Blood Money (7 page)

In the City, such arrogance and narcissism are all too commonplace. Ghastly as these traits are to normal people, Alexis sees Mark Harvey as role model for other employees to follow. His arrogance is not a fault but a defining feature of success (so long as he continues to back-up his boasts with results).

Alexis sits down on the corner of Marks desk. “How's the market this morning?”

“She's a bit twitchy, a bit turbulent, and a bit difficult to predict to be honest. And so far your algorithm machine hasn't given me anything to get my pulse going.” Mark isn't sounding as self-assured as normal. Analysts often refer to the market as being a female entity that they're trying to ride. Sometimes she's placid, sometimes agitated, sometimes she has to be ridden hard to get her going and sometimes she's like a rollercoaster that you simply have to hang onto for dear life.

“Well, this piece of information will put a glint in your eye…” Alexis's voice drops to a whisper, “A little bird tells me that Woodward International are about to be on the receiving end of a takeover bid. It's a trusted lead, so be quietly confident. Start buying in small sizes; we don't want to start a stampede. Keep it going for as long as you can, spread it across lots of brokers and keep it as low-key as possible. I think you've got at best 2-3 days, and before the end of the week I'll wager the share price will have doubled.”

With his pulse now racing, Mark Harvey doesn't need telling twice.

*

Moving down to the 1st floor, Alexis spies the well groomed Oliver Robertson. Ollie is a man who walks and talks like he's the biggest swinging dick in the City of London. He dresses impeccably and always seems to be at the centre of everything.

Fifteen years ago when he first cut his teeth as a lowly analyst in the pharmaceuticals sector he promised himself that he'd either get rich or die trying and by all accounts he's actually succeeded in doing both. Only a month earlier he'd been resuscitated after binging on ecstasy and vodka all night in a West End night club.

Socializing in the pubs and bars around the Square Mile is a necessity for anyone trying to gain a sufficiently large network of contacts to survive. But Oliver Robertson isn't just surviving, he's thriving, -thanks to his concerted efforts in the cocktail lounges and clubbing hotspots of central London.

Having given out a lot of very lucrative tips to his plethora of friends over the years he's now assured of being paid-back with interest. The list of traders and analysts who owe him ‘big-time' is vast. Quid pro quo is one of the rules of the City…-I‘ll give you something but I expect something back in return. Robertson's gigantic network of contacts means he's usually the first to be told if there's so much as a sniff of news in the pharmaceutical sector…a failed trial, a new use for a drug, an unforeseen side effect. Being highly ‘event driven', the pharmaceuticals sector is easy for Ollie Robertson to make money in. Confidentiality is easily overcome when you've got the right contacts.

Additionally, ‘Ollie's' success owes much to his ability to sustain himself on no more than 3 hours of sleep a night. -They say that money never sleeps, and the same is (almost) true of Robertson. A hedonistic insomniac, he takes enough ‘grown-up pro-plus' each day to floor Keith Richards. His shaking hands, dilated pupils and bloodshot eyes bear testament to the fact that his nocturnal life of self-destruction has become his master and he its slave.

Seeing Alexis approach, Robertson smells an opportunity for profit. “Good day boss! Got anything for me today?” he says, smiling from ear to ear.

“Good day Ollie, I believe I do…. our old friends at Pharmutech are about to be hit with a lawsuit in the coming few days in a patent dispute over generic versions of their anti-clotting drug Flofree. Looks like it'll be a protracted and expensive trial and the lawyers will turn it into a gravy train.”

“
Jesus H!
That'll put 20% of their future revenue stream in jeopardy! –It'll set them back years! I'm not even sure they'd be able to keep themselves financed properly and that would mean they'd be ripe for a takeover.” Robertson pauses. “Now be straight with me Alexis, I've not heard a pip about this on the grapevine. Is this one of your rumours or is it for real?”

“You're not a moron are you Ollie?” Alexis's tone is at first quiet and gentle. Then without warning it turns into the roar of an enraged lion. “Because only a moron would question one of my leads!!!” He tries to calm himself down but his reddened face makes it obvious he's furious that his authority has just been questioned. “Don't make me think you're a moron Ollie because I'm not in the habit of employing morons.”

Robertson's stupid smirking face is now ghostly white as he realises too late how big a mistake it was to question his boss like that.

“It's 100% legit you fucking muppet! -When it comes from me you should treat it as ‘Divine Information' and not be so impertinent as to question the matter.” There is a theatrical pause whilst Alexis draws breath. “Now to me, if it looks like a duck and it quacks like a duck, then I reckon it's a fucking duck! So act like you've got at least a shrivelled-up pea for a brain and do something useful like actually starting to short Pharmutech before trading is suspended ‘pending an announcement'.”

Red in the face, Vasilakos turns away, putting some distance between himself and Ollie Robertson before he properly loses his temper. Still fuming, he continues a rant of anger inside his own head. ‘Who the hell does that impudent twit think he is? If he questions my tips once more he'll be fired quicker than a rabbit gets fucked. One more time…-just one more time!'

Opening a small plastic container pulled from his trouser pocket, Alexis throws a beta-blocker into his mouth, swallowing it dry. Counting to ten, he breaths slowly just like his doctor had instructed.

*

The fourth and final Senior Portfolio Manager is at the far end of the floor. Alexis moves across towards him, observing his staff diligently making the split second decisions necessary for them to beat the markets. Ben Willington is a prolific trader, a maths prodigy and an expert at deciphering the trading screens. Never overstretching himself, never holding a position for longer than he needs, he trades like a man possessed. Alexis watches Ben in the heart of his department, leading by example. Each one of his team is intensely scrutinising the multiple sets of monitors laid out before them.”

Alexis has no tips for Ben today. Perhaps tomorrow things will be different.

Vasilakos stands still, scanning the analysts and traders all around him. What he sees is the future of the City, workaholics; ruthless, analytical money-making machines. Not distracted by the need to schmooze clients. Not spending all afternoon entertaining rich investors by taking them on 5 hour lunches. No need to curry favour with corporate entertainment at Wimbledon, Stamford Bridge or Twickenham.

Ben Willington is perhaps the only person to fully value the potential of the quantitive trading which now occupies half of the Cray's resources. But even Ben has no idea what it is the Cray is doing with the other half of its processing reserves.

It's an unpleasantly cold and blustery morning and coming in on the Jubilee Line into Canary Wharf Station is another multitude of city-workers.

Once her carriage has slowed to a complete halt, the doors duly open and Rebecca patiently waits for the people in front of her to move forward before she too can disembark.

Dressed in a stylish charcoal grey skirt-suit Miss Kavanagh cuts a very professional, city-like image.

Slightly taller than average, she still has the slim waist and youthful figure she enjoyed 10 years ago as a teenager, thanks to a daily exercise routine that alternates between jogging in the park opposite where she lives and attending aerobics classes at the local sports centre.

This morning, her long brown hair is tied back in a ponytail to prevent the chill wind from doing its worst. Image conscious Rebecca chooses to keep high standards when it comes to her appearance at work and she's fortunate that her pretty looks need only a light application of make-up. Walking purposefully, the two inch heels of her Italian leather shoes noisily strike the pavement with each staccato step.

Canary Wharf is Britain's fastest growing business district, and is home to many of the world's leading banking, legal and accountancy corporations.

If they aren't home to the giants of international finance, the buildings that surround her are occupied by luxury shopping malls, high-end hotels or trendy bars and restaurants. The air she breathes is fresh and unpolluted; the environment is clean, spacious and modern, making it a much more pleasant working environment than the feverish tensions of the Square Mile which by comparison are cramped, noisy and chaotic.

25 North Colonnade, also known as ‘The FSA Building', is what architects would haughtily describe as a ‘post-modern skyscraper'.

Occupied solely by the Financial Services Authority, its 15 floors provide plenty of space for the 1000 or so employees who work there. It's smooth, clean lines are constructed from concrete, steel and glass and it is designed as two separate wings linked by a central entrance space. Visitors are welcomed by several attendant staff sat behind an extended reception desk whilst a plain-clothes security professional watches the variety of visitors who enter through the revolving glass door.

In the open-plan office area up on the 7th floor of the western section, Rebecca smiles acknowledgements to her work colleagues before sitting herself down at her desk.

Pouring over numerous financial transaction records, she's intent on reviewing the most recent activities relating to the Kronos Fund. It's an obsessive behavioural pattern that she's been repeating for as many working days as she can remember. Breaking-off for a moment to check her emails, she sees that amongst the unopened messages there's a meeting invitation for an ‘all-hands' company briefing by the FSA Managing Director of Enforcement, Hilary Demming, at 10:30am. Rebecca clicks the accept button.

That still leaves plenty of time for her to look at the automatically generated records of suspicious trading patterns that have occurred during the past 24 hours. She scans the reports carefully, marking certain rows of information, adding notes and comments as she feels appropriate.

The data is compiled into a standardised report, building up a profile against each and every financial institution in the UK.

When a business makes a major public announcement, there is usually a significant change in its share value. Comparing the timing of share buying around the period of such company statements is a proven technique for finding corruption and Rebecca knows that 20 percent or more of share purchases made just before a major announcement will be “questionable”.

She ignores the ‘general noise' and filters for Kronos. Yet again, she sees there have been several very significant, highly improbable and also highly profitable share trades. She feels the frustration building up inside her body, the data is screaming out ‘corruption', but conclusive proof stays just out of reach, beyond her outstretched fingers.

Critics of the FSA sometimes call it a ‘toothless tiger'; because it's internally agreed policy is that it should exercise a ‘light-touch'. However, Rebecca feels this ineffective stance is more indicative of the low calibre of staff and the general spinelessness of its middle management. But standing up against indecision and fecklessness within the FSA has been getting her an unhealthy reputation as a trouble maker.

Rebecca's specialism is statistical analysis. Her job is to compare patterns of trading activity in relation to changes in share values. Whenever she finds suspicious patterns she then has to describe how probable it is that this activity occurred ‘naturally'. Her degree qualifications afford her a deep grounding in probability theory, mathematics and very importantly, economics, making it easy for her to ‘speak' the language of the City. Much of her time is spent preparing reports on the financial institutions that are exhibiting the highest degrees of suspicious trading and then explaining this activity in layman's terms. By doing this she is supposedly helping the FSA focus their resources on the institutions with the most frequent occurrences of apparently abusive trades, meaning that they should be easier to prosecute and more deserving of the FSA's attentions.

Engrossed in a mountain of data, Rebecca realises just in time that it's getting close to 10:30am. Leaving her desk, she moves towards the largest of the conference rooms on her floor which on entering she finds is already full. Standing at the back she makes a little small talk with a few colleagues until Hilary Demming enters via a side door. The Enforcement Director's presence demands respect, and a hush instantly descends upon the assembled staff.

A short, middle aged woman with a stern face, Hillary moves over to the lectern and after lifting her head to survey the room she begins her address.

“We have just reached a very important milestone in our ‘credible deterrence' strategy. I have just returned from Southwark Crown Court where the case against Glyn McGarry and his retired father-in-law David Appleton has just reached a very successful outcome. The pair have both been found guilty and sentencing will occur in due course. So I'm therefore very pleased to announce that we've achieved the first ever criminal convictions for insider dealing.”

A universal cheer erupts, filling the room, and for the first time following months of low morale there are smiles on the faces of Rebecca's colleagues.

Hillary continues “Forty two year old solicitor Glyn McGarry, whilst acting in his professional capacity as legal adviser at Teslacom clearly abused a position of trust. He tipped off his retired father-in-law David Appleton that his company was about to be taken over by a US conglomerate. The retired businessman then spent more than £25,000 on 190,587 Teslacom shares. When the deal was announced to the public at the beginning of May 2010 the share value soared and a month later Appleton sold his entire holding, netting a £46,350 profit. On September 3rd, Appleton gave McGarry a cheque for exactly half that amount.”

Hillary holds everyone's full attention, despite many of them already knowing the details of the case. “What we should be really pleased about is that the judge stated in his summing–up that he considers insider trading not to be a victimless crime and that left unchecked it undermines confidence in the integrity of the market.”

“Since its creation, the FSA's record of bringing insider traders to book has been lamentable. Until now, it has been believed that insider dealing cases are too complex to go before a jury and therefore only civil cases requiring a lower burden of proof have been pursued. In practice, the tribunals have still been applying what was effectively a criminal standard of proof and if the accused were found guilty such tribunals would then only apply a trivial fine. At this moment in time, there is an unacceptably high level of market abuse in the UK, and I believe it is only through criminal prosecutions that we are going to make people think twice. Fines have not been taken seriously, but a prison sentence represents a credible deterrent. Today's success will bring a change in the public's perception of the FSA. They will see that we are an effective force in fighting market abuse.”

The Enforcement Director stops and takes a sip from her glass of water. Momentarily checking her notes, she continues.

“Traders have been under the belief that market abuse is normal activity. Insider information is never wasted, and the abusers frequently pass on such tips to their friends. The perpetrators believe no real crime is being committed and that it won't be detected anyway.

This morning's success at Southwark will be broadcast far and wide. Very soon, the City will understand that market abuse is a socially unacceptable crime. Today is just the start and further criminal convictions will follow. We've begun to show people that insider dealing is an offence that can put you in prison. At the end of their criminal trial, bankers will need to take a toothbrush with them when they go down to Southwark Crown Court to be sentenced.” She pauses and takes another sip. “- Does anyone have any questions?”

There is an embarrassingly hesitant silence. The Director comes across as being quite intimidating to everyone she meets, a perception created from her displays of intense and steely determination. Hillary waits and scans to and fro across the room for a show of hand. At last, someone stumps up the courage to pose the question that everyone is thinking, but no one seems willing to ask.

“These cases are complex. They're taking at least a year a-piece to process. Gathering the evidence, trawling through the data and finding the necessary expert witnesses. We don't have enough staff and we don't have enough people with the specialist skills required to carry out many more cases. How are you going to recruit staff of sufficiently high calibre to take on the City?”

“Good question. Firstly, everyone in enforcement is going to have to upskill and raise their game. The next 12 months is going to be a particularly tough period for us all, because we're now going to be taking a very different approach to our work. It's true we're understaffed, but I'll make you a personal promise -I will hire the criminal specialists we need, whatever it takes. We have to be able to fight the armies of top-flight lawyers that the industry can set against us. Together we're going to make the FSA an effective force against corruption in the City.”

With the ice broken, a second question soon follows. “Getting statements, witnesses, and corroborating evidence isn't just about throwing more people at the problem. We need more powers to do our job effectively.”

“You're right, we need some extra tools if we're going to get more convictions, and you've already seen the start of this. We've got to be as tough as the US regulator. If we don't, the government might shut us down and invent a different structure for regulatory control. You're going to be doing far more telephone interviewing of suspects immediately after suspicious trading activity, offering more witness immunity, as well as taking part in a lot more dawn raids to arrest suspects and gather evidence. All of these things combined will begin to show the results that we need. Any further questions?”

Only after prolonged silence does the Director decide to bring the session to a close.

*

Following the briefing, Rebecca's boss, Tom Vaughan, sits down at his desk and whilst he glumly considers how Hillary's new-found enthusiasm will adversely affect his workload he begins to open the post that's just been delivered to his office. He's got a face like a west-country farmer, which is something wholly alcohol related as he's certainly not the rugged, outdoor type. He's an introverted, mild mannered middle-aged office manager with an insecurity complex caused by his inability to get a much better paid job in the financial services sector. And with a nickname like ‘Tommy Chardonnay' it's clear he's been as unsuccessful in hiding his long-standing drinking problem as he has been in finding employment in the ‘real world'.

After glancing at a couple of letters, Vaughan opens-up a small jiffy bag and putting his hand inside he pulls out a small white note. Straight away he knows something's not right, he can feel the weight still in the bag and he's experienced something like this once before. Unfolding it, he reads the message, then frowns, feeling confused, ‘But how can they know?'

There's still something inside the jiffy bag that he holds in his unsteady hands. It's quite small, but heavy. ‘Please don't let it be…' as he tips-up the bag, a single bullet drops out onto his sweating palm. His face visibly changes, his eyes widen and within an instant the rosy colour drains from his cheeks.

With her usual poor timing, Rebecca picks this very moment to knock on the glass door to Tom Vaughan's office. Startled, he stuffs the contents back into the jiffy bag and hides it away in his desk drawer.

She observes her boss's strange response whilst politely waiting outside to be acknowledged. He appears to be acting like a little boy who's been caught doing something he shouldn't. Still looking uncomfortable and sheepish, he at last beckons her inside.

Seeing that his complexion is as white as a sheet, she begins by showing concern. “Are you ok Tom? You look like you've seen a ghost!”

“Yeah, yeah. Don't worry about me. Everything's fine. No probs. What can I do for you?”

“The briefing just now…. I like the change in direction. This could be like a new start for us, don't you think?” But Rebecca doesn't pause long enough for her boss to answer, “Hillary's certainly grasping the nettle, isn't she!? And I think once we get some more success, preferably with some higher profile cases, we'll really be sending some shockwaves across the City.”

Rebecca can tell that something's not right; her manager is twitching like a nervous cat. He's a timid little bureaucrat at the best of times, but right at this moment he has fear painted all over his face despite trying to act normally.