“Yeah?” Sally Steiner says. “That’s interesting.”
Two
Late in May, Timothy Cone comes off a case that’s a real doozy. Cone’s an investigator for Haldering amp; Co., an outfit on John Street that provides “financial intelligence” for corporate and individual clients.
Early in May, a venture capital partnership hired Haldering to look into something called Ozam Biotechnology, Inc. Ozam had been advertising in the business media with big headlines: NEW ISSUE! Shares of Ozam available at ten bucks.
The legal and accounting departments of Haldering amp; Co. couldn’t find any record of Ozam anywhere. It apparently had no bank accounts, wasn’t chartered by the State of New York, nor was it registered with the Securities and Exchange Commission.
So Timothy Cone went to work. He soon found there were two other eyes doing the same thing: a guy from the SEC and a woman from the Manhattan District Attorney’s office.
The three finally discover that Ozam just doesn’t exist. It is an out-and-out stock swindle dreamed up by a con man named Porfirio Le Blanc. How much loot he took in on those fraudulent ads they never do determine, but it must have been hefty because when Porfirio flies the coop, he flies first-class to Bolivia.
No one is interested in trying to extradite the rascal; just getting him out of the country is enough. So the Immigration and Naturalization Service is told to put Senor Le Blanc on the “watch list,” and Timothy Cone returns to his cubbyhole office to write out his report.
When he tosses it onto the desk of Samantha Whatley, who bosses the five Haldering amp; Co. investigators, he slumps in the doorway while she reads it.
“You’re a lousy speller,” she tells him. Then she shakes her head in disbelief. “Can you believe this? A guy takes out ads in newspapers, and people send him money.
“It’s happened before,” Cone says, shrugging. “Years ago there was an ex-carny pitchman working the Midwest. He bought ads in small-town newspapers. All the ad said was: ‘Last chance to send in your dollar,’ with a P.O. Box number in Chicago. He was doing okay until the postal guys caught up with him.”
“Barnum was right,” Sam says. “Well, here’s a new one for you.”
She holds out a file folder, and Cone shuffles forward to take it.
“What is it?” he asks. “Some guy selling the Brooklyn Bridge?”
“No,” Sam says, “this is heavy stuff. The client is Pistol and Burns. You know them?”
“The investment bankers? Sure, I know them. Very old. Very conservative. What’s their problem?”
“They think they may have a leak in their Mergers and Acquisitions Department.”
“Oh-ho. Another inside trading scam?”
“Could be,” Samantha says. “Tim, this is a new client with mucho dinero. Will you, for God’s sake, try to dress neatly and talk like a gentleman.”
“Don’t I always?”
She stares at him. “Out!” she says.
Back in his office, he opens a fresh pack of Camels (second of the day) and lights up. He parks his scuffed yellow work shoes atop the scarred desk, and starts flipping through the Pistol amp; Burns file.
It’s a sad story of unbridled greed-and a not uncommon one. About a year ago, P amp;B is engineering a buyout between a big food-products conglomerate and a smaller outfit that’s making a nice buck with a nationwide chain of stores that sell cookies, all kinds, made on the premises, guaranteed fresh every morning. The takeover is a marriage made in heaven. Or, as they say on Wall Street, the synergism is there.
As usual, the ladies and gents in the Mergers and Acquisitions Department of Pistol amp; Burns work in conditions of secrecy that would do credit to the CIA-so word of the impending deal won’t leak out prematurely. But it does. The computers of the Securities and Exchange Commission pick up evidence of heavy trading in the cookie company in the weeks prior to the signing of the buyout documents and the public announcement. The cookie stock goes up almost ten points.
So the SEC launches an investigation to try to discover the insider leak. It turns out that a yuppie-type in the Mortgage Insurance Department of Pistol amp; Burns, who has nothing to do with mergers and acquisitions and is supposed to know zilch about them, is a drinking buddy of another yuppie in the M amp;A section. Not only that, but they’re both doing coke and shagging the same twitch who supplies the nose candy and also dances naked at a joint on East 38th Street called Aristotle’s Dream.
The whole thing is a mess. The two Pistol amp; Burns’ yuppies confess their sins and admit they made almost a quarter-mil dealing in shares and options of the cookie corporation in the month prior to the takeover. What’s worse, they were paid for their insider information by arbitrageurs and attorneys who work for other investment bankers.
This clique of insiders, all with MBAs or law degrees, make a nice buck until the SEC lowers the boom, and everyone has to cough up their profits, pay fines, and is banned from the securities business for three years. The two original Pistol amp; Burns insiders also get a year in the slammer, which means they’ll be out in four or five months. There is no record of what happens to the skin dancer at Aristotle’s Dream.
The entire scandal is a painful embarrassment for Pistol amp; Burns. It is one of the few remaining investment-banker partnerships on the Street. The original partners, Leonard K. Pistol and G. Watson Burns, have long since gone to the great trading pit in the sky, but the present partners try to preserve the stern probity and high principles and ideals of the two founders. Their oil portraits glower down on the executive dining room, spoiling a lot of appetites.
But Pistol amp; Burns muddles through, cooperating fully with investigators and prosecutors from the SEC and district attorney’s office. P amp;B also appoints one of the senior partners, Mr. G. Fergus Twiggs, to be Chief of Internal Security. He institutes a series of reforms to make certain such an insider coup will never again tarnish the reputation of such a venerable and respected institution.
(Which somewhat amuses students of the history of our nation’s financial community. They happen to know that Leonard K. Pistol kept a teenage mistress, and G. Watson Burns drank a quart of brandy every day, without fail, and once had to be dissuaded from making a cash offer to buy the U.S. Government.)
Timothy Cone, reading all this with enjoyment, pauses long enough to light another cigarette and call down to the local deli for a cheeseburger, an order of French fries, a kosher dill, and two cold Heinekens. He munches on his lunch as he continues reading the preliminary report provided by the client.
After enduring the shame of what comes to be known on Wall Street as The Great Cookie Caper, and after tightening up their internal security precautions, Pistol amp; Burns now finds itself facing another disgrace involving insider trading.
They’re in the last stages of finagling a leveraged buyout of a corporation that makes clothes for kiddies, including diapers with the label of a hotshot lingerie designer and little striped overalls just like gandy dancers once wore. The buyers are a group of the company’s top executives, and the transaction includes an issue of junk bonds.
Everything is kept strictly hush-hush, and the number of people with a need to know is kept to a minimum. But during the last two weeks, the volume of trading in Wee Tot Fashions, Inc., usually minuscule, has quadrupled, with the stock up five bucks. An investigator from the SEC is already haunting the paneled corridors of Pistol amp; Burns, trying to discover who is leaking word of the upcoming deal.
“This state of affairs cannot be allowed to continue,” Mr. G. Fergus Twiggs concludes firmly.
So Timothy Cone calls the phone number on the letterhead of the client’s report.
“Pistol and Burns.” A woman’s voice: brisk and efficient.
“Could I speak to Mr. Twiggs?”
“May I ask who is calling?”
“Sure,” Cone says cheerfully.
Long pause.
“Who is calling, please,” she says faintly.
“Timothy Cone. I’m an investigator with Haldering and Company.”
