Man in the Middle

natural,” Morgan Stenman had said more than once after reviewing his performance numbers.

The brokers who covered him enjoyed his pleasant manner, and bent over to give him preference on deals, insight, and knowing winks and nods. Company executives, accustomed to a browbeating whenever someone from Stenman Partners called, seeking information, appreciated Peter’s politeness. He sometimes received a proprietary nugget or two as a reward for his uncommon civility.

On the first Friday in October, Peter closed out a trade and took a quick look around the room. With his turret close enough to Stuart’s that their elbows brushed, Peter noticed Stuart’s nose dripping like a leaky faucet. “Fucking-A, Stu, it’s noon,” he said, muffling his voice. “You need to get a grip.” Stuart’s eyes rolled so fast they made Peter dizzy.

“Lighten up, dude,” Stuart said. “Friday ritual. A treat after a week’s hard work.”

“Can’t you at least wait until the market’s closed? How can you function with all that shit floating around the scrambled eggs between your ears?”

“Usually helps. I got a great idea . . . since you got nothing to do, mind reconciling for me today?” Stuart’s leg jack-hammered off the ball of his foot.

“Nothing to do? You know better than that.”

“Fact is, Petey, you’re right. I am a little messed up. And I got too many . . .” Stuart paused to wipe his nose. “Muller had me take down some of his trades . . . I’ve got to reconcile them. Help me out, just this once. It’s not as if I haven’t taken you under my wing, helped build your budding career and all that.”

“Yeah, yeah.” Peter began to play an imaginary violin. “Just this once. Whatta you need me to do?”

Peter recalled Stuart disappearing that morning into Muller’s office just as Muller left for a meeting. When Stuart emerged, an hour later, he had a stack of fifteen or twenty tickets that he now withdrew from a side drawer. Stuart dropped them in front of Peter.

“The P&L ought to add up to . . . uh . . . shit, how much was that?” he asked himself in a voice loud enough for half the room to hear.

Stuart patted the desktop with both palms like a man trying to put out a small brush fire. Spinning his head, he said, “Oh yeah, oh yeah, oh yeah.”

He then darted to Muller’s office. With a rapid series of punches, Stuart typed a seven-digit password into a keypad, opened the door, and went in. A moment later, he reemerged and pulled Muller’s door closed. Stuart wore a ridiculous drug-fueled grin and looked as if he might be humming to himself. He waved a slip of paper as he bounded towards their desks on the balls of his feet. In the background, one of the clerks dinged a bell that signaled one p.m.—the stock markets had closed for the week.

“Here,” Stuart said, flopping into his chair, facing Peter. “This is on the QT. If Fat-Head knew about this, he’d cut my balls off, hang ’em up to dry.”

“What number am I trying to reconcile?”

Stuart rolled his shoulders to a silent rhythm as he squinted at his own handwriting. “Two hundred twenty- one and some change.”

“Two hundred and twenty-one what?” Peter asked.

“We’re dealing in millions of dollars.” Stuart grinned.

Peter felt bewildered. “You’re saying you or Muller or whoever did these trades made that much money this morning?”

Stuart horse-laughed. When he caught his breath, he said, “Yeah. That was me and the freak.”

Several traders turned, annoyed at the levity. “Shhh,” Stuart slurred, not able to take his own advice. “You mind crunching these numbers while I take recess in the conference room?”

“I don’t mind, Stu, but don’t you think”—Peter’s voice dropped to a whisper. He leaned into Stuart’s ear “— that you should go easy on that stuff. You’re already messed up.”

“Make the money, dude, and nobody’s gonna care. See you in ten.”

Stuart double-timed it to the conference room. A moment later, he drew shut the curtains. By now, Peter knew the routine. Four lines drawn on the table with a hundred. Roll that bill, inhale, switch nostrils, inhale. Wait five minutes, do it again.

“Get some help, Stu,” Peter said under his breath.

Peter picked up the first two tickets. They involved massive day-trades in the Japanese Yen. Net profit: $32 million. The account name was coded. The next two trades were in the British Pound Sterling, similarly large and coded, but something looked wrong with the information on the tickets. The purchase appeared out of whack. According to the ticket, the buy took place several hours after the sale. Unless this was a short sale, and nothing indicated it was, the trade times looked ass-backwards. Peter matched the last seven sets of trades—all hugely profitable—and discovered one other with a similar discrepancy. This second erroneous transaction was done through an Irish broker in a stock that appreciated fifteen percent between the purchase and sale. The transaction times also made no logical sense.

By the time Stuart returned, Peter had separated out two sets of confusing trades.

“How’d you do on reconciliation, Petey?”

Stuart’s brain, Peter guessed, now floundered in a stupor, light years from reality.

“Stuart—”

“Why you whispering, dude? Got a problem? You need a lesson in addition, subtraction?” Stuart’s lids and brows opened and closed in an annoying dance.

“Were any of these trades short sales?” Peter asked.

“Nope. All straight buys then sells.”

“So we didn’t sell stock or currency ahead of the purchase?” Peter grabbed Stuart’s hand and squeezed hard enough to feel bone bow.

“Hey, what’re you trying to do?”

Still whispering, Peter said, “These trades are backwards—the time stamps have sales occurring hours before purchases. What’s going on?”

Stuart managed to focus. “What?”

“Sales before—”

“I heard you the first time.” As if he had been caught stealing candy, Stuart looked side to side in an attempt to read others’ faces.

“Follow me,” Stuart ordered.

The two men quick-stepped to Howard Muller’s office. For the second time in the last hour, Peter watched Stuart punch numbers on the keypad lock.

“Muller changes the office code by four p.m. every Friday,” Stuart said. “Thank God you . . .”

Entering, Stuart skipped to a corner and opened a small index-card file, resting on a bookshelf. “This’ll be no problem,” he said. He took a small key from the file. A moment later, he unlocked the side-drawer of Muller’s desk. He removed the sophisticated remote that Peter had seen at his first formal meeting with Stenman’s CIO. “I can’t focus, Petey. Need your help.”

Having to reach over a mound of disorganized papers atop Muller’s desk, Peter took the slim ten-inch device from Stuart’s outstretched hand. He moved slowly, not wanting to disturb, drop, or knock against anything. He noted where Stuart had lifted the remote and reminded himselfto return it exactly to that spot.

“What in God’s name is going on?” Peter asked.

“Ain’t about God, my man. Backtrading is all. Not a big deal. Aim at this.” Stuart pointed to Muller’s timestamp machine.

“Why?”

“Please, Peter. Give me a break. If those tickets had gotten booked the way I wrote them, I’d be fired. I need you to program in the sell time on that first ticket.” Stuart slumped onto the floor in a near corner, looking the part of an exhausted man nearing total collapse.

Peter shook his head in defeat. “Now what?” he asked. “I want to get my sorry ass out of here.”

“Uh, was that the sell time we just entered?” Stuart asked.

“Goddammit, Stuart. Pay attention. Yes, that was the sell time. What’s next?”

“Okay. Stamp that time on a buy ticket. You get what we’re doing?”

“Yeah. I get what we’re doing. We’re reversing the times on these trades by using a programmable timestamp.”