“I’m pregnant, Michael. If we go belly up-no pun intended-do I lose my health care coverage?”
I hung up, exhausted. I hadn’t even come close to dealing with every managerial responsibility I had as head of the Green Division, but refusing to drink the Kool-Aid came with a price: Committing only one hand to management meant that my clients and contacts in the world of production also had to be reassured. There were no small fish in my pond, and before I could dial his number, Moby Dick was calling me.
“Kyle McVee here,” he said, his voice crackling on my cell phone. “I’m on my way downtown. I’ll pick you up and we can talk.”
He knew I hadn’t worked downtown since 9/11, but this was McVee’s style-you went where he was going, you didn’t ask what or why, you talked when he wanted to talk. He was the president and CEO of one of the world’s most successful hedge funds, Ploutus Investments, LLP. The firm’s namesake was the Greek god Ploutus, the personification of wealth, not the Roman god Pluto, ruler of the underworld-though in recent years people were saying that the latter was more fitting. I couldn’t say that I actually liked McVee, but bringing him to Saxton Silvers had definitely worked to my benefit. The big Wall Street brokerage houses hungered for hedge funds, which traded much more furiously than typical investors. Ploutus meant millions to Saxton Silvers in brokerage commission dollars.
“I’m at the gym, but I actually have a meeting at nine o’clock near the federal courthouse,” I said.
“Perfect,” he said. “We’ll drop you off.”
I gave him the gym’s cross streets in lower Midtown and waited. And waited. It was sort of what Wall Street as a whole had been doing for hedge funds since the late 1990s-waiting on them, picking up the tab for lavish “capital introduction parties” in places like St. Moritz or Palm Beach, publicly denying that we steered our clients their way in exchange for all that brokerage business they did with us. When I started B-school, there were about six hundred domestic hedge funds. Ten years later there were more than 6,300, about a third of which couldn’t have told you the date of their last audit. Some were charlatans, boobs, or worse. But hedge funds like Ploutus were hiring some of the sharpest minds on Wall Street-including Ivy Layton, who had been with McVee only a few months before she’d died. Successful managers worked like dogs but were paid like hogs, taking a 20 percent cut of profits (the carry) on top of annual management and administrative fees-compared with mutual fund fees of, on average, 1 percent of assets.
A long black limo pulled up. The door opened, and out climbed McVee’s twenty-five-year-old nephew, Jason Wald. He was talking loudly on his cell, seeming to make it a point that I overheard.
“Look, I’m not trying to be an asshole,” Wald said into the phone, emphasis on the word trying. “We’re selling the company, and you’re out. It’s over, T.J.”
Wald was having too much fun with this call, and it was obvious that the timing was choreographed for my benefit. I knew he was talking to T. J. Barnes, CEO of one of the top one hundred companies in Dallas. T.J. was a middle-aged cowboy who had never worked for anyone a day in his life until-on a tip from me-McVee’s hedge fund purchased a controlling interest in his company.
Papa’s voice was echoing in my head again: Who are your enemies, Michael?
I climbed into the limo and sat on the black leather bench seat facing McVee and his nephew, my back to the driver.
In recent years, the face of the relationship between Ploutus and Saxton Silvers had been less and less about me and Kyle McVee. Jason Wald wasn’t about to grab the helm from his uncle, but his influence was enough to steer Ploutus deep into the subprime waters of Kent Frost and his structured products factory. Since I was the one who started the relationship between the two firms, McVee must have felt compelled to drop the bomb on me, rather than on my CDO-making, market-shaking, bonus-taking colleague.
“There’s no way to soft-pedal this, Michael. Ploutus and its affiliates have no choice but to withdraw all of our capital from our prime brokerage accounts at Saxton Silvers.”
It was as if he’d just punched me in the chest. Prime brokerage was a highly profitable bundle of services we provided to hedge funds and other professional investors who favored short-selling and other leveraged megadeals.
“That’s two and a half billion dollars,” I said.
“As of this morning, yes.”
“That money is the collateral for the deals we finance and the trading strategies we execute for you.”
“I hate to state the obvious, but what I’m telling you is that Ploutus won’t be doing any more deals or executing any further strategies through Saxton Silvers.”
“This is the kind of move from a major hedge fund that others will follow.”
I was sure he’d heard me, but he was suddenly gazing out the window. We were near the NYU campus, slowly rounding the corner. McVee’s attention had shifted to the nearly completed building facing Washington Square.
“Coming along nicely,” he said with a wan smile.
The university was getting a new arts center named for McVee’s son Marcus. I had attended the groundbreaking ceremony as one of McVee’s guests two years earlier. Marcus had been dead for several years now, and still it wasn’t easy to get McVee to focus on much of anything when his son was in his thoughts. But I had to try.
“Kyle, I hope you aren’t making this decision based on the ridiculous things Chuck Bell has been saying.”
“Nothing to do with Chuck, God rest his soul.”
“No disrespect for the dead, but the man you’re commending to the hand of God almost single-handedly ruined my reputation on the Street.”
“Chuck called it like he saw it. And he made me a ton of money.”
“Are you saying you’re short-selling Saxton Silvers?”
“Everyone with a lick of sense is short on Saxton Silvers. Wake up and smell the coffee.”
His nephew inhaled deeply, as if literally showing me how to do it.
Such a punk.
I could have tried to convince McVee to wait and see how the market performed before making his decision, but he was finished with me. Except for one more thing.
McVee leaned forward, looked me in the eye, and said, “It’s nothing personal. I mean that.”
The car stopped within walking distance of the federal courthouse. My brother’s office was in the building on the corner. The driver came around and opened the door for me. McVee slapped me on the arm as I climbed out of the limo.
“Like I said: nothing personal.”
“Ditto,” said his nephew.
I watched from the sidewalk as the limo pulled away. A single “nothing personal” would probably have done it. Saying it twice was one time too many.
Ditto had almost made me puke.
I checked my watch: 8:40 A.M. The market would open in fifty minutes. I had to give Eric the news about Ploutus before disappearing into a meeting with my “big brother” the lawyer. My cell rang as I was dialing. It was the tech leader from my investment team. I had every computer-savvy genius I knew trying to figure out how the identity thief had accessed my password-protected accounts, and Elliot Katz was among the brightest.
“Breakthrough,” he said. “I think I know how they got your passwords.”
I spoke while zigzagging my way down the crowded sidewalk, weaving in and out among hurried commuters, joggers, and dog walkers. “Tell me,” I said.
“Spyware. It infected your laptop and monitored your keystrokes.”
“How did it get there?”
“I’ve seen it countless times,” said Elliot. “Even police stations fall for this stuff and get their databases hacked into. Usually somebody opens an attachment to an e-mail offering ‘free porn’ or some other goodie from an unknown source.”
“I don’t open attachments from people I don’t know.”
“I know. That’s a given. Which leads me to the jaw dropper: The e-mail attachment that launched the spyware on your computer didn’t come from an unknown source.”