The Last Hedge

by Green, Carey

  “Yes,” Josh said. “I am.”

  “Good.” Dylan and Binky watched Josh as he turned and made his way towards his glass office. A few minutes later, the power to their computers returned.

  “You work on that,” Dylan said as he got up from his chair. “I think it’s time I found out what the real deal is.”

  Dylan got up from his desk and walked towards Martha Thomas’ office.

  Martha did not hear Dylan when he entered her office. He admired for a moment her perfect hair and posture. She was wearing a blue dress, open at the neck, and a stylish set of pearls.

  “Martha, we have a problem. I need to speak to Ray today.”

  “Is it an emergency?”

  “Depends on how you look at it. Look, I plan on getting paid this year. What it boils down to is I work on commission. If my book is not making money, I don’t get a bonus. I got my assistant here, and King giving me a hard time all day. It’s not an easy situation.”

  “I realize that.”

  “So what this means is … I have to be able to trade at some point. And without Ray here, my hands are tied.”

  “I completely understand.”

  “So? May I call him? Is he reachable by phone?”

  “No, Dylan. Today he is not.”

  “I don’t understand. What kind of operation are they running here? I guess Josh came down here and told you what happened.”

  Martha smiled at him sadly. She then got up from her desk. She walked past Dylan as she closed the door to her office. She returned to her desk and sat back down, smoothing her dress slowly as she sunk into her chair.

  “No. You see, I was the one who told Josh. I hate to be the one to inform you of this, but we are having liquidity problems.”

  “What? How can this be?”

  “Very easily. Our fund was down 65 percent last month.”

  “He mentioned a bad week, but not like 65 percent.”

  “How could that he? It’s not the type of thing one advertises to prospective employees. Ray was generous enough to put cash in an escrow account for you.”

  “What does that have to do with this?”

  “I’m just pointing out a fact. Besides no one has taken a bigger risk than Ray. His whole net worth is tied up in this fund.”

  “That’s insane. All of his money?”

  “Everything. If the fund goes dead, he loses everything.”

  “How could he have been so dumb?”

  “Dumb? Because he believed in himself and his abilities? I wouldn’t call that dumb. Perhaps not the best risk management…”

  “To say the least. Do the other traders know this?”

  “No, not exactly. I think they have some idea. Only Ray, myself, you and Josh know for sure.”

  And where is Ray now?”

  “He’s out raising capital. Martha looked down at the Rolodex calendar on her desk. After a moment of thought, she looked up. “I believe that he’s in the Cayman Islands. You see, it’s been very difficult to raise money domestically right now. We’ve met with a host of private clients, pension funds, and private equity investors. Well, they all think that our current investment strategies are not working. They believe that the market is commoditized on the type of investment strategies that have succeeded in the past. Therefore, we either need to change our quantitative direction or find a new source for an influx of cash.”

  “What’s the strategy?”

  “We had hoped that you might be able to help us with that.. You come from a major investment house. That is the type of pedigree we need to go out and attract the type of capital we need to turn this firm around. Let me show you something.” Martha reached into her desk and removed a gold signet ring. Dylan could see it from a mile away, the Veritas shield shining brightly. It was from Harvard Business School, class of 1972. It had the encryption of a Baker Scholar, someone who had finished in the top 5 percent of one’s class.

  “I have one, just like you. I lobbied hard for you to be here. Why? Because it tells me the type of person that you are, and the intellect that you possess. It was a struggle for me to get this, but it means the world to me, as it should to you. And I believe in what you can do. I don’t want you to give up on Ray so quickly. The credit crisis will pass, and I will do whatever I can to help this firm and you succeed.” Martha took the ring back and placed it in her desk drawer.

  There was nothing to say. They both smiled at each other. Though Dylan felt the ring was a bit much, somehow, he trusted her. Whatever deviousness lurked in the Corbins’ scheme, Martha did not seem to be one of the ringleaders. No pun intended.

  “So what do you want me to do?”

  “I told Ray what happened here this afternoon. He wanted to speak to you directly, but did not have time today. Can you catch a flight to Antigua tomorrow? A ticket will be waiting at the airport. Ray will meet you at the hotel.”

  “Are you sure he’ll be there?”

  “If you’ll be there, he’ll be there.”

  “Tell him I’ll see him in Antigua.”

  “You’re on.”

  Chapter 9

  The intensity of the Antiguan sun was already evident, as the airport limo dropped Dylan off at curbside. A bright, cloudless blue sky hung overhead. For a moment, he wished that he were there on vacation rather than having to deal with the mundane business of banking and raising capital. Dylan took his bag and headed inside the hotel.

  Inside the hotel, a small line was gathering at the hotel check-in counter. When Dylan checked in, he found that Ray, the spendthrift hedge fund manager, had splurged on top of the line accommodations. The receptionist then handed him a folded note, written on hotel stationery. Dylan stepped away from the counter while he unfolded the note. It was from Ray Corbin.

  Dylan,

  Glad you could make it.

  Meet me at the hotel piano bar

  at 3 p.m.

  Ray

  That was it. Dylan crumpled up the note and put in it his pocket. He made for the hotel elevator at the end of the lobby. When he arrived on the penthouse floor, he used his key to unlock the elevator. As he exited, a copious spread was waiting: cheese, fruit, caviar, brioche and booze, only of the best quality.

  With little to do before his meeting, Dylan decided to take a nap. Once in his hotel room he washed his face and undressed. He removed his jacket, then his pants, before he stretched himself down on the elegant Queen-sized bed. The Antiguan sun was still high in the sky. Within minutes, he was sleeping deeply.

  Waking, he found the time was close to 3 p.m. He showered, dressed, and took the elevator to the lobby.

  The piano bar was practically empty when he arrived. A woman and a man were sharing a martini, alternating sips from the same glass. They were having fun. The man was older, at least in his mid-fifties, a corporate type. The woman was young, a real stunner with black hair and a short skirt. Though she was twenty years younger, Dylan couldn’t help but notice the large rock on her finger. Dylan ambled up to the bar and took a seat.

  The piano player was just arriving. In his twenties, he looked fresh from Julliard or some other conservatory. His tuxedo looked two sizes two large. He started in on an Elton John tune, “Sacrifice.”

  While he waited for Ray, Dylan ordered a Scotch on the rocks. He had been there less than ten minutes when his boss arrived.

  “Hello Dylan,” Ray said, smiling as he extended his hand.

  “Ray,” Dylan said coolly, extending his drink but not his hand. “May I buy you a drink?”

  Ray laughed. “Of course. Is this seat taken?”

  “It’s reserved for you.” Ray took a seat while Dylan signaled the bartender. She came, and Ray ordered a gin and tonic.

  “Nice seeing you again, Ray. It’s funny. I was expecting to see you in New York, not Antigua.”

  “Thank you for making the trip.”

  Though he was trying to keep appearances, Ray Corbin had the drained look of a beaten man. Perhaps it was something in the e
yes, a slight hint of lines, or perhaps he was a bit more disheveled than usual. His shirt was slightly wrinkled and the knot of his tie, a double Windsor, had drifted slightly astray. For a moment, Dylan felt sorry for him.

  “So how are you, Ray?”

  “I’ve seen better times.”

  “I can imagine,” Dylan said. “I had a long talk with Martha about the state of things.”

  “Yes, she relayed that to me over the phone. I can understand your being upset.”

  “Upset really has nothing to do with it. No one likes being lied too. Why didn’t you tell me?”

  “Dylan, you know this business. It all went down the week you called. We were taking huge speculative positions in the oil market. When the price of oil was low, we made a killing by selling puts. But when oil prices began to rise last week, we got hit hard.”

  “Weren’t you hedged?”

  “Well, we had taken that money and invested in natural gas. When those prices dipped, it was a double whammy.”

  “Ray, you had everything on those two trades? They weren’t even well correlated.”

  “We got sloppy, and we lost.”

  “That’s not just sloppy,. That’s plain dumb.”

  “Dumb? You blew your fucking money on an art gallery, and you expected me to bail you out? Grow the fuck up! We made some mistakes, and we got burned. You live and learn. Then, you move on.”

  “Now what?”

  “Look, this is not a business for the faint of heart. We reconstitute ourselves, and we make a comeback.”

  “And you expect me to be a part of this?”

  “Dylan, after looking at how you made money this week, I want to build the company around you.”

  “I find that so hard to believe, because I just got here. Yeah, we made a few good trades, but when it gets out that you had a blow-up, and it will get out, your reputation will be tarnished. The vultures will start circling. What do you expect me to do about that?”

  “The only thing you can do is to stop doubting yourself. You went to Harvard.”

  “Yeah, sounds great, but I at least I thought that your firm was solvent. I have bills to pay.”

  “So do I, Dylan. That’s why we need to get moving.” Ray took one last sip of his gin and tonic, downing it completely as he tilted the glass up.

  “And tonight we are off to meet the Wizard, one of the greatest financial minds on the planet. I can personally say he taught me almost everything I know.”

  “Is that a good thing?”

  “I guess you’ll find that out, won’t you? Let’s go.” Ray paid the check and off they went.

  Chapter 10

  The exterior of St. John, Antigua seemed different now that the sun had gone down. The streets, teeming with tourists during the day, took on a sinister deserted feel at night. It was a poor country. Many of the buildings looked like plywood shacks. Groups of men congregated on the street corners, either standing around or engaged in games of dominoes. Within blocks, Ray and Dylan were outside of the city center, headed for the coast.

  Both were quiet. Ray drove through the night focused on the road ahead of him. Dylan attempted small talk to break the silence.

  “So how were the Cayman Islands?”

  “The same as usual. Boring. Nothing much happens there, just rich men counting their money at night; that and the tourists.”

  “You’ve spent a lot of time there?”

  Ray Corbin laughed. “You might say that. I used to live there.”

  “How long ago?”

  “So long ago I almost forgot. It was over twenty years ago. Jonathan was, and still is, a privacy nut. ”

  “Like a lot of people in this business.”

  “Even then he was as secretive as ever, running from things only he saw in his head. So he moved his operations down to Cayman, and I went with him.”

  “What was it like being an American down there?”

  “I didn’t see anything. I wasn’t allowed to leave the estate.”

  “What?”

  “That’s how secret our operation was. It seems far-fetched, even now. But that’s the way it was. Jonathan was on the cutting edge of trading. He felt that any security breach might compromise the business.”

  “But you were trading stocks and bonds, not cocaine. You couldn’t leave?”

  “I don’t know if Jonathan could have made it in the military, but that’s kind of how he trained us. On the rare occasions that we had time off, we left the island,. first-class, all expenses paid. That was the way that it was.”

  “So he’s here now? Trading?”

  “You might say he’s trading. Depends on how you look at it.”

  “Meaning?”

  “What’s in Antigua now?”

  “I don’t know.”

  “Think about it.”

  “Gambling?”

  “Of course. Jonathan Kay is running one of the biggest online sports books in the world.”

  “How big?”

  “Rumor has it it’s a two billion dollar operation.”

  “And this is the man who’s going to save your fund?”

  Ray took his eyes off the wheel to give him a look. “You got a better idea?”

  “No,” Dylan said. “But have you heard of the Internet Gambling Act? Anti-Money laundering? RICO?”

  Though the Justice Department had ruled Internet gambling illegal, many federal court rulings had since disagreed. The debate came down to an old law called the Wire Act, originally designed to prevent electronic betting across state lines. As most Internet gaming took place offshore, the United States had very little jurisdiction to enforce the law. Instead, they had gone after the banks and credit card companies that made the money transfers to the sites possible.

  “Even if it were legal, by taking money from this man you will bring about the type of scrutiny that I don’t think you want. Is it worth it to take money from this man?”

  “Well, it’s too late for that.”

  “He’s already invested?”

  “Jonathan K. is already in for over fifty hundred million.”

  “Does he know the situation with the funds?”

  “Of course he does. Jonathan is like a brother.”

  “Well, beg my pardon, but considering you’ve lost most of that investment, why in God’s name would he want to invest more?”

  “He’s a gambler, Dylan. Do you know what the first law of gambling is?”

  “No.”

  “Always double down.”

  Both men were silent as Ray navigated the hairpin curves along the road. After a few minutes, he brought the car to a halt.

  “We’re here.”

  Dylan looked through the windshield in front of him. The car was parked in front of a large, imposing wrought iron gate. Two men in black suits and black T-shirts were standing directly in front of Ray’s car. Both men had shotguns in their hands. One appeared to be in his late fifties, balding with thinning grey hair. At 6’10”, he towered over the other guard. The other was a muscle head in his twenties, short and stocky. An apprentice. They began to walk towards the car with their weapons aimed.

  “What the hell is this, Ray?” Dylan asked.

  “It ain’t Kansas, Dorothy. I recommend that you put your hands up where they can see them. When they open the door, get out very slowly.”

  Each guard opened a car door. Dylan and Ray both exited the car slowly and moved towards the gate.

  “Place your hands on the gate please,” the tall guard said, as he directed each man on how to stand. The other guard then frisked each one of them, while his partner stood by with the shotgun aimed. After he frisked them, he went over and checked their car. After he deemed the car to be safe, he reached for a walkie-talkie from a holder on his belt. He spoke loudly into the microphone after he made the call. “They’re both clean.” Soon after, a voice came through over the walkie-talkie with a gravelly replay.

  “Roger. Let them through.” The tall guard turned towa
rds Ray and Dylan, now both standing near the gate with their hands still raised. The tall guard came over to them.

  “Okay, you two.” After a moment, the gate opened before them, and they proceeded to drive the car through.

  “So. Nice place, huh?”

  “Yeah, nice.”

  “Just remember one thing, Dylan. If Jonathan starts talking about gambling, just nod your head and smile.”

  “I’ll try to remember that.”

  They drove along the paved road for about two hundred more yards. At first, there were no lights along the road; the car’s high beams were the only marker of space. Soon, they found themselves in front of a small mansion with a circular driveway. Stadium lighting seemed to illuminate the house from a distance. There were no other cars. Ray parked the car, and they got out.

  The house was new. It was also typical of the type of modern architecture perpetuated by the nouveau riche, Frank Lloyd Wright at one-twelfth the scale. The term “McMansion” came to mind. Dylan had visited many of these homes as they often belonged to hedge fund managers, men who were long on bankroll and short on taste and modesty. The sterility of these houses often reminded him of a T.V. set, “A Perry Como Christmas” complete with flat panels displays and sub-zero refrigerators.

  Ray Corbin led the way towards the front door, then rang the doorbell. From the outside, they could not tell if the bell was ringing.

  “No welcoming committee?” Dylan asked.

  “Maybe he gave them the night off.”

  After a few more rings, Ray began to pound on the door.

  “Hey,” Dylan said. “Take it easy. The guard was speaking to them on the phone. So someone must be here.”

  “You’re right,” Ray said, trying to regain his composure. “I’m just wondering why no one answered.”

  “Because we’re here,” a female voice said from behind them. “We’re dining under the stars tonight: al fresco. We were hoping you would join is.”

  Both men turned to view the body that was attached to the voice. And what a body it was. She was standing at the side of the house, to the left of Ray and behind Dylan, wearing a black, sleeveless full-length sequined dress. More accurately, the dress was wearing her, as every ounce of her ample body seemed dying to escape. Her hair was thick, brown that radiated from the center of her scalp, over her olive skin and tan complexion. Her sultry voice seemed to add to her allure.