Zero Sum, Book One, Kotov Syndrome (3 page)

Shorting stocks involved borrowing
shares from a broker and then selling them, in the expectation of
being able to buy them back and return them to the broker later,
when the price was lower. It was a bet on a price decline, where
the value of the short sale increased as the price of the stock
fell.

Griffen had long ago discovered that
the economics of manipulation and destruction, of pumping prices up
artificially then driving prices down, were far better than those
of trying to choose winning companies and buying their shares,
waiting for the world to discover their merits. It was much easier
to create a mania over a company’s massive price increases and
hugely profitable potential, and then panic the crowd by screaming
fire in the crowded theater, profiting from the ensuing chaos via
short selling. In the ensuing panic, investors sold first, and
asked questions later. And the more pronounced the fall, the more
panicked they generally became.

Griffen’s group was expert at using his
network of media sources to create a bubble in a stock by hyping a
company with marginal or no real technology or value, and then
using a deluge of unlimited selling to panic the market, thereby
destroying the company’s share price. The term for it was pump and
dump – it was illegal, but the regulators rarely if ever enforced
the rules, so what the hell. Only an idiot would drive fifty-five
if there were no cops around. And Griffen was no idiot.

He knew from experience the market was
a zero sum game – and for him to make a fortune, investors on the
other side of the bet had to lose. That’s just how it worked. Zero
sum.

The trick was to ensure you were on the
winning side.

The second line rang.

“Griffen – what?” he barked at the
box.

“They’re nixing any more shorting until
we deliver the slug from last week on Allied. Said this afternoon’s
a non-starter; the regulators are in today and they’re looking over
shoulders,” advised the calm, unemotional voice.

“Is there any room to wiggle?” Griffen
inquired.

“Not now. Maybe tomorrow, once the
shop’s back to normal.”

Griffen sighed. “All right. Puts a
crimp in today – but them’s the breaks. Let’s talk
tonight…”

He punched the other line back into
active status. “Change of plans. Start covering the shorts. Pick up
a few thousand, sell off a few hundred from the Pac Ex, walk the
ask down and then see if anyone bites. Rinse and repeat. Get us
whole for the day.”

“No
problemo
, boss.”

Terminating the call, he watched as the
stock price slowly fell, went back up a few cents, swooned again,
went up again. He considered his performance that of a virtuoso
musician, and he delighted in being the stock-gaming equivalent of
a maestro…in a long tradition of master manipulators who’d worked
on Wall Street for the last hundred years.

This was his province, his world. He
was in his element with the ticks on the screen, representing tens
of millions of dollars to be made or lost.

Griffen was one of a rare group of
financial movers and shakers who were largely above any regulatory
or law enforcement probes – small token fish were occasionally
nabbed, but the real money jockeys were untouchable. On the
contrary, he received preferential treatment from the SEC, which
came in handy when he needed help with a particularly troublesome
stock. There was nothing like a trading halt or an investigation to
crater a company, at least long enough for him to make a few
bucks.

He was sharp, smooth, refined, and
completely amoral. And most importantly, he was rich.

Emil spoke into the specially
configured phone in a soft, emotionless voice. The phone’s
encryption technology ensured prying or eavesdropping ears would
decipher nothing but a screeching data stream, using Department of
Defense-level scrambling.

“It really is perfect. Given our level
of financial commitment to the opposition party, we could easily
get them twice as much as they need this year.”

Emil Weingard worked within a rarified
division of the government’s clandestine machine, responsible for
making things happen in deniable ways. Officially he was in the
Information Operations Center/Analysis Group, but his real role was
much more important than that. He was a fixer, and had gained
notoriety at West Point by writing his thesis on a highly
autonomous strategy for running covert missions, coupled with some
intriguing alternative mechanisms for funding them. He was
recruited shortly thereafter.

His job was to procure large amounts of
cash for delicate projects that were essential to national security
– projects that Congress wouldn’t necessarily approve of. He
currently had two active deals, one of which involved the continued
support of an anti-establishment dissident group in Iran, and
another which involved untraceable support for a splinter faction
in the German government.

Emil fancied himself a secret agent of
sorts, but deep in his heart he knew he was a banker. The irony
that he’d conceptualized a self-sufficient team approach to
clandestine operations and had wound up being the bean counter
wasn’t lost on him, but he was pragmatic. After the disastrous
revelations of Iran Contra, the more sensitive agencies couldn’t
afford any embarrassments and the only way to compartmentalize and
seal off the risk was by using a tightly limited approach to the
problem. Emil had come up with his team’s funding sources, which
later became the standard for most of the other teams. How many
others, he didn’t know – and ‘Need to know’ was still the guiding
principle.

Right now he was on the phone with his
man in Istanbul, who interfaced with the Iranian contact every few
months. Another payment into a numbered account in Austria was
required at the end of the quarter, and the man in Turkey wanted to
ensure they were game-on.

They were.

They always were when Emil was running
the money.

* * * *

Griffen pored over the pile of computer
printouts stacked a foot thick on his scarred mahogany desk; a
relic from the 1920s rumored to have been the infamous short seller
Jesse Livermore's, that he’d acquired for twenty thousand dollars
when he’d opened his offices. Its battered presence was a constant
reminder of the history of Wall Street, and the brutality of the
market’s whims. Fortunes had been made and lost in hours during
frenzies, and Griffen, more than most, understood that you had to
be driving the frenzies in order to come out on the winning side.
To do so meant rigorous determination, exhaustive research, and
most importantly, the ability to control what information made it
into the marketplace, as well as the timing of its dissemination.
He who controlled the printing presses controlled destiny, and
Griffen bought ink by the barrel. He created reality, and his
associates in the media parroted his spin without question. That's
the way the markets had worked since the stock exchange was built,
and he'd merely refined a time-honored tradition and applied it to
his own specialized segment.

He absorbed the row of figures,
mentally digesting the balance sheet and preparing a
rationalization that would paint black as white, and make a loser
into a winner. It would take some massaging to prepare a story
where the endless bleeding of cash in this company's history could
be sold to the rubes as having built a foundation for limitless
success in the near future, but if anyone could make it happen,
Griffen could. He was a master of putting lipstick on pigs, and
convincing hapless investors that this time was indeed completely
different.

In the only clear corner of the scarred
table-top a forgotten cigar smoldered in a heavy onyx ashtray. The
office, even though well-ventilated, had a perennial odor of
leather, cigar smoke, and agitation. It was the smell of the market
– the smell of money.

Griffen kept long hours, driven by a
love of the action involved in fiddling the system. There was never
enough time to accomplish everything, never moments where he could
let down his guard – and the challenge of staying on top kept him
energized and motivated.

He’d triumphed in a world where only
the most cunning and nimble survived. He’d amassed a fortune
building manias and then collapsing them.

Unlike many traditional venture capital
funds, Griffen’s investment group was nothing more than a large
pool of cash which traded however he felt appropriate. A big
attraction of his fund was that nobody asked where all the money
came from; there were no annoying disclosures to make, no boxes to
check, no forms to complete. Even in a world of Patriot Acts,
reduced rights, and financial transparency, Griffen enjoyed
complete secrecy in most of his affairs. That had always been the
lure for him – as a young man, he’d seen a lot of possibility in
Wall Street’s selective lack of regulation. He remembered it like
it was yesterday.

A Yale graduate, he’d paid his dues by
spending eight years as an analyst, and then later as a trader with
one of the big brokerages, hating every second of it while building
a network of contacts. In the late seventies he quit and launched
his eponymous fund, partnering with a childhood friend from New
Jersey.

Griffen had pitched several Italian
union pension funds and waste management groups on a neat way to
invest the deluge of cash pouring in from the surge in demand for
their services; as well as from the expansion of cocaine and heroin
trafficking on the eastern seaboard. The groups had been receptive
to creating a veneer of respectability, and were enthusiastic in
their response to his proposition; their money got laundered via
his venture capital and stock trading activities and they saw a
good return on the newly sanitized loot. It was a win for all
involved.

With those early investors he’d found
his first serious money, and from that point things accelerated as
the newly respectable investors told their friends about their
smart new investment advisor. Griffen soon had a runaway success,
and was oversubscribed from his first formal funding raise. In
time, legitimate clients were attracted by his spectacular results;
and over the years, the Street forgot the hints of his questionable
beginnings.

Building on his initial relationships,
Griffen became a ‘go to’ guy for shady figures wanting an in on
Wall Street biotechnology action. His door always open to the
fringe players and the dirty money – a specialty that rewarded him
handsomely. His unique customer mix and their powerful contacts
shielded him from intrusion by the authorities, enabling him to
refine his pump and dump game to a fine art.

Create a bubble, then pop it, and only
he
knew when it would collapse. It was simple, effective,
and highly lucrative, albeit illegal and unethical. Then again, all
great fortunes had great crimes at their root, and Griffen was
simply using the same techniques the stock manipulators of the
Roaring Twenties had used to build dynastic wealth. Just as icons
like Joe Kennedy had created manias in worthless companies, then
once the public was enraptured with their shares, kicked the chair
out from under them and made millions as the stocks plummeted, so
too did Griffen. Human nature hadn't changed much in a few
generations, and the same techniques worked, again and again. Only
an idiot obeyed the laws, especially when the regulators were
asleep at the wheel and virtually never enforced them. He was
comfortable that he was a criminal – actually reveled in the
knowledge, truth be told. All the wealthiest of the Wall Street mob
were gangsters at heart, in spite of the tripe the industry’s PR
machine put out day after day. It was just far more lucrative to
carry a cell phone and a calculator than a machine gun, these days.
Everyone at the top knew how the game was played. Big gains
required big balls, and often meant crossing lines that lesser
mortals were barred from even considering breaching. That was the
game, and he was very, very good at it.

At the same time, he was on the
invitation list for the Governor’s dinners and Mayor’s functions;
rubbing shoulders with celebrities – a fixture in the New York
social scene. His investors were highly appreciative of his
continued performance and discretion, and always ensured he wanted
for nothing. The best looking call girls, pharmaceutical grade
cocaine, two hundred dollar scotch. If Griffen could imagine it, he
got it; there were literally no limits for the man with the golden
touch.

Steven watched in fascination as the
screen normalized, and trading that had been erratic and plunging
slowed to a crawl.

“Unbelievable. It’s like they flicked a
light switch,” he muttered to himself.

He moved to the other screen and
brought up a window. The message boards had also slowed to nothing.
When the stock was being pummeled the boards had been saturated
with hundreds of posts advising shareholders to sell, that somebody
knew something, that institutions were bailing, that the stock was
going to zero. Psychological warfare – all par for the course.
Organized teams hit the boards, attempting to sow the seeds of
panic and confusion.

Then, just as suddenly as the selling
normalized, the panicked posts were gone.