Octopus: Sam Israel, the Secret Market, and Wall Street's Wildest Con by Guy Lawson

Author:Guy Lawson [Lawson, Guy]
Language: eng
Format: epub
Tags: General, Business & Economics, Banks & Banking, True Crime
ISBN: 9780307716095
Publisher: Crown
Published: 2012-07-10T00:00:00+00:00

ISRAEL AND NICHOLS negotiated a side agreement granting the CIA asset 5 percent of the profits—a sum that promised to be hundreds of millions. To begin trading, all that remained was for Sam to meet the designated trader who had been assigned to the newly minted faction. Emily Hardwick was five-four, blond, in her early forties. Nichols said she was expert in the programs. The meeting was in the Royal Club Lounge at the Grosvenor—Nichols’s base of operations. Hardwick spoke with an upper-class English accent and dressed in conservative business attire. But she had the blotched face and scratchy voice of a heavy drinker. Israel was told that her problems with alcohol had forced her to take a leave of absence from the market. She was back now, though, and she would be trading Sam’s money. To Israel it was evident that she was well versed in the bonds. Hardwick explained her ground rules. She didn’t want her real name disclosed under any circumstances. She wouldn’t allow any photographs of her to be taken. Secrecy was paramount.

At midnight, Israel, Nichols, and Hardwick went to the offices of Barclays Bank at 54 Lombard Street in London’s financial district.

Nichols accompanied Sam as bodyguard, minority partner, and handler. Despite the late hour, the trio had to pass through security. Upstairs, there was a large trading room, with thirty or forty desks. The room was empty and the computers were turned off. They walked through to another room in the back. This was the secret shadow-market trading room, with high ceilings and dark wood furniture and the formal decorations of a boardroom. On one wall there was a bank of screens. Bonds were stacked on a desk—embossed and sealed and stamped documents with the U.S. Federal Reserve mark. Israel paged through the financial instruments. They appeared legitimate. Nichols pointed out the CUSIP numbers—the ten-digit security identification given to securities—and Sam concluded they were real.

“We were given a trading desk,” Sam said. “There was a computer on the desk, showing how regular bonds were trading in the overnight markets. Then there was another computer showing where these other bonds were trading. Emily was a stand-alone trader. She’d been trading with the Fed for years. She was a secret squirrel. She didn’t want to be known in any way. So Emily and I started to bid on the bonds. We were the only ones in the room, but I could see the other traders on the screen. The German bank Postbank was trading. HSBC. Mellon. There were sixteen or seventeen banks approved to do these trades. They were the night traders. Not because it was done at night—though it was. They were night traders because the business was invisible. No one on the outside could see what was going on. Emily introduced me online as a new night trader. I was trading for my own program—for my $150 million.

“It was like regular trading. There was a quote, a bid, an ask. The denominations ran up to billions.

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