security services for Pace-Loyette.”
I thought about that for a while. “Nina Sachs told me that Pace had more questions than answers about where Danes might be.”
Neary nodded, eyeing an elk steak that passed our table, gleaming and smoking. “If we win this beauty contest, I expect that finding him will be one of the first things Pace management asks us to do. If you’ve already located him by then, all the better.”
Wheels within wheels. I smiled. “Why are they so interested?”
“Danes isn’t just another office grunt,” Neary said.
“I know, he’s their wunderkind stock analyst- or he was until a few years ago, when he crashed and burned along with the rest of them. Now I guess he’s like all the other ex-superstars, the pile of dog shit on the kitchen table that everyone’s trying to ignore.”
Neary smiled. “His management is afraid he might be an exploding pile of dog shit.” I raised an eyebrow and Neary continued. “You see the articles in the Journal, on pending enforcement activity?” I shook my head. “I thought you followed this stuff,” he said, smiling. “I thought it was in your blood.”
“I’m in recovery for it. What’s the Journal say?”
“They’ve been running a series on what the next wave of Fed actions might be. Speculation is that the SEC and the Justice Department are looking at the small boutique firms- the niche playersand that they’re set to land hard on anyone who didn’t come to Jesus when they had the chance a couple of years back.”
“And Pace falls into that category?”
“Yep. They’ve got a nice little franchise, providing investment-banking services to tech companies. They’re a one-stop shop: doing M and A, underwriting, lending, syndications, and research. A lot of folks think they never really fessed up, back when the analyst shit first hit the fan- which could make them a prime candidate for some Fed attention this go-round. Pace management has consistently denied any wrongdoing- big surprise- but it’s no secret that they’re nervous.”
“Danes is a part of their worries?”
“He’s been their chief analyst for a long time. He’d inevitably be at the center of any investigation into whether or not Pace tailored their stock recommendations to curry favor with their investment banking clients- or potential clients. A firm in that position has to do some fancy dancing with a guy in Danes’s spot. A guy like that is under a lot of pressure. He could be… unpredictable. He could do damage. So they’ve got some tough calls to make.”
“Like what, whether they can serve him up to the Feds before he cuts a deal of his own?”
Neary laughed. “They haven’t been quite that blunt about it with me,” he said. He drained his ginger ale and waved to the waitress for another. “But they are worried about what Danes might be up to.”
“Is that just corporate paranoia, or has Danes given them reason?”
“The last time they saw the guy, he was storming out of his office after a twenty-minute shouting match with the head of the legal department, and he was muttering something about forwarding his e-mail to the SEC. The next thing they know, he’s on vacation. It got them a little nervous.”
“Very dramatic,” I said.
“But not out of character,” Neary said. “Not for him. You know much about the guy?”
“Not too much. I’ve seen him on the tube- though not lately. Today I heard he’s an asshole, unreliable, a bad father, a liar, and friendless- the usual stuff you get from the ex. But I realize that might not be the whole story.”
Neary made a maybe, maybe not shrug and started to speak, but he was interrupted by our waitress, bearing lunch. Neary’s buffalo steak ran with blood and juices and threatened to overwhelm his plate. My duck sandwich on sourdough was a bit smaller- but just a bit. She laid platters of carrots, steamed spinach, and spicy onion rings in the middle of the table. I took a bite of my sandwich. Neary cut himself a piece of steak and chewed it with his eyes closed. He sighed and nodded to himself. Finally, he came back to earth.
“I never met the guy, but I got an off-the-record earful from some folks at Pace. According to them, Danes is a massive pain in the ass: an egomaniac, a bully, and half a nut job to boot- maybe more than half.” He paused to savor another hunk of buffalo. Color was returning to his face, and his eyes had lost some of their muddy look.
“When the market was up and he was on TV every other day, he was a real prima donna. He roared around the office like a bull in a china shop, terrorizing everyone who crossed his path- including senior management.”
“Nice hobby, but maybe not wise.”
“Apparently he wasn’t too worried. He fancied himself the greatest thing since sliced bread- or the smartest thing, anyway- and he had the press to back him up. He barely tolerated the less gifted- which, according to him, covered pretty much the rest of the world. And they tell me he reserved a special contempt for the Pace-Loyette management committee, his bosses. Thought they were bureaucrats, second-raters, et cetera, and he made no secret of his feelings.”
“No one ever took him out to the woodshed for an ass-whipping?”
Neary shook his head. “I guess the committee tried to get him to chill a couple of times, but in those days- when the market was riding high, and Danes was their analyst poster boy- he had them by the balls, and he knew it.”
“He sounds more like a head trader than an analyst,” I said.
Neary nodded. “Except back then he made more than any trader at Pace.” He picked an onion ring off the platter.
“I take it he toned down his act when the market tanked.”
“A good guess- but wrong. The Pace people tell me that, if anything, he’s gotten worse. Going from hero to goat overnight was a real kick in the head for him- which is maybe understandable. I mean, one day he’s everybody’s favorite market expert, and the next nobody takes his calls. That’s got to hurt.”
Neary shook his head and helped himself to more onion rings.
“Once he got over the initial shock, he demanded that his management get out there and defend his good name- circle the wagons, call out the marines, that sort of thing. That went over like a lead balloon, of course. Pace-Loyette just wanted it all to go away. Their tactic was to say as little as possible, and they suggested to Danes that he do the same. That apparently made him crazy- or crazier. He’s gone from arrogant and contemptuous to openly hostile and paranoid. He claims management is setting him up as a fall guy.”
I worked on my sandwich for a while and thought, while Neary put an end to his buffalo. “If he’s so hostile and so nuts, why hasn’t Pace gotten rid of him?”
Neary put his flatware at parade rest and took up his napkin. “If not for this SEC threat, and the investor grievances still floating around, they would have. As it is, they’re reluctant to force him outand all but guarantee that he becomes a hostile witness in any action. They need to keep up at least the pretense of a united front.”
“Then why not do what other firms have done? Make a deal with the guy. Agree on a sum in exchange for a nice quiet resignation.”
“From what I hear, the issue with Danes is ego, not money. He wants his rep restored; he wants vindication. He’s got no interest in going gentle anywhere.”
“So he’s still got them by the balls.”
“It seems to be a talent of his.”
I finished my sandwich and the waitress came by to clear the table. We passed on dessert but said yes to coffee.
“How good is the Journal’s information?” I asked. “How likely is it that the Feds will target Pace?”
Neary snorted and shook his head. “How the hell should I know? I’m only slightly more welcome than you are down at One Saint A’s these days- which means not at all. And I’ve been getting the cold shoulder at the Woolworth Building too.”
One St. Andrews Plaza is downtown, near the courts and City Hall, and it’s where you find the office of the U.S. Attorney for the Southern District of New York. Neary and I had had dealings with that office late last year, as part of a case he’d helped me with, and the ill will we had left in our wake apparently extended a block or so west, to 233 Broadway- the Woolworth Building- and the regional offices of the Securities and Exchange Commission.
“Tell me these guys have nothing better to do than nurse their grudges,” I said.
Neary gave a rueful laugh. “Don’t kid yourself. We got special training in that, down at Quantico.”
