Timothy's game

his cap, Cone phones the SEC investigator.

“Hiya, old buddy,” Jerry says breezily. “How did you make out at Pistol and Burns?”

“Like you said, it’s as holey as Swiss cheese. I gave them some ways to close the holes.”

“But no evidence of an insider leak?”

“I didn’t find any.”

“That’s a relief. I wrote in my report it was the arbs who caused the run-up of the stock. I guess I was right.”

“Uh-huh,” Cone says.

“So much for the good news. Now comes the bad. We got another squeal on insider trading.”

“Oh, Jesus,” the Wall Street dick says. “Don’t tell me it’s a Pistol and Burns’ deal.”

“No, this one is at Snellig Firsten Holbrook. You know the outfit?”

“The junk bond specialists?”

“That’s right. They’re supposed to have the best security on the Street, but they’re handling a leveraged buyout and someone is onto it. The stock of the takee is going up, up, up. Listen, could you and I meet on Monday? Maybe we can figure out what’s going on.”

“Maybe,” Cone says, striving mightily to recall what he cannot remember.

He wakes the next morning, hoping the night’s sleep has brought to mind what he’s been trying to recollect; sleep does that sometimes. But all he can remember is the entire pepperoni pizza he ate the night before.

He goes over to Samantha’s place on Saturday night. She won’t be seen with him in public, fearing someone from Haldering will spot them and office gossip will start. That’s okay with Cone; he’s willing to play by her rules.

She serves a dinner of baked chicken, Spanish rice, and a salad. They also have a bottle of chilled Orvieto which puts them in a mellow mood. They have a nice, pleasant evening of fun and games, and Cone is home by 1:00 A.M. He gives Cleo fresh water and some of the chicken skin and bones he doggie-bagged from Sam’s dinner.

Sunday is just as relaxed. He futzes around the loft, smokes two packs of Camels, drinks about a pint of vodka, with water, and digs his way through Barron’s and the Business Section of the New York Times. In the evening he has a one-pound can of beef stew with a heel of French bread he finds in the refrigerator, so hard that he has to soak it in the stew to render it edible. Cleo gets the remainder of the chicken scraps.

On Monday he’s late for work, as usual. Jeremy Bigelow shows up at ten o’clock, carrying a fat briefcase. Cone calls down to the local deli for two black coffees and two toasted bagels with a schmear. They wait for their breakfast to arrive before they get down to business.

“Look,” Cone says, “it would help if you could tell me how the SEC works on insider trading scams. Then maybe I’ll know what you’re talking about.”

“It’s a two-level operation,” Jerry says, gnawing on his bagel. “We get a lead and start gathering facts. That’s where I come in. If we can’t find any evidence of hanky-panky, the investigation is usually dropped. If things look sour, the staff goes to the Commission and gets an order for a formal inquiry. That’s when we get power of subpoena.”

“Yeah, but what gets you moving? Where do the leads come from?”

“Computers mostly. We couldn’t live without them. You know how many companies are listed on all the stock exchanges in the country?”

“No idea.”

“Neither do I-exactly. But I’d guess about twelve thousand. How could you check all those every day by hand? Imfuckingpossible. So the computers are programmed to pick up unusual activity. Say a stock has been trading an average of fifty thousand shares a day for months and months. Suddenly the trading volume goes up to maybe a million shares a day. The computer flashes a red light, bells go off, and an American flag pops from the top of the machine and starts waving madly back and forth.”

“And that’s when you move in?”

“Sure,” Bigelow says. “We want to know who’s trading. Most of the time it’s entirely innocent. A rumor got floated on Wall Street, and a lot of amateur arbitrageurs are hopping on what they hope will be a bandwagon-and probably won’t.”

“So your computers do it all?”

“Hell, no. Just the first line of defense. We also get tips from brokerage houses. Their computers pick up unusual trading activity. They report to us because they don’t want to get their balls caught in the wringer. Also, we get anonymous tips from divorced wives and husbands who want the boom lowered on their former mates. And sometimes we get squeals from honest executives who know or suspect the guy in the next office is buying or selling illegally on the basis of the next quarterly earnings report.”

“You check out the executives first?”

“Of course. If they’re officers of the company, they’ve got to declare buys and sells. If they don’t, they’re in the soup.”

“Look,” the Wall Street dick says, “I know you haven’t got the time or staff to check out every piddling little trade. I mean you’re not going to investigate Joe E. Clunk of Hanging Dog, North Carolina, who bought ten shares of this or that. So what do you look for?”

“Generally I look for trades of ten thousand shares or more. But if a corporation officer is involved, he’s as guilty if he trades a hundred shares as he would be if he traded a hundred thousand on the basis of inside knowledge.”

“But he could get his relatives and friends to trade for him.”

“Of course,” Jerry says, grinning. “Happens all the time. That’s when we’ve got to play detective, track down relationships, and tell them all they’ve committed a no-no.”

“And what do they get for that?”

“Usually they have to surrender their profits, pay a fine, and are put on probation. A few go to the clink.”

“For how long?”

“I think the longest sentence for insider trading has been four years.”

“Which means the guy is out in eighteen months.”

“Probably,” Bigelow says, shrugging. “But that’s not my problem. I’m supposed to make the case. What the judge decides is something else again.”

Cone lights up a cigarette, after offering the pack to the other man. But Jerry declines.

“I stopped smoking four years ago,” he says virtuously. “You know what those things are doing to your lungs and heart?”

“Please,” Cone says, holding up a hand. “I’ve heard all the lectures and none of them take. Let me enjoy my vices. Now what’s this Snellig Firsten Holbrook deal you mentioned on the phone?”

“Like I said, it’s a leveraged buyout. An old outfit named Trimbley and Diggs, up in Massachusetts. They make brooms, brushes, wooden clothespins, and stuff like that. But they also own some choice shorefront real estate. They went public about twenty years ago and have been paying a small dividend-but never missing a quarter. It’s a small outfit, Tim; General Motors it ain’t. If their daily trading volume hits, say, ten thousand shares, it’s a big day. Now the top executive officers want to buy them out, take the company private again, and develop their beachfront properties. Snellig Firsten Holbrook is handling the deal. But suddenly the daily volume is way up- almost a hundred thousand shares last Friday. Nobody can figure how the buyout leaked. Someone is gobbling up shares, and we want to know who.”

“The arbs?” Cone asks.

Bigelow shakes his head. “I doubt it. Not enough loot in it for them.”

“Yeah,” Cone says, “I can understand that. But what’s all this got to do with me? I work for Haldering, and we don’t have Snellig Firsten Holbrook as a client, or Trimbley and Diggs either. So why am I supposed to get involved?”

“One,” Jeremy says, holding up a thumb, “as a personal favor to me. Two,” he says, pointing a forefinger, “because it’s a puzzle, and I’ve got you made as a guy who likes puzzles. And three,” he adds, extending his middle finger, “who the hell do you think recommended you to Pistol and Burns?”