see where you’re going with this.”
“So Jay said, as long as Wes wasn’t forming his opinion of the price of Edenfree’s shares based on information that was not publicly available, he didn’t have to disclose it.”
“I understand,” I said.
“So this is a very hypothetical, weird thing to ask an opinion on. Like I said, Wes is a weird guy, he’s paranoid about getting sued, he’s a numbers guy, and so on. But, wouldn’t you know it, next year, boom, the ABCP market freezes, Edenfree goes bust, and the OSC crawls right up everyone’s butts for a whole host of other issues. Those issues got resolved, a few people got reprimanded and fined, and that was it.”
“Okay,” I said.
“But then, just this summer, the hacker group lulzsec hacks the bank that underwrote the IPO and releases about six terabytes of e-mails on Wikileaks. And lo and behold, the e-mails show that while the bank was going around pumping up Edenfree for the IPO, its proprietary traders were shorting the stock. That means betting it would go down.”
“I know that,” I said.
“So the OSC hits the roof. The bank is fucked, clearly, but the OSC also goes after everyone affiliated with Edenfree again. And they bring all the Edenfree guys in one after another for interviews and ask them: did you think the share price was overvalued? And all of them say no, are you kidding? I had my life savings invested in our stock. They all say that except for one. Wes. Who says, oh yeah, sure, I thought it was very overvalued. And they asked Wes, well, why didn’t you say anything? And what does he say?”
“Okay, but …”
“And all of a sudden,” Dean cried, “Jay’s this bad guy who tells board members to lie to the shareholders. Which …”
“But I mean, Dean, you gotta admit, it looks fucked up.”
“Yeah,” Dean said, “if you’re an idiot!”
“No way,” I said. “It’s fucked up to advise someone they don’t have to say anything when they think something they’re selling is overvalued. I mean, even if that’s the law, that’s fucked up.”
I looked at him, holding a wing in my saucy hands. I didn’t want to piss him off, but I wanted to have my say too. Dean just looked out the window, his cigarette burning down between his fingers. Finally he looked back at me, and I saw that, yes, indeed, he was pissed off.
“All of the information,” Dean said, “that was out there that led to Wes to form his opinion was available to these people. Did they read it? No. Did they think about it? No. They all ran out and bought stocks when they didn’t know jack fucking shit about what they were buying. They just saw it on BNN and they thought it was money for nothing. And now it’s Jay’s fault they lost money? What the fuck is wrong with people? Why don’t they think for themselves? Why are they so content to go along with things they don’t understand?”
He paused, but of course I had nothing to say about that.
“And now these same assholes are ruining Jay’s life, a guy who was not retained to represent their interests, and for what? For giving a legal opinion that was completely accurate?”
“All right man,” I said.
“Stocks can go down as well as up,” Dean said. “That’s the chance you take. All right? Especially when you don’t know what the fuck you’re doing.”
“All right,” I said. “What do I know? You’re right.”
Dean shook his head. When he spoke next his voice was very bitter.
“I don’t get it,” he said. “I just don’t understand people.”
He barely had any wings. I tried to turn the conversation to happier sub
jects, but what were those? His personal life? Mine? Work? There wasn’t even any basketball season coming up. It was like everything was turning into a minefield.
28
On Monday, I told Alan things were slowing down on the Goldstein file, and asked for new work. He turned me down and told me to bill the shit out of the Burke file. And that depressed me. It felt pointless to keep following Anthony. How could I prove that he wasn’t cheating on his wife? And if he was cheating (which I doubted) how could I catch him when three other guys had failed?
I spent the whole week shadowing him, feeling vaguely like it had become my job to take advantage of a crazy woman. Eventually the day of the art show rolled around, and I found myself sitting at the patio of the Flatiron and the Firkin, across the street from the art gallery, wondering what to do with myself.
I had decided it was best if I didn’t go to the art show; I’d stick out like a sore thumb. But I was frustrated with the lack of progress, so I figured ‘what the fuck’ and made my way over.
A waiter with a black shirt and white tie gave me a glass of red wine when I walked through the door. The place was packed with people standing shoulder to shoulder. I made my way straight to the cheese tray, drew upon my high school football experience to clear a little space, and started shoveling crackers into my mouth. My primary focus was this one particularly bad-ass cheese, like a soft Brie with blue powder sprinkled on it. Once satisfied, I got another glass of wine and squeezed my way through the crowd, looking at the paintings.
They were all, I shit you not, of dicks. Literal dicks. Like, penises. Each one was a close up of a dude’s crotch, with the dick hauled out over the waistband and hanging down. Instead of being realistic, they were brightly coloured, blues and greens and pinks.
No price tags. I was looking around for someone to ask how much they cost, when I noticed the man himself coasting confidently towards me.
“Hi,” he said. “My name is Anthony Burke. I’m the owner of this gallery.”
I said: “I’m wondering how much these paintings cost.”
He smiled:. “Because you want to buy one, or because you want to roll your eyes at how ridiculous modern art is?”
“What?” I said, offended. “I hope you don’t think that just because I’m black, I came in here to make fun of your paintings.”
“No,” he said, “I think you’re a private detective hired by my wife, and you came in here for the free cheese. You seemed to particularly enjoy the Cendrillon. Next time I recommend you pair it with a white.”
“I don’t know what you’re talking about,” I said.
“About the cheese, or my wife?”
“No,” I said. “I understood the cheese. It was bitching.”
“So we have similar tastes in at least one thing.”
“And you know what, you got me,” I said. “I did ask how much they cost because I’m going to make fun of modern art. But come on man. Tell me.”
“I honestly can’t tell you,” Burke said. “Between you and me, the price is a bit fluid. Some of my customers, I have particular arrangements with, because I placed a piece with them before or something like that. You understand.”
“Right,” I said. I understood all right. He charged whatever the fuck he thought he could get away with and didn’t tell anyone what that was.
“But,” Burke continued. “These paintings are by a young British woman named Anna Herowicz, a painting in this series was on display at the Tait Modern in London, England, and these pieces sell in the, please don’t sip your wine as I tell you this, the mid six figures.”
It was good that he warned me. I would have spat out the wine for sure.
“Like,” I said, “the multiple hundreds of dollars?”
“Yes,” he said. “American dollars.”
“Jesus fucking Christ man,” I said.
He smiled a little, looking very relaxed.
“I’m sorry,” I said. “I don’t mean to piss off your customers.”
“Oh, no one can hear you,” he said, which was probably true, it was very loud in the small space. “And anyway they wouldn’t care what you think. Just marks you as a no-nothing rube, that’s all. Doesn’t detract from the value of the art in the slightest. It might even increase it.”
“How could it increase it” I asked, fascinated.
“Well,” he said, “let’s say you’re very rich. At a certain point, it becomes difficult to impress your friends. Cars, houses, whatever. All that stuff is boring. Everyone has them. But art is different. If you buy a Herowicz, or let’s say, a Hirst, or a Warhol, and you put that on your wall, all your friends are like ‘oooh!’ They know that you spent a ton of money for a picture of a dude’s dick, or a bunch of random dots. So that means that, one, you’re rich, and two, you’re cultured. You’re not some cheese-loving private detective who doesn’t ‘get it’ and makes snarky comments like ‘my kid could paint that!’ You aren’t just some nouveau riche clod who lucked into a fortune by managing a hedge fund or by founding a software company. You’re a renaissance man. Do you see?”
“But it’s just a picture of dude’s cock!” I said.
“What’s your name?” he asked me.
“Danny,” I said.
“The thing is Danny,” he said, “it doesn’t matter what the art is. I mean, there are a billion examples. I assume you haven’t heard of Felix-Gonzales Torres.”
“You assume correctly, good sir.”
“He’s a very important contemporary artist, one of the top ten of the past fifty years, say. He had a work that was untitled but referred to as Lover Boys. It was 355 pounds of candy intended to be piled in one corner of a room in a pyramid and eaten by guests. It represented his lover's body wasting away from AIDS.”
“What kind of candy?”
“It doesn’t matter. Regular candy from the Bulk Barn. They were individual wrapped. We’re talking a thousand dollars worth of regular candy or something.”
“And it comes in a bag, or something?”
“Yeah,” he said. “And then you make it into a pyramid in your house. It came with a certificate of authenticity. It was listed as a sculpture, described in a catalogue entry as ‘dimensions variable’. Sold for $456,000.”
“Jesus,” I said.
“Another example. An art journalist owned a painting of Stalin by unknown artist. He bought for 200 British pounds. He says he puts it over his desk to inspire him in his work. Later he tries to sell it but no one wants to buy it. Maybe because, I don’t know, it’s a fucking portrait of the greatest mass murderer in history. So he gets his buddy, the well-known artist Damien Hirst, to paint a red nose on Stalin and sign it. They put it up for auction and estimated it would bring in 8,000 to 12,000 pounds. It sold for 140,000.”
“Mondern art is fucked!” I exclaimed. “No offence, but my kid could paint this stuff! And I bet you that these people couldn’t tell the difference.”
“Well, sure,” Burke said comfortably. “But art has always been about the brand of the artists, and not about the art itself. Now Van Gogh is a great artist. Your kid couldn’t paint that. But can you really tell the difference between a lesser-known Van Gogh painting and a painting from one of his contemporaries? Let alone a skilled forgery. Can the people who pay big money for those paintings tell the difference? Hell, if someone didn’t tell you the Mona Lisa was the best painting in the world, would it really grab your attention if you walked past it in the Louvre?”
Burke shrugged, then continued: “I like to think that some art is great and important and it will echo down through the generations, that it will speak to people outside of this place and time, that it really changes the people who experience it. But the business of art? The business? That’s just branding.”
“My buddy wouldn’t like that,” I said. “I have a friend that will only buy expensive things if he can tell the difference in a blind test.”
It was the first thing I’d said that got a reaction from Burke. �
��Hmm?” he said, raising his eyebrows and looking a bit concerned.
“Yeah. So for example, he won’t pay extra for a bottle of wine unless he can taste the difference himself from a cheaper bottle in a blind taste test. So I don’t think he’d be into art. He’d probably want to look at the actual pictures without knowing who painted them. And I don’t see how he could want to buy the bag of candy. He wouldn’t even know that it was art, unless he saw the certificate of authenticity.”
“He doesn’t do that for everything though,” Burke said. “Really?”
“I think so,” I said.
“Can I ask you something?”
“Sure.”
“Is your friend lonely?”
The question surprised me so much I didn’t know what to say. At first I opened my mouth to say, no, he’s all right, but then I realized that Dean maybe was lonely.
Burke touched my shoulder.
“Do you smoke?” he said.
“No,” I replied.
“Never mind. Come out with me.”
We threaded our way through the crowded room, with Burke smiling and nodding at people and occasionally saying a word or two but pressing resolutely forward, and then we went through the back room (that was full of paintings covered in cloth and stacked on the floor) and headed outside into a little laneway, not wide enough for two cars to pass each other.
The building that housed the gallery was a 150-year-old brick warehouse on Front Street, now restored and occupied with cutesy restaurants and bars and luxury condos. A little to one side some guys were loading boxes of booze into a restaurant, while a waiter stood supervising and smoking.
Burke leaned up against the bricks and lit a cigarette. It was nice to be out in the quiet and the cool of the street.
“Why do you say he’s lonely?” I asked.
“Well, a couple of things,” Burke said. “First of all, brands are important to people. Maybe they shouldn’t be, but they are. So if you ignore brands, out of principle or something, it seems like you’re putting that principle above getting along with people. Do you know what I mean?”
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