theirs.”
Seth frowned. “I don’t understand. They can take their clients’ stock, lend it, make money off it, and they’re allowed to? Isn’t that the clients’ property? What other business operates like that?”
“Yes. It’s in the fine print of every agreement in the industry. That’s one of the reasons all the discount brokers will execute a trade for next to nothing. The industry gave up making money off commissions a long time ago. Now, they want your account because if it’s a margin account, which most are, they can lend your shares out and collect fat loan fees, and not tell you.”
“But who do they lend to?” Silver asked. “Who wants to borrow shares?”
“Short sellers. The irony is that you own the shares of a company because you’re hoping the share price goes up, while your broker is lending your shares to short sellers who are trying to drive the price down.” Richard noticed the look on Silver’s face.
“And that’s legal?” Seth demanded.
“It is. But anyway, with cash accounts you aren’t allowed to do that. There’s supposed to be a wall between the margin accounts and the cash accounts. The theory that allows them to lend from margin accounts is that they’ve extended you credit and the shares are therefore their asset, to collateralize the credit. But with cash accounts, you own the assets and there is no credit, so they have no claim on your property. They’re just acting as custodians, holding your shares as a courtesy so you can trade more easily. Apparently our victim was playing fast and loose with the cash accounts too. Or at least that’s what the SEC contended. He settled with them, without admitting or denying guilt, of course.”
“What is that now?” Silver remarked. “Three out of five victims with SEC actions?”
“Yes, but for our purposes, that’s two out of five without. In terms of predictive value, I’m not sure it will help us figure out who will be next.”
“Great.”
“I know. It’s just information.”
Seth’s face was a picture of indignation. “Didn’t I read somewhere about the ex-governor or someone doing exactly what you described with over a billion dollars of his brokerage’s money? The firm went BK and the money’s gone?”
“That’s the general idea. But nobody has been prosecuted.”
“You take over a billion dollars of someone else’s money, it’s gone, and nobody gets charged?”
“Welcome to Wall Street.”
They considered the ramifications in silence for a few seconds before Silver asked, “Does the latest victim have any connection to any of the other victims, Richard?”
“We’re still digging, but it looks like there’s a link with the second and third victims — the hedge fund. This was one of the brokers that they used to process their trades.”
“One?”
“Hedge funds will often have a variety of brokers. Usually one prime broker — their main broker — but larger funds will have more than one prime broker, as well as secondary brokers. Depends on the fund and their trading strategy. In that hedge fund’s case it was largely short selling, or what they call short-biased.”
“Meaning they made their money by stocks going down?” Seth tried.
“You’re getting the hang of this. It’s more complicated than that, but yes, that’s essentially it. But there’s an even more ominous connection I’m still trying to get to the bottom of.”
“What’s that?”
“It looks like the latest victim could have been associated with some of the funds that come up when you look hard at the software guy’s partner. This broker handled several of the larger suspect investment funds that have been targeted for scrutiny because of terrorist ties.”
“Really,” Silver said.
“While it’s too soon to get all excited, my cronies back in Financial Crimes also flagged the broker as being rumored to be mob-connected. I’m trying to get more information on why that is, but if it’s correct, we have mob and terrorist money moving through him. I’m going to run all the brokers he has working for him to see if any of them have been sanctioned elsewhere. When you look at the mob on Wall Street, many of the same names keep popping up again and again. So it’s worth a check. I might get lucky. You never know.”
“Russian mob — like Masenkoff? Or Italian?” Silver asked.
“Both.”
“Every time we turn over a rock, this gets more complicated.”
“That’s what keeps it interesting, right?” Richard observed.
“And the shooter this morning looks like he was Russian mob…” Silver trailed off.
Her head was swimming from all the information and the implications.
If there was a pattern, other than that everyone appeared to get dirtier the harder they looked, she wasn’t seeing it.
They continued to discuss the findings until the nurse came in, as promised, with a file full of forms and a bag with clothes in it. Monique had saved the day.
While she was checking the relevant boxes and scribbling her signature, Richard offered to drive her wherever she needed to go after being discharged. She momentarily panicked at the thought of time having raced by, then confirmed it was actually only one o’clock — there was plenty of time to get Kennedy. Calculating, she decided she would make a call and tell Miriam the barest details of her ordeal and let her know she’d be dropping by early. If she didn’t have to work the rest of the afternoon, she might as well spend some quality time with her daughter.
“I’ll take you up on your kind offer, Richard. I should be ready to get out of here shortly.”
The nurse shook her head.
“An hour?”
The nurse nodded.
“Take your time. I’m in no hurry,” Richard assured Silver, who couldn’t conceal her annoyance at the delay.
“Okay. Now let me make a call and get dressed. Thanks, both of you, for coming.”
Seth rose quickly from his chair. “No problem, boss. I’m headed back to the scene. Call if you need anything,” he said, waving as he opened the door.
“Will do.”
Chapter 12
Surprisingly, the stitches didn’t hurt much — probably because the local anesthetic hadn’t completely worn off. The hospital had given her pain killers and warned her against aspirin for a week, which was fine — she preferred ibuprofen, anyway. She had no intention of taking the painkillers. Anything that would dull her reactions or thinking was out of the question.
As Silver and Richard made their way from the hospital, she stopped and picked up a copy of the
“Did you see this?”
“I don’t read the
She shook the paper and then began reading aloud.
“Blah blah blah, ‘Horrendous murder’ blah blah. Oh. Here it is: ‘A task force is being headed by Assistant Special Agent In Charge Silver Cassidy, whose name might ring bells following her work on the Turnpike killer a few years ago. Cassidy declined to comment to the
“What’s the big deal?”
“I try to keep a low profile. Now every reporter, author and nervous politician in New York knows I’m running the task force, which means I’m going to get bombarded with calls. It’s not the end of the world, but it’s another
