Chapter 49
Buy ReWire now on Amazon for only $3.99
Short volume on Double Helix was five times normal. The day before short volume had been triple normal. If the pattern was still in effect, the rumor campaign had started. Jack had already set up four different searches on the stocks, their direct competitors, major executives, and scientists. There was nothing in US or European news, but a Reuter’s story, credited to their Singapore bureau, was the start. At first glance, the story seemed like fill on a slow news day.
Michael Ilyich Riyalin was the founder of Double Helix-over the counter symbol DBLH. On first read, story looked like a human-interest bio. Riyalin’s family had been Ukrainian Jews, who’d survived the forced collectivization of the early 1930s. Stalin knew the Ukraine would be a hotbed of dissent so he used the army and the NKVD to enforce grain collection rules. Collectivization was horribly inefficient and Stalin knew grain production would drop.
Stalin raised the quota for the Ukraine to forty percent higher than before collectivization. Until the quota was met, no grain could be saved for use on the collective, except as seed stock. This meant no food grain for the farmers. Any farmer not obviously starving to death was suspect and their property searched. Michael Ilyich Riyalin’s mother took pity on a beggar. She ran across the street and fell, the stocking stuffed with rye bursting open into the slushy snow, right under the eyes of the NKVD.
Svetlana, who was almost eleven at the time, avoided the firing squad by servicing the nine men who, shortly after, put bullets into her father, mother, and three older brothers. The story went on to talk briefly about his mother’s battle to escape the Soviet Union, her eventual migration to South Africa and her unexpected pregnancy with Michael right after her forty-fourth birthday. The story mentioned, almost in passing, Michael’s scholarship to Caltech, where he had graduated at the top of his undergraduate class. He finished his master’s in a year before dropping out of the doctoral program to form Double Helix.
Jack read the story and then read again. As he reread the third time, the subtle nature of the sabotage came through. What he expected to feel when he finished was admiration for Michael. Instead, he felt as if he should trust Michael a little less. He reread it, trying to see how his emotions had been toyed with. The intimate knowledge of Michael’s suffering was too detailed. He knew Michael’s pain too well and this familiarity made him uncomfortable. It was as if a great-uncle with too much to drink at a family Christmas dinner told him in graphic detail how much his great aunt liked to be spanked.
Another part of the manipulation was the phrasing. Michael’s accomplishments were all “supposed” or “alleged. “He was described as “unyielding, fanatically goal oriented,” and toward the end of the piece, “some have called him ruthless in achieving his goals.”
He emailed the piece to Olga Boginskaya. She might be able to spot the author. He knew it wasn’t the usual Reuters staffers. Most of their stuff was more obvious in its hatred for business, typical journalism school stuff. He had once read a story by one of their beat business writers who called the improved living standard in the PRC “a sad homage to the greed of capitalism and the death-knell of the spirit of self-sacrifice instilled by Mao.”
Just before he signed off, he did another quick search. There was another story on DBLH.
“Industry insiders hint that DBLH’s upcoming earnings report will disappoint. These sources, all of whom spoke to this reporter on condition of anonymity, say a major hit on earnings is coming. This will be from much higher than expected costs producing their new drug, Riyalinaze, which is alleged to help strengthen the immune system. These same industry insiders also say the FDA is now considering removing its conditional approval of the drug for late stage AIDS sufferers. The president of the company did not respond to any requests for comment.”
The story was pure bullshit. Jack knew the president of the company. He knew a lot more about him than he wanted to, especially after all the play the press had given the storybook romance between Michael and the rock star and subsequent big splash wedding. It would be hard for Michael to comment. Unless he had made a major math error, Michael was somewhere near the San Juan Islands on a sailing vacation with his new bride. The article Jack read said that the couple would turn off everything but their emergency radio for two weeks. Michael and the rock star planned on getting to know themselves, their new boat, and one of the best stretches of sailing water in the world.
The second story was out of the San Jose Mercury News and wasn’t attributed to any of their reporters. Strange, because the story was number two lead in the business section for the day. Any reporter would have demanded credit for that many column inches. No wire service attribution. The byline was staff reporters for the San Jose Mercury News.
He did lunch with their business editor at least once a quarter. Right after he’d left Solomon they’d been after him to write a column. The paper was in the heart of Silicon Valley, which happened to be genetic valley too. He had grown to trust the Mercury News reporters over the years. The reporters knew if they screwed him, he would never talk to them again.
He pulled up insider trading numbers on DBLH. The report was in a kind of short hand, clear to someone in the business.
Source: Insidertrading.com Cupertino, California
Insider/Post/Action/Date/Shares/Share Price/Total Shares Owned
Double Helix
Adam S. Walker OD AO 12/17 95,000 $6.00 Unreported
Adam S. Walker OD Sold 12/17 75,000 $21.00 Unreported
Nancy H. Nguyen VP AO 12/17 22,000 $6.00 395,000
Nancy H. Nguyen VP Sold 12/17 18,000 $21.00 Unreported
The first was Adam S. Walker, Officer and Director, (OD), acquiring through exercise of option, (AO), on 12-17, 95,000 shares total for $6.00 per share, with his total ownership of shares being unreported. The second entry for Adam showed that he sold 75, 000 shares at $21 and his total ownership was still unknown.
Nancy H. Nguyen, a Vice President, (VP), had also acquired shares through the exercise of an option, (OA), 22,000 shares, at $6.00 a share and sold 18,000 of them on the same day at $21.00 a share. Her total ownership of shares was 395,000 shares.
Over the last six months, insiders were buying more than they were selling. Upper management didn’t have as much faith in the company as those further down the food chain. Directors and majority owners were net sellers, while executive vice presidents were net buyers.
The market closed as Jack watched. He pulled up his portfolio to check his borrowing ability. He didn’t want to sell anything, but he’d need at least $10 million working capital to counter the short sellers. He normally didn’t look at his stocks unless there was hard news on them or a direct competitor. He didn’t like to sell stocks, because he had to give himself a lot of convincing to buy them in the first place. If forced, he could sell one. The one thing he’d learned in all his years in the market was that some days prices went up, and some days prices went down, and eventually, if you did your homework and weren’t too greedy or too unlucky, you made some money.
He didn’t have enough in his accounts the States. He wouldn’t be able to use money from those accounts without going to jail anyway.
He pulled up one of his offshore portfolios. If anyone asked, it was a model portfolio. If anyone asked his broker in Macao, it was an aggressive portfolio with a current market value of $26 million, US. He emailed the buy order on Double Helix to his broker in Macao. He told the man that rumors supporting DBLH would be arriving shortly.
The story he would have planted was simple and fortunately untraceable. Olga Boginskaya would polish the story before he sent it out:
Sources close to the president of Double Helix, market symbol DBLH, say recent negative rumors about the stock are the work of short sellers who have unfortunately taken positions in the stock and do not wish to cover their losses at current prices. Sources inside the company are certain the market will see the fallacy of these short positions and there will soon be strong buying demand for the stock.
Buy ReWire now on Amazon for only $3.99
The only source close to the president of that company was a very fit, very assertive female rock star. If rumors were correct, she could make any man forget his name almost immediately. Jack laughed when Michael blushed at the news conference after Mary grabbed him on the ass.
Jack knew his broker in Macao wouldn’t let anyone know what was what. His broker had the great good fortune of being Uncle Chin’s youngest daughter’s oldest son. This meant Uncle Chin knew everything he was doing, but it also meant he got a hell of a deal on commissions. Most importantly, the young Mr. Hong would laugh at the idea of answering a question from the SEC-or anyone else.
Clouds moved in again, blocking what little sun there had been that day. The window was darkened like the rest of the glass in the office tower. He walked over to the window and felt it with his hands. After he did it, he felt sorry for the janitors who’d have to clean it early the next morning. He could feel the window flexing, almost as if it were breathing along with him. It was just the wind pushing the window in and out with the give the engineers had designed. Bend, don’t break, be the sinewy willow, not the stiff oak.
The window felt cool, almost cold, unlike the sterility of the room and it’s untouchably constant 68 degrees in winter and 74 degrees in summer. He had the urge to rest his cheek against the window, hoping its coolness would clarify his thoughts. When he did, the vibration of the wind felt like a careful lover’s caress, with nearly too-cold hands. As he pulled his face away from the window, he saw a glint, maybe even a light, from a darkened room in the ultra-chic boutique hotel across the street.
The warning hairs on the back of his neck bristled like a razorback hog’s. He was certain he was being watched. There was only one way to find out if someone had seen anything. Go to the hotel and check.
Jack tried to remember if he’d turned his back to the window while he had the information up on his laptop. He hadn’t. He reviewed the phone calls he’d made. None had anything to do with the insider trading. If someone had read his lips through a telescope or binoculars, they’d have learned a lot about the difficulties of moving an older lumber mill up a river in Siberia.
He had a bad habit of covering his mouth with his hand when he talked on the phone, even when using a headset. It was a habit he’d picked up when he was a baby stockbroker, working out in the pit, long before he’d earned enough commissions to get an office. It had been so noisy that he’d had to do his dialing for dollars with his left index finger pushed into his left ear and his right hand cupping the mouthpiece of the telephone mike.
The eraser board! The board had been aimed right at the window. It had been erased a week ago and was now turned to face the wall, but if the watcher had been there long enough, he, she, or they, might have seen the stocks on the board.
He told Siri to call Bob White’s personal line.
“Yes, Jack.”
“Bob, I am pretty sure that someone in a room on the sixteenth floor of Hotel Umbria is watching me right now.”
There was the usual silence that preceded any response from Bob, and then, “How sure?”
“Real sure!”
Another long silence, “I’ll have one of our teams in your office in…twenty minutes. Act as if you are not aware.” A click and Bob was gone.
Buy ReWire now on Amazon for only $3.99