Black Fridays by Michael Sears Page A

quant credits—MIT or Chicago. They’re all too eager to please. They do all right in sales. But Sanders stood out. He had balls and a bit of flash. And he could crunch numbers.”
    “What did he trade?”
    “Bond basis. He was part of the proprietary trading group. There’s a small group of senior traders who report directly to me. They trade whatever they want as long as they make money. They take a lot of risk, but they’re the guys you want handling it. There’s a few junior traders who sit with them. They get the experience of working with some real hitters, and every once in a while, maybe, generate an idea for something new.”
    “Sanders was one of them?”
    He nodded. “It’s a good team. Rich Wheeler heads it. You might remember Neil Wilkinson. He was also at Case—back in the Dark Ages.”
    I did remember Cornelius Wilkinson. He was a genius and a gentleman—a rare combination anywhere, but especially so on Wall Street.
    “Back to the top,” I said. “Bond basis?” I had a vague idea of what he was talking about.
    “The short version? He traded U.S. Treasury notes and bonds and arbitraged them versus the futures market. You did something similar in currencies, right?”
    “In foreign exchange, we call it trading to the date.”
    “Sharpies can buy in one market and sell in the other, for future delivery, and lock in some small profit. It’s a relatively low-risk, low-return strategy that demands quick reflexes and extraordinary attention to detail.”
    “But all this is computer-generated these days, right? You don’t need a trader—you want someone who’s good at video games.”
    He laughed. “Maybe so, but there’s enough moving parts that you’re always trying to hit a moving target. So there’s some art to it as well. Not everybody is suited to it.”
    I wouldn’t have been. “Was Sanders?”
    Barilla leaned back and looked at the ceiling for a minute before answering. “For two years, he was thoroughly adequate. He kept his risk levels low—spent his time learning the product cold. Then this winter he took off. The senior guys on the desk must have let him off the leash a bit. He went from racking up two or three mil a year to being up eighteen mil by end of second quarter. I’d say he figured it out.”
    “So where was he screwing up?”
    He gave me another hard look. “I don’t think he was screwing up. Remember? The Feds have it wrong, or they’ve got the wrong guy. Christ, years down the road and the whole mortgage market is still in disaster mode. So why is the SEC suddenly concerned over some junior guy who never made more than chump change?”
    Exactly what I had said to Stockman.
    “So why is Stockman so concerned?”
    “Stockman is basically an empty suit with ambition—and he’s up to something. There are so many rumors going around, you could write a book.”
    “It sounds like I’m going to have an easy few days. I’ll be gone before you know I’ve been here.”
    “I already know you’re here, and I don’t like it.”
    —
    KEN TOLAND WAS a sales manager. Not all sales managers are bottom-feeding lowlifes. It’s a tough job—they are constantly putting out fires, stroking huge yet fragile egos, and adjudicating disputes. Salesmen ostensibly report to a sales manager, but that doesn’t mean they listen to or respect him—or, in rare cases, her. Some are fair and hardworking—mentoring junior salespeople, keeping older warhorses productive, and willing to take a stand on what’s right. Those guys burn out fast. The politicians are the ones who last—the two-fisted hand-shakers, the ass-kissers, the promise-breakers, the glory hounds, the self-promoters. The markets are tough, and the clueless get ground up and spit out—or they manage to keep dancing and become sales managers. A sure sign that Toland was coasting was that he was the only person available to take me to lunch in the middle of the trading day.
    We rode uptown in a Town Car. Toland