The Last Hedge (6 page)

“So our boy Cash is at a new firm: Corbin Brothers. They are a small firm, nothing special, three or four hundred million under management, nothing too huge.”

“Chicken feed.”

“Yeah, chicken feed. I think this guy Cash is dirty, and I think we may be able to get him to talk.”

“What do you have on him?”

“His new firm has been accused of several incidents of naked short sales, an S.E.C. infraction. I think we can use that to bring Cash in here and get him talking. This guy knows where a lot of bodies are buried. Besides, if we can get him to talk, we have backup in case our informant doesn’t come through.”

“What if he doesn’t give us anything?”

“Then we pray that our informant comes through for us, so that we can nail his ass to the wall with everything we have.”

“Sounds like a plan. So how do we start?”

“He started this new job last week, so he should be settled in by now. I say this Friday. Let’s give him a surprise.

“May I pull Vanessa in on this?”

“Vanessa? You mean, Ms. Princeton.”

“Exactly. She’s an expert on this type of shit.”

“We could use more people like that around here.”

“I agree,” Highland said. “And Timmy?”

“Yeah,” Conroy said, as he headed for the door.

“Don’t forget the money for the pool. The All-Star game is next week.”

“Catch me in the morning, Dan. I’ll have it first thing.”

“Good man.”

An art gallery late at night, and a solitary man alone. The gallery had closed hours ago, and Dylan stood in the gallery office in a white T-shirt and jeans, unable to paint and unable to discern a reason why. Two easels stood before him, one of his unfinished painting called “Woman”, the other featuring a canvass that was completely blank. A half-finished bottle of
pinot noir
sat on the desk. John Coltrane was on the stereo.

He had been pacing back and forth, and the unfinished painting troubled him as much as the blank canvass. He had started the painting while he was still dating Samantha, and he often wondered if that was why he had been unable to finish it. Lately, he had trouble even starting to paint. No sooner would he have an idea, then be stricken with doubt and self-criticism before he began. Procrastination had become his greatest friend, and he wondered if they would ever part.

He sat down on the desk and placed his head in his hands, and wondered if his life would ever feel normal again. He had thought that the gallery might connect him with something, some community, some feeling, some place in the world. And now it was a disaster. His parents were dead. His friends were married and in the suburbs. He would have to find a way to start again, and his prospects did not seem appealing. He had few friends in the trading world. He was too quirky and artistic, and the art world had never given him a second glance. At thirty-five, he felt washed up. He picked up his paintbrush and went back to the canvass. He barely heard the door when Samantha entered.

“Uh, Hello. What are you doing? Sleeping?”

“Literally. What brings you here this time of night?”

“I forgot my purse. Looks like you’re trying to paint.”

“’Trying’ being the operative word.”

Samantha picked up her Gucci bag that was sitting on the desk. She was wearing tight black leather pants and a pink leather jacket. Her heels were three inches off the ground.

“Aren’t you going to be hot in that leather?”

“Hot temperature-wise, or hot looking …”

“You have a point. Where you off to?

“I am off to a party in Dumbo.”

“I hope its not one you found on Craigslist.”

“Ha. Ha. No, bright young artistic types. Why don’t you join me?”

“Me? Are you kidding? Absolutely not. Besides, wouldn’t your boyfriend mind?”

“We’re dating, not contractually bound.”

“That’s not what you said when we were together.”

“But we’re not together. And you act like you’re sixty-five lately. I know you’ve got a lot on your plate, but come out with me and have some fun.” For a second, Dylan considered it. Then he shook his head “no.”

“I promised myself that I would paint.”

“I remember when you used to paint my body. Those are the days that I miss.”

“Yes,” Dylan said with a smile. “Those were the days.”

Samantha placed her bag on the desk, and strolled across the room. She stopped one foot short of the easel, took in the painting that she knew was of her: Dylan Cash’s “Woman.” She liked the painting though she had no great affection for it. She had seen other paintings of his, this and was not his best work. It was a curiosity to her that he continued working on it.

“Doesn’t look like you’ve done much tonight.”

“I can’t get started these days. I just, freeze…”

“You think too much. You spend too much time in your head.”

“You’re right. I spend too much time in my head. Maybe I should rent it out for a week.”

Samantha took another long glance at the painting. Almost as an afterthought, she said, “Why don’t you just throw the thing out? Maybe that would help you. start something new and forget about this thing.”

“And what would that prove?”

“It would prove nothing, but at least you wouldn’t torment yourself about it.”

“That’s what artists do. They torment themselves.”

“Yes,” Samantha said. “That’s what artists do.”

As she walked across the room to retrieve her purse, Dylan stopped her short by placing his hand on her elbow.

“Samantha?”

“Yes.” Before she could react, he kissed her on the head. She smelled good, the way she always smelled.

“Enjoy your party.”

“Enjoy your torment.”

“I’ll try.”

Before the words that he wanted to say could exit his mouth, she was gone. Dylan picked up his brush and went back to his canvass. But all he could think of was Samantha.

They were making money. Ray had given Dylan an authorization to trade up to twenty million, and they had made approximately one million dollars profit that week. They had been very lucky. Binky had worked hard his first few days, adapting their previous trading models to work in conjunction with the systems at Corbin Brothers. It was no easy feat. Josh’s databases of historical prices and stock movements were stored in an unorthodox format, and had to be mapped creatively to work with their own models. Dylan marveled at Binky’s computer skills. After several days of intricate programming, Binky finally had the models up and running.

The software was built using various statistical algorithms designed to find trends in the market based on varying correlations. Airline stocks might fluctuate inversely to the cost of oil. Much as natural gas might correlate with seasonal weather. The model might then suggest selling one basket of securities while buying another, exploiting minute price differences between the two. All of the trades were computer-executed, and were often done over and over throughout the course of the day. The human interaction was reduced to monitoring the trades and tracking profitability. Dylan slapped Binky on the shoulder as the software loaded.

“Looks good,” Dylan said.

“I told you so.”

Dylan looked around the trading floor. Josh was in his office, stoically typing away on his keyboard. He rarely left his office these days, instead preferring to monitor the trading floor from behind glass walls. The other traders remained silent at their desks.

The model had finished processing for the morning. The calculations on screen showed that the combined value of oil and gas securities on the NYSE had lost more than 20 percent over their value sessions. The top five companies in the sector had declined in price 35 percent. The model was suggesting that there was a high probability that these stocks would rally at least 10 percent over the next few sessions. You didn’t have to be a gambler to understand the odds.

“The twenty five million Ray gave us to trade…Is that a hard limit?”

“Why? What’s up?”

The trading system that Corbin Brothers used was based on a system of trading limits and authorization codes. Ray had given each trader a cash limit, based on risk profiles and trader profitability. Dylan had fought hard for more than twenty million to trade with, but Ray had resisted. They would “work it out,” Ray had said, when he returned from his trip. Dylan had agreed, though he was far from happy about it.

“The deal value of the trades is 20 million, but to ensure we have proper collateral, we need credit of 25 million. So, how do the trading limits work?”

“Josh stores them in a database. It’s password protected, but not fully secure. The limits are verified against the trades at the end of the day. If we exceed the limits within the day, no bells will go off if everything is flat by end of trading day.”

“Interesting,” Dylan said. “How did you access that?”

Binky said nothing, as he leaned back and smiled.

Dylan smiled as he turned back towards Binky. “Could you raise our limit?”

“How much?”

“Five million.”

“No problem. Is that what you want me to do?”

Dylan took his pencil and began to tap on the desk. He wrote five million on a piece of paper and then underlined it. At their prior firm, traders frequently exceeded their trading limit, and they then covered themselves by getting an authorization at the end of the day. From his point of view, five million dollars was a drop in the bucket for a two billion dollar fund. Besides, they had made two million already that week. If the trades became a problem, he could speak to Ray Corbin personally. Ultimately, he decided not to push the envelope.

“Nah, no funny stuff. Leave the limits where they are and scale the trades back. Let’s stick to the twenty that was allotted to us. Book the trades. If they go through, fine. If not, we’ll deal with it.”

“No problem,” Binky said. He went to work on the keyboard. Seconds later, he struck up his thumb, indicating that he was done.

Dylan reviewed the list of securities on the screen, and the allocation of the cash for each. He clicked the button on the screen and the model began to execute. The algorithm began to run, buying and selling the various lots according to the price, volume and direction of the security. Dylan and Binky sat back and monitored the operation. Within minutes, they were making money.

“Look at that thing go,” Binky said, monitoring a profitability graph on the screen.

“What can I say: We’re good,” Dylan said. As he leaned back in his chair, he turned to his left where he noticed Richard King, hovering aimlessly and reading something.

Their desks were stationed about ten rows away from a row of filing cabinets. At the end of each trading day, Binky and Dylan would look over their trade reconciliation reports and file them away for safekeeping. Next to the files was a small desk on which sat a copier, shredder and fax machine. Dylan had noticed that Richard King had started loitering around the area each day, doing nothing in particular, but keeping his back turned away from him. Dylan leaned over and whispered to Binky.

“Hey, have you noticed that Richard …”

“Yes,” Binky said. “He goes and gets coffee, then starts hanging out over there.”

“Any ideas?”

“None.”

“Okay.”

Dylan leaned back towards Binky and put his hand on his shoulder.

“Let’s go see what he’s up to.”

“I gotcha.”

Dylan and Binky got up and walked toward King, whose back was turned from them.

“Richard,” Dylan said in a loud and abrupt voice. King lurched forward spilling his coffee. Whatever was in his other hand, he attempted to conceal. He scowled at both of them when he turned around.

“What the hell are you doing sneaking up on me like that?” Dylan shrugged.

“Just saying hello.” Richard scowled again as placed the coffee of on the table with the printer. He kept the document in his hand hidden. When he turned back towards them, a sarcastic smile was plastered on his lips.

“Nothing but fun since you two got here. The trading system is slower ever since you got here.”

“Why don’t you speak to Josh about that,” Dylan said. “He was the one who wrote the thing, right?” King backed down as he relaxed his stance.

“Yeah, yeah. It’s not that bad. But why so many small trades? What exactly are you guys running through there?” King leaned over Binky’s shoulder to glare at the screen. With one quick movement, Binky was able to flip off his monitor.

“I wouldn’t do that if I were you,” Binky said. King rocked back and began to howl with laughter.

“And oh, why not?”

“Ray told us not to share our information yet. He wanted to take a look first at what we’re doing.”

A look of consternation came over Richard King’s face. “You guys are like Ray’s private pets. Does he walk you both after work?”

“I’d focus on my trades if I were you. Don’t want what happened last week to happen again.”

King’s face turned beet red. He was now standing two feet from Binky, his teeth clenched as he began to scream.

“What did you just say?”

“Nothing,” Binky said.

“Did Ray say something?”

“I don’t know what you’re talking about,” Binky said innocuously.

“This is total bullshit! How did you know that?”

Dylan soon got between them. He put his hands up in a gesture of peace.

“Ray told us the firm had a rough week last week. That’s it. So why don’t you just let it go, okay?”

“Yeah,” King said angrily, “I’ll let it go this time.” King turned and walked away. For the moment, the show was over. Dylan turned towards Binky.

“How did you know how bad his P and L was?”

Binky smiled mischievously. “I went in and took a look.”

“Dude, you have got to stop hacking into everything. We just got here. Let’s not start breaking and entering the system every five minutes. You got that?”

“Yes,” Binky said.

“You want food? I’m going to the deli. You want anything?”

“BLT on wheat.”

“You got it,” Dylan said.

Dylan had frequented a deli on the corner, a one-stop convenience store and twenty-four hour grocer. Some of the other traders went there too, but Dylan had never been invited to join them. Instead, he and Binky had been eating together. When he returned, Binky was still monitoring the software.