Bull Street (9 page)

Cole signaled Richard to hand out his brochures of comparable figures and other pricing information. He gave one to each of the officers, avoiding Jeannie’s eyes, feeling self-satisfied to be momentarily in the limelight and anticipating the action. Jack and Mickey exchanged a look, and Mickey got up and left the room.

Richard reflected on his Capital Markets class at Michigan, eager. He’d learned about the sophisticated alchemy of how an investment banker priced a deal; now he’d see it from the inside.
Well, this is it. Now I’ll see what it’s really all about.

Wall asked, “How the hell can you price a deal with such inconsistent EBITDA and net earnings?”

Jeannie opened her mouth to say something and Cole talked over her, said, “It’s being priced off growth and potential.” Richard felt a swell of victory at seeing Jeannie muzzled.

Jack said, “EBITDA Schmebitda, look at…”

Smith, the syndicate head, cut in, “Fuck all the numbers mumbo jumbo, the order book’s at $14.50 per share if you wanna sell the deal out. If we price it any higher we don’t have enough buyers. We get stuck owning a big chunk of the deal and we take a bath when the stock drops like a stone once it starts trading on the exchanges, ‘cause we overpriced it.”

Jack said, “$14.50? $14.50, Jeez.”

Smith said, “Cut the shit, you know the order book as well as I do. You’ve been all over my guys checking it all week.”

About this time Richard started thinking this wasn’t at all how he imagined it would be.

Jack said, “Okay, how’s the book at $15.00? Milner’s gonna be pissed if we price it too far below $16.00.”

Smith said, “If we try $15.00 we’ll probably wind up owning 5 to 10% of the deal.”

Jack said, “That’s a chance I’ll take.”

Morris sat up like he’d been poked in the back and said, “Not on my divisional P&L and balance sheet. You guys in Corporate Finance carry it on yours.”

Wall said, “Yeah, in your dreams, Jack, that’s 50 to 100 million bucks. We aren’t taking a potential hit like that.”

Jack curled his lip at them both and said, “We’re making, say, $75 million in fees, we can’t afford to risk a little of it to keep the client happy? Maybe Milner takes his next deal to Morgan Stanley.”

Nobody said anything for about 30 seconds, Richard thinking,
So much for Capital Markets 105.

Smith said, “I think we can get it done at $14.75, but I can’t guarantee it’ll stick at any higher price than that.”

Jack looked at Smith like, “You and I knew that all along.” Jack looked around the room and each nodded back to Jack in turn and that was it, the deal was priced at $14.75. One hundred percent of Southwest Homes’ stock was being bought by Walker & Company for $1,068,840,003, then sold to the public the next morning when the stock markets opened.

Richard looked into his lap at a copy of the pricing books he’d spilled his guts into for weeks, ignored in the brief chaos of the deal pricing.
So much for the elegance of financial theory.

Afterward, Richard walked into the Comm Room to troll through a week of emails and faxes, trying to digest what he’d just witnessed. The Southwest deal got priced in less than two minutes based on some snarling back-and-forth about how many client orders they had for the stock at what prices, rather than any financial concepts. Then Jack, Morris and Wall started fighting over the fee split between Corporate Finance and Sales and Trading like bears over a carcass, the fight over the fee split going on ten times longer than the pricing meeting. Jack finally stared down Morris at the end like a street bully. Not boring, but was that how it always was?
And can these guys stand being in the same room together?

He turned to the computer he’d inadvertently discovered the trading emails on, figuring he’d check it out again. He sat down and opened Outlook, clicked on an email in the Inbox to [email protected] and then sorted by that name. He saw about 10 emails since the one he’d stumbled on a few weeks earlier. Now he was more than just curious. He opened the first five,
counting instructions for about 10 million more shares and put options on the group of companies he’d seen before. He also noticed they weren’t company names or ticker symbols, but appeared to be code names. So whoever was doing the trading was trying to hide it. He left, thinking it was all really odd.

Back at the Associate bullpen he stopped at his cubicle to see if Kathy was in. He wanted to celebrate his first deal, and she was the only one he felt like doing it with. She wasn’t around so he went straight to Raoul’s; it seemed like the most logical place to find her. Rob couldn’t get him a table or a booth so he had steak frites at the bar. Ken behind the bar asked where Kathy was.
Rub it in, man.

After six beers and three cognacs Richard looked at his watch. It was 11:05 p.m. “Leaving,” he said and stood up. Kathy or no Kathy, he was going to bed. Southwest Homes would start trading in the morning and he wanted to see his inaugural deal’s first trades. He turned toward the door just as Kathy walked in.

“Been looking for you,” Kathy said, smiling. She stepped back for a moment, then chuckled. “I was going to buy you a beer, but it looks like you’re a dozen ahead of me.”

“Looking for you, too. Where were you?”

“Work, dinner, work. C’mon I’ll buy you one, Mr. Deal.”

Richard nodded, sat back down. Ken set up two bottles of Heineken. “Cheers,” Kathy said, clinking Richard’s bottle. “Congratulations on your first deal. How’s it feel?”

“Exhausted, demoralized, but otherwise great.”

“Demoralized?”

“Not quite the glamor I expected. You know, getting kicked around by Jeannie and Cole.”

They both paused for a few moments, sipped their beers looking straight ahead. Then Richard could see Kathy observing
him, leaning away from him, like she thought Richard might do something irrational. Or fall off his stool.

Richard said, “How about you? How you doing?”

“Good. Fired up. Like my father used to say, ‘I’m already on the second rung of the ladder.’” Just like Kathy, that killer ambition. But now that he thought about it, lately he’d sensed her ambition was on autopilot. This drive to be the youngest woman Managing Director ever seemed monomaniacal. And her constant talk about the family heritage in the business; it was almost like she was still building her resume, or maybe using her father as part of hers.

Richard said, “You still sure this is what you want?”

Kathy shot a look at Richard. “Why would you ask me that?”

Richard didn’t say anything for a moment. The intensity of her reaction surprised him, and then he realized how drunk he must be to have asked her. But he figured,
What the hell.

“Sometimes when I hear you talk about your dad it sounds like maybe you feel you have to live up to him, be the son he never had. Or maybe you didn’t think you had much choice but to go into the business.”

She settled back on her stool. “I’ve had plenty of choices. This is what I want. And I want to be the best.”

Richard nodded.

“But I’m still surprised you asked. Do
you
have doubts?”

“I saw some bizarre stuff at Walker on this deal. This is a tough business.” Richard thought about Cole beating up on him, the Southwest pricing meeting, Jack in the turf battle over fees afterward. “Some high financiers. Bunch of guys duking it out over a pot of money.”

“Nobody said it’s for the fainthearted,” Kathy said. He saw her face soften. “But you’re a tough guy. And smart. I’ve seen it
firsthand. Getting thrown together into a cubicle with somebody, you see what they’re made of.”

“Yeah, I think I have what it takes.”

“But you still sure you want it?”

“Absolutely. Bad enough to suck in my pride for six months.” He realized what he’d said as its came out of his mouth. He might as well have used the word
probational.

Kathy leaned in toward the bar and tilted her head so she could see his face. “Nothing to be ashamed of about that. When I heard, it made me respect you more.”

“Does everybody know?”

“Cole talks about it like it’s not even supposed to be confidential.”

“Maybe he wants everyone to know. I hear he flushed a few probationals last year.”

Kathy didn’t say anything for a moment. She was looking into Richard’s eyes, almost tenderly.

“What?” Richard said.

“Like I said, I respect you, and I hope you make it.”

“What do you think of my chances?”

She laughed. “You just did a billion-dollar IPO, the firm’s biggest ever, for Harold Milner, no less, arguably the most important financier of his generation. I’d say that’s a good running start.”

“I’m not kidding myself. I was a low-level grunt on this one. A pencil getting pushed around by Jeannie and Cole.” He paused and smiled. “So what do you think of my chances?” Richard teetered sideways on his stool; Kathy put her hand out to prop him up.

She didn’t answer.

After a moment Richard said, “Cole’s got my number, doesn’t he?”

She shrugged.

Bastard.
What did he have to do to get past this guy? What a downer. Some first deal celebration. He shrugged back at Kathy. No sense feeling sorry for himself. He imagined Dad looking at him with that half smile, telling him to dig in and show this guy Cole what he was made of. In that moment he made up his mind he was gonna do whatever was necessary, whatever Cole or anybody asked him to do.

The morning Southwest Homes went public, Milner had coffee at Cipriani Dolci on the balcony level at Grand Central Terminal, looking out at the Main Concourse. Milner loved Grand Central. Sometimes he came up here to just stand and watch, imagining what Cornelius Vanderbilt would have felt taking in that view of the station his heirs built as a monument to him and his empire. People hurrying across the floor, the brass clock atop the information booth where it had always been. The hum of voices and feet shuffling on marble echoing off the ceiling. The ticket booths still busy, everything much as it must have been in 1913.

He looked up at the three cavernous arched windows sixty feet above the floor on either side. The architect’s vision had proposed them as open arches for elevated roadways to connect 43
^rd
Street through the station, instead of stopping it dead at the terminal and continuing it on the other side; a complement to the elevated north-south arteries that encircled the terminal to unite Park Avenue with Park Avenue South. It was intended as a grand-scale tribute to the stature of Vanderbilt’s accomplishments: Grand Central as the nexus of all activity in the world’s most important metropolis. Milner would like to have seen that,
just as he would like to see a similar tangible monument to his own achievements. Now he felt free to get that plan back on track. The hell with “financial engineering on steroids,” he was going back to being a builder again.

N
EW
Y
ORK
C
ITY
.
R
ICHARD SAID
how much you wanna bet this takes all day? Kathy said not a bet I’d take. Richard said how’d we get ourselves into this anyhow? Kathy said quit complaining, you’re the one who was campaigning to be this year’s debutante. Richard said I just wanted to be at the top of this year’s class and get sent to Europe, not get pins stuck in me all day. Kathy said maybe if you’d spent a few weekends this summer out on Long Island instead of kissing ass in the office you might not be sitting here. Richard said how come you’re sitting here, Hamptons girl? Kathy said I’m smarter than you.

They went on like that for a while, like they did next to each other in the bullpen at the office. It helped with the boredom. They were sitting across from each other outside a massive dining room in the rented suite at the Carlyle Hotel where the assembled senior partners of Schoenfeld & Co., GCG and Walker&Company were holding their annual strategy sessions. Richard and Kathy were dwarfed by 15-foot high ceilings, opulent silk wall fabric, the ivory sheen of aged oil paint on chair rails and two-inch thick polished mahogany doors. They waited for their interviews to be considered for a three-month secondment, as the Brits called it, to the European offices of Schoenfeld and GCG. They bantered to masquerade their tension, tied for top of the Associate class.

Richard was desperate to win the secondment: it was considered a plum and evidence of being on the fast track. That would assure he’d survive his probational period. Besides, he’d heard rumors that if he didn’t get sent to Europe he might get assigned to the Mergers and Acquisitions Department. The officers in M&A were even tougher than Cole, whom Richard, through diligent focus, thinking two steps ahead and grinding it out, had managed to win over. And while the M&A bankers were considered Wall Street’s elite, Richard knew that meant working for LeClaire. He remembered how LeClaire broke his balls when he interviewed him; what would he be like to work for? Richard had a pretty good idea that Jack wanted to see him stick around, what with Jack tapping him for little odd jobs all the time. And he wouldn’t put it past Jack to kibosh his candidacy to keep one of his best mules in his own barn. It was a touchy spot.

Jack hitting on him started early on. “Jack’s looking for you,” Kerry Learned said as Richard walked back into the bullpen with his bag of takeout food one evening. “Said he’s heading out to dinner with a client, but he’ll be back later.” Things like that boosted Richard’s status as the alpha male after closing the “Milner deal,” as the other Associates referred to Southwest Homes. They actually got quiet when he walked into the bullpen for the first two weeks. It was like his friend’s pointer, Rip, when it would walk around the kennel all stiff-legged and cocky after being the only one let out to work the field on a Saturday. The deference of the other dogs was grudging, but unmistakable.

“You busy?” Jack asked Richard after his dinner.

Richard there with his shirtsleeves rolled up, 10:00 p.m., tie undone, half-eaten boxes of Chinese food on his desk and piles of annual reports all over the place.
The hell you think?

“Sort of.”

“Working for Cole?”

“Who else?”

“Got some time for me?”

“Always, Jack.” Richard smiled extra hard to look eager.

“I’m not asking you on a date, bozo.” Jack handed Richard a list. “Tomorrow first thing would be great. I’ll cover you with Cole. Get whatever help you need. Thanks, tiger.”

Richard looked over to say something to Kathy and realized she was gone, having dinner with some guy from Morgan Stanley.

One of those nights Richard stood in a darkened conference room and looked across the river at Brooklyn. He could see the lights of the River Café on the other side, where she’d told him another guy, this one from Goldman, had taken her for dinner, and then walked with her on the promenade at Brooklyn Heights. He turned away, wishing it didn’t matter to him.

She’d laughed that off as nothing while Richard and she played squash one evening at the Harvard Club. “It was down-right windy and cold out there, even in early September. I couldn’t wait to get home.” Even hearing her say that, he remembered the ache he’d felt when she first told him about it.

Richard saw her smirking at him, working the ball in her hand, poised for a serve.

“What?” he said.

“You sure you want to keep going?”

“Just serve, smart-ass.” He felt as if she’d dragged his lungs around the court for half an hour. His legs were beginning to cramp. She wore a simple T-shirt and gym shorts, but still managed to look killer sexy. Her skin shone with perspiration.

“You’re cooked, farm boy,” she said.

“Quit calling me that. I’m a Midwesterner, not a farmer.”

“Same thing,” Kathy said, smiling. “And don’t knock it. It’s a big part of your appeal.” Then she aced him for the fourth time that game. He only learned a few days earlier that she was a tristate junior squash champ in private school.

Now he looked over at Kathy’s profile, the graceful jaw, pert nose and full lips. Whichever of them won the secondment, Richard would miss her for the three months. Aside from the fact that he was trying to figure out a graceful way to put a move on her without killing their friendship, she was the only one in their Associate class that wasn’t pretty much an asshole. Not having Kathy to horse around with at midnight or have a few beers with would leave a void. Richard had even brought Kathy into his confidence with the emails he’d discovered between somebody at GCG and “walker1” in the Comm Room. They’d nicknamed “walkerl” the mole.

When Richard told her about the first emails he’d seen, Kathy nodded, thinking. “If this is what it looks like, your mole is a crook. The SEC would send him and his friends to jail for what they’re doing.”

“For a long time. Especially the mole, since he’s the one placing the orders.”

“And he’s here at Walker,” Kathy said. “You check out the stocks he’s trading?”

“He’s code named them. He’s being careful.”

Two weeks later Richard sat down in his and Kathy’s cubicle in the bullpen and whispered, “Somebody almost walked into the Comm Room while I was checking the mole’s emails.”

Kathy looked around the bullpen, then whispered back, “I’ve been thinking about that. I have an idea. Wait till later.”

By 1:30 a.m. the Associate bullpen had cleared out. Kathy stood up and started walking out. “Come on, farm boy. I’ll show you some stuff they taught us at Harvard.”

Richard followed her, feeling a flicker of anticipation.

They could still hear the Analysts’ fingers on their keyboards crunching numbers, smell stale takeout coleslaw when they walked past the Analyst bullpen. They entered the Comm Room as quietly as they could and sat down in front of the computer. Richard felt lightheaded. He realized he was clenching his fists. Kathy motioned for Richard to sit next to her. “Write this stuff down.”

Richard looked back at her and rolled his eyes. “Since when do I take notes for you?” he whispered.

“What, I can’t show you something without you feeling like I’m stomping on your ego? Lighten up.”

Kathy turned back to the computer, opened Microsoft Outlook and clicked on the “Tools” menu, then “Email Accounts.” When the box popped up, Richard saw about 15 email accounts.

“There it is,” Richard said, pointing to [email protected]. He glanced at the doorway.

Kathy highlighted the account and then clicked on “Change.” The new box that popped up showed the email account [email protected], the incoming and outgoing servers, the username “walker1” and nine asterisks for the password. Richard wrote it all down. Kathy clicked on “Advanced” in the “More Settings” menu and pointed to the checked box next to “Leave a copy of messages on the server.” Richard wished she’d hurry up.

Kathy closed down the “Tools” menu, got up and motioned for Richard to follow her. Richard’s mouth was dry as they walked out. When they got back to their cubicle, Kathy said, “The netwiz.net server, wherever it is, doesn’t care where the mole is or what computer he’s using. It’ll send his emails to whatever computers have that account set up in them. So all you need
to do is set up that account in your own computer and you’ll get the mole’s emails. That is, after you guess his password.” She smirked at him.

Richard geared himself up as if he’d be solving the London Sunday Times crossword puzzle and then was almost disappointed when he got it on his second try: walkerone.

“Look,” he said to Kathy, as well over a hundred emails streamed into his computer once he’d entered the account.
This guy’s been busy.
He felt a squishy sensation in his stomach, then his legs. What was he getting himself into?

“All those downloaded because that little box was checked saying to leave a copy of all the messages on the server. They’ve been sitting there, waiting.”

Richard clicked on his “Sent Items” folder. “Nothing.”

Kathy said, “That’s because your Outlook only tracks emails you send from your computer. But if all of the incoming emails are still on the server, I’ll bet all of the outbound ones are still on there too.”

Richard Googled netwiz.net, found the website and logged in as walkerl, password walkerone. It worked and sure enough, Kathy was right. The “Sent Items” folder had all the outbound messages as well. Hundreds, Richard guessed. He printed out hard copies. He felt his pulse quicken. By then Kathy had rolled her chair over next to Richard’s to see. Her laugh was one Richard hadn’t heard from her before: giggly, like the fastest-promoted woman MD on Wall Street was a 16-year-old girl. Richard felt that squishy sensation again, but more intense because of Kathy’s reaction. This mole was into something big, and maybe better left alone.

Amazing old building, the Carlyle.
Richard now absently looked up at the ceiling, eyeing 18-inch plaster moldings. He itched to know what was going on at the strategy session in the
room next door. He bet Jack was pumped, remembering how Jack had sucked up the tension in the room in the Southwest Homes pricing meeting, like infighting was some drug for him.

Jack was so bored he was afraid that if he didn’t concentrate on breathing, his autonomic nervous system would shut off and he’d die. These strategy sessions were even worse than year-end bonus discussions. At least in those things you were talking about money. Here it was just Sir Reginald sounding off about “tactics and accomplishing our strategy” and shit like that.
What a horse’s ass. Must be a riot getting stuck sitting next to him at a dinner party.

It was awful, but Jack had to listen. His logic was: even a nincompoop sometimes passed a multiple-choice exam, like when the
Wall Street Journal
had those monkeys pick stocks by throwing darts, and they occasionally outperformed big-time money managers. So Jack felt like he couldn’t afford to zone out while Sir Reginald was blathering on, just in case the potato-head, upper-crust Brit moron got lucky and had a brainstorm that could cause mischief.

Sir Reginald was in the middle of one of his monologues right now, acting all dramatic, looking like some stern-faced high school guidance counselor. He droned on about Schoenfeld & Co. and GCG sharing client relationships to springboard the Walker-Schoenfeld-GCG alliance into a global presence.
Global schmobal.

“…it may admittedly take some years to do so,” and Sir Reginald extended his palms like he was cradling a globe, “but we’re building a business and we have plenty of time.”

The old guy was talking to everyone like they were little kids. Only the Brits were so arrogant.
Except for the Frogs.
If Jack hadn’t sat through a couple of hours of this already it might be comical. He spent half his time looking at Sir Reginald Schoenfeld’s belly bulging out of an open button on his shirt. Other than that, at least the bald old slug knew how to dress—he wore a Saville Row custom suit, a subtle chalk stripe on a bold blue. But the other half the time Jack spent looking up the old bird’s nose, given the way Schoenfeld tilted his head back. Jeez, somebody should buy the guy a nasal hair trimmer. Marvin Garden-Whyte, Sir Reginald’s number-two man, perched at his side like a lapdog. Philippe Delecroix, their partner from GCG, was a spindly little wisp who looked like a loud cough would blow him out of his chair on the other side of the 20-foot conference table. How a scrawny stick like that could be such a cagey in-fighter was always a surprise to Jack. Look at him, yawning, talking in French to his guys, waving those pixie arms that looked like you could snap them in half with a good twist. Jack reminded himself the Frog was nobody to mess with even if he did come off as Truman Capote. He glanced over as Mickey jumped up to take another call on his cell phone, heading out for the hall. At least he was getting some work done.

“Would you repeat that part about utilizing our clients? I’m uncertain I correctly heard you,” Delecroix said.

Sir Reginald cleared his throat. “Of course, Philippe. Let me clarify.” Sir Reginald took a long breath.