Singapore Hedge Fund

Alternative asset management in Singapore

Billionaire Modi Seeks Island Resorts in Distressed-Asset Quest

Billionaire Bhupendra Kumar Modi, who made his fortune from mobile-phone services in India, is planning to invest $100 million in distressed assets including the island resorts on Batam and Bintan neighboring Singapore.

Modi, chairman of Singapore-based Spice Global with interests from telecommunications to financial services, said he is in talks to buy stakes in all the resorts on the Indonesian islands and wants to transform them into entertainment hubs, flying in Bollywood stars and eventually adding casinos.

“There’s nothing near Singapore as beautiful as these two islands, but they are distressed,” the 60-year old said in an interview at his 63rd-floor penthouse overlooking the casino- resort being built by Las Vegas Sands Corp. “There are a lot of situations emerging where the actual asset is good, but it is distressed because the situation around it is not right.”

Modi, who last year moved from Beverly Hills to Singapore, is aiming to fill a gap left as firms such as Blackstone Group LP and Och-Ziff Capital Management Group LLC scaled back plans to buy distressed Asian assets. He has set aside $100 million for special situation investments, which seek to profit from events such as spin-offs.

He plans to invest with distressed specialists, including hedge-fund firm 3 Degrees Asset Management Pte and former traders from Lehman Brothers Holdings Inc. who are opening their own shop to take advantage of rising Asian corporate defaults.

3 Degrees

Modi earned 21 billion rupees ($434 million) selling his stake in Noida, Uttar Pradesh-based Spice Communications Ltd. to Idea Cellular Ltd. last year. He said he has a net worth of $1.5 billion to $1.6 billion and cash of $700 million to $800 million.

Spice Global is planning a $1 billion initial share sale, Modi said in June.

He plans to invest $20 million in a private-equity fund managed by 3 Degrees to buy a stake in a resort in Bintan through the Singapore-based distressed asset manager.

Modi said he seeks management control of the companies he invests in. He became chairman of the board of MediaRing Ltd. and replaced its chief executive officer and chief financial officer after agreeing to buy as much as 20 percent of the Singapore-based Internet telephony firm for about S$60 million ($42 million) last month.

The billionaire said he expects returns of more than 100 percent if he can change the way Bintan and Batam, 45 minutes from Singapore by ferry, are being run. He will engage policy makers in Singapore and Indonesia to develop infrastructure and promote more visitor arrivals there, he said.


About $1 trillion of corporate debt is stressed and distressed in Asia today, with only about 10 “substantially capitalized” distressed investing firms chasing it, according to Robert Petty, New York-based co-founder of Clearwater Capital Partners LLC, which manages a $1.7 billion fund of Asian distressed assets.

“The supply-demand mismatch is interesting,” he said. “Today is an extraordinary market opportunity if you have the depth of team to be able to do all dimensions of distressed.”

Bonds are termed distressed when they yield at least 10 percentage points more than similar-maturity government notes. Near-distressed or stressed bonds have yield premiums of between 7 percentage points and 10 percentage points.

Asia-focused distressed and event-driven hedge funds and private-equity firms manage about $67 billion in assets, according to Eurekahedge Pte, a Singapore-based data provider.

Record Defaults

Standard & Poor’s expects “record levels of defaults” in Asia as the global recession hurts the region’s export-dependent economies and leveraged industries, it said in a June 1 report. Nine rated borrowers defaulted in the first five months of the year, matching the peak of the region’s 1998 financial crisis, S&P said.

“There will be a shedload of money to be made in Asian distressed over the next 18 to 24 months,” said Michel Lowy, former head of Asia-Pacific Strategic Investment Group at Deutsche Bank AG, who has been investing in distressed assets for 13 years.

Lowy is starting SC Lowy Financial (HK) Ltd., a Hong Kong- based distressed investment business which will focus on the region, and will seek “all asset classes within the illiquid value investment space” including special situations and distressed. Investment opportunities in this area will likely peak in one to three years, he added.

Lowy said his most successful deal while at Deutsche Bank was the German firm’s investment and reorganization of Spice Communications. He declined to say how much the bank made because the information is private.

SSG Capital

Hedge-fund managers investing in Asian distressed debt returned 1 percent in the first eight months of 2009, according to Eurekahedge. Asia-focused event-driven funds gained 16 percent.

Edwin Wong, an ex-Lehman managing director, set up SSG Capital Management with former colleagues including Andreas Vourloumis to start a fund to invest in distressed assets in Asia outside Japan. Modi said he plans to co-invest with Vourloumis, who made money for Lehman investing in Spice Communications. Vourloumis was not immediately available for comment.

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Finance Jobs in Asia going back to boom time?

HONG KONG — Marco Wong lost his job with Citigroup in Singapore in mid-January. During all the turmoil that engulfed the financial world last year, the cutbacks at the U.S. banking giant were neither unique nor surprising.

Still, Mr. Wong says, Citigroup’s decision not to renew his contract shortly before it was due to end “came as quite a shock.”

But 20 job applications, four interviews and three and a half months later, Mr. Wong was again gainfully employed — as a financial consultant at IPP Financial Advisors in Hong Kong.

Asia has already emerged more forcefully from recession than the United States and Europe, economic reports over the past month have shown. Now, that upturn here is starting — at least tentatively and in certain sectors — to feed into the job market. Hiring is starting to pick up again, recruiters and bankers say.

Broad unemployment is still rising, a normal pattern even after economies begin to emerge from recession. But economists say that any early signs of job growth are a prerequisite for a more solid-based recovery — one in which more confident consumers, and not just huge government stimulus packages, can play a role in lifting the economy.

Perhaps the most striking element in the new hiring: Almost a year after Lehman Brothers folded — roiling financial markets, spurring a remake of the banking landscape and feeding one of the worst recessions in modern history — it is the financial sector that is leading the way.

“The death of the industry has been greatly exaggerated,” said Matthew Hoyle, founder of Matthew Hoyle Financial Markets, a specialist headhunter for the banking and hedge fund industries, based in Hong Kong. “I am actually quite excited about the prospects for the rest of the year.”

“Things have picked up here — unlike in Europe and the U.S., where that’s absolutely not the case,” he added.

To be sure, the recovery in Asia is tenuous, and highly dependent on a recovery in the West, a major market for the region’s export-driven economies. But for now, the picture is brightening.

Jerry Gunnell, a corporate cash management specialist in Singapore, fell victim to Bank of America’s headcount reductions in February. He is now back in the saddle at Standard Chartered, a British bank that does much of its business in Asia, in a somewhat different but equally senior position he took up in mid-June, also in Singapore.

In the past month, several banks have announced plans for some serious hiring in Asia.

Standard Chartered intends to hire about 850 relationship managers for its consumer banking business over the next 18 months, to gain a larger market share of affluent customers in Asia.

HSBC — which, like Standard Chartered, is very active in Asia — is recruiting more than 100 staff members in Hong Kong. In mainland China, it plans to add 1,000 employees this year, and a similar number next year.

Bank of New York Mellon recently announced it would increase its 150-strong Hong Kong staff by another 50 as part of its expansion in Asia.

And ANZ of Australia, which recently bought some Asian operations from Royal Bank of Scotland, the battered British lender, is hiring 100 senior private bankers in the region over the next 18 months.

Several others, including Citigroup, Nomura, Barclays Capital, Credit Suisse and BNP Paribas, have announced new hires and appointments in recent weeks.

Tales like these highlight the newfound dynamism that is starting to creep back into the Asian job market. While unemployment continues to rise in much of Europe and is expected to top 10 percent in the United States before any improvement materializes, rates in Asia have remained relatively low: 5.4 percent in Hong Kong and 3.3. percent in Singapore.

One relatively weak spot is Japan. The jobless rate hit a seasonally adjusted 5.7 percent in July, the highest level since the end of World War II and up from 5.4 percent in June.

But elsewhere, recruitment firms are busy again.

“Last October, after Lehman Brothers collapsed, the lights went out here; it was really quite frightening,” said Nigel Heap, managing director for the recruitment firm Hays in Sydney. “But we’re now cautiously optimistic that the worst is over in places like Hong Kong and Singapore.”

Andrea Williams, managing director of Ambition, a headhunting firm in Hong Kong, said that things started to turn noticeably from April onward.

“During the second quarter of this year, we got in 20 percent more jobs than during the first three months of the year,” Ms. Williams said. “Yes, we’re still below where we were a year earlier, but it’s definitely encouraging.”

A survey in August by Robert Walters, a recruiting firm based in Singapore, showed that job ads in the Hong Kong, Singapore, Chinese and Japanese media nudged up 6.4 percent in the April-to-June quarter from the previous three months.

Of course, for the legions of those who lost their jobs and still remain unemployed, or who are still being laid off as some companies continue to struggle, it is too early to celebrate.

“It’s not an across-the-board improvement — it’s pretty patchy in terms of sectors, and in terms of geographies — but things are at least holding steady or even getting better in some parts,” said Darryl Green, who heads Asia Pacific and Middle East operations for Manpower, a temporary employment and recruiting company.

“On a scale of 1 to 10, I’d say we were negative during the first half of the year,” he said. “Now, we’re at 0.5 or 1 — not huge, but better, and definitely stronger than in the Americas and Europe.”

Nearly all of the jobs that are coming back are “replacements” of previously cut positions, not new jobs, market experts here say. And employers are still being very cautious and choosy when it comes to hiring.

But increasingly, the champagne is coming back out, as Asia’s economies and stock markets are recovering — faster than expected, and faster than Europe and America.

Demand in the financial sector is strongest for back-office positions like compliance and accounting, as well as client relationship and asset management — a business in which many banks want to expand to tap the growing number of increasingly wealthy Asian savers.

Hedge funds, too, are again looking to increase staff, said Mr. Hoyle in Hong Kong. “A lot of the big U.S. hedge funds retrenched — they are regretting it now.”

Outside the financial sector, there is anecdotal evidence of hiring in other areas, though it is patchy.

Demand for sales jobs, for example, has picked up across all sectors as companies focus their still scarce resources on jobs they hope will help generate immediate revenues.

“Asia is seen as a growth market,” said Mark Ellwood of the Robert Walters recruitment agency, in Singapore. “Companies are not going out all guns blazing again, but there is once again an appetite to hire in certain areas.”

In Hong Kong, Eike Croucher, a communications manager, was laid off from Swiss Re after the reinsurance company announced in April that it would shed 10 percent of its 11,500-strong global work force. Mrs. Croucher had a job offer from the German chemicals giant BASF on the evening of her last day at Swiss Re, thanks to some fast networking.

“I was very, very lucky, of course, that things happened so quickly,” she said.

In another example, one senior marketing executive who lost her Singapore-based job with a large U.S. software company, had been in the region for four years. The woman, who spoke on condition of anonymity because she was not authorized to talk to the media, found a job at another U.S. company in the same sector. It took 7 weeks of research, 45 applications and a dozen job interviews.

It is still very much an employers’ market. Generous “expat packages” — in which overseas employees have much of their housing and their kids’ schooling paid for — are for many a thing of the past.

The most successful candidates have experience in Asia, a network of contacts and language skills. It is difficult for someone to just pack up and move over from New York or London, where the market remains much gloomier.

“Employers are still being extra, extra selective in their talent search,” said Mark Carriban, the Asia managing director based in Hong Kong for Hudson, a recruiting agency. “And what is very prized out here is local market knowledge.”

In fact, many recruiters are already starting to warn that a “talent crunch” could be only months away, with companies again struggling to find people with the right combination of international qualifications, contacts and languages — of which there is a limited supply.

One piece of advice for job seekers, though easier said than done: “Learn Mandarin,” Mr. Carriban said.

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Recruitment starting again for hedge funds based in Singapore and Hong Kong.

From, some good news on Asian Hedge Funds with new activity noted in Singapore and Hong Kong. The dark days may at last be over for Asia’s hedge fund sector, but recruitment is still selective, senior and sales-focused, with a real recovery not expected until next year.

Hedge funds are making a minor comeback after suffering their worst year on record in 2008, outperforming global benchmarks and experiencing an inflow of new assets, according to data provider Eurekahedge.

Asia has experienced a lot of the recent action. Winton Capital Management, for example, is starting a new fund in Japan and hiring staff in Hong Kong – its expansion coming just months after rivals like GSO Capital Partners, HBK and Ramius retreated from the region.

And ex-bankers are seizing the opportunity to start up their own firms in Asia. The list of budding fund managers includes: Nick Taylor, ex-head of Citadel Investment’s principal investments business in Asia and Europe; Shafiq Karmali, a former Goldman Sachs trader; and Edwin Wong, previously a Lehman Brothers MD.

Hedge fund recruitment is for now small-scale and focused on the front office. Jared Ng, regional consulting director, PeopleSearch explains: “Because short-term revenue is essential for the survival of companies to meet their short-term liability, revenue-generating jobs are more in demand. As a result, there have been more openings for sales positions.”

Peter Douglas, Asia Pacific council member for the Alternative Investment Management Association, says funds want experienced professionals who can hit the ground running. “In Singapore, Artradis, for example, has been taking on some senior people, basically taking advantage of a cyclical opportunity to add talent that’s now available,” he adds.

Funds that have not been so badly affected by the financial crisis are starting to recruit again after lying low for the past nine months, says Angela Kuek, manager, banking and financial services at Hudson in Singapore.

Douglas thinks the current fund inflows in Asia are coming mainly from specialist investors. The “real volume” is likely to return next year when more capital enters the market. “Asset size directly drives revenues and therefore the capacity and inclination to hire,” he adds.

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Deutsche Bank official reflects on the impact of the financial crisis on Asian wealth management

From The Business Times, Singapore comes news of the impact of the firestorm which hit the global financial industry, wiping out some US$3 trillion in market value, on one area, wealth management, which was particularly impacted .  Huge asset values – especially in structured products – were wiped out overnight.

Mr Raju: Says this is a US-led crisis, and Asia remains largely intact

‘All this hit suddenly after a good run for over a decade,’ noted Ravi Raju, head of Deutsche Bank Private Wealth Management Asia Pacific. ‘No one expected a huge chunk of the market to be wiped out overnight.’  Private banking clients saw their net wealth shrink substantially.

According to a recent Merrill Lynch-Cap Gemini report, the combined wealth of the world’s high net worth individuals (HNWIs) – defined as those with investible assets of US$1 million – fell 19.5 per cent to US$32.8 trillion in 2008, but should recover to US$48.5 trillion in five years. The ultra-HNWIs – those with investible assets of more than US$30 million – suffered an even sharper drop of 24.6 per cent in combined fortunes.

Meanwhile, the banks themselves – having built up huge fixed costs in investments in facilities, people and technology – were suddenly faced with shrinking margins.

According to Mr Raju, the root cause of the problem was insufficient regulation of exotic products, lack of training of the people who sold them, and poor product knowledge by the people who bought them.

‘Over the past two decades there has been such explosive growth that the industry over-expanded. There was also too much fixed investment and hiring of too many client advisers without the requisite training. Banks created and sold structured products without adequate control or oversight.’

The situation was particularly bad for the mass affluent market, or those with some US$500,000 in investible funds.

But the worst may be over, at least for Asia, said Mr Raju: ‘This is a US-led crisis, and Asia remains largely intact. In five years, when we look back, this will seem like a blip in Asia’s growth supercycle. The Asia-Pacific remains the manufacturing and entrepreneurial centre of the world.’

And Deutsche Bank’s (DB) private banking franchise is focused on this niche.

‘Entrepreneurs spend 95 per cent of their time on their business. So we offer solutions in investment banking and advisory work, then bring in our wealth management capabilities,’ Mr Ravi explained.

‘We do not compete directly with the Swiss boutique banks in Europe, which deal largely with the old money establishment. In Asia, much of the wealth is one or two-generational, and largely in the hands of entrepreneurs.’

He said the value proposition of DB’s private banking franchise was its capability to offer an array of banking services onshore: ‘DB is very much embedded in Asia Pacific. We have an onshore presence in virtually every market. So our strategy is somewhat different from the others. It enables us to forge closer partnerships with the growing numbers of entrepreneurial wealthy across Asia.’

Though smaller than the Swiss banking giants, DB’s private banking franchise is far from small.  ‘We have almost 20 billion euros (S$40.8 billion) under management in the Asia-Pacific,’ he said.

This is about 11.6 per cent of DB’s global portfolio of 165.1 billion euro, and has grown from Dec 31, 2008’s 18.4 billion euros.  With demand for wealth management still growing in the region, Mr Raju sees Singapore and Hong Kong remaining the two biggest Asia-Pacific booking centres for private wealth.

‘Singapore in particular has all the right ingredients – regulatory structure, talent, institutional framework – to emerge as a global leader in wealth management.’

But retaining this lead will require more emphasis on the quality of its wealth managers, he added.

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Not really SHF news but it's the weekend…

I found this on the Quant Finance Group on Linkedin, It is the story of “Amazing Grace”, the former Lehman Brothers fixed income salesperson who went on to become an exotic dancer (and more). I publish here the first 10 installments…


Episode 1

‘The financial markets are full of hard luck stories these days, so I thought it only right to share my experiences.

I joined Lehman Brothers straight out of college in 2004. Although I didn’t really know what I was getting into, a friend of mine worked for the firm, and there was a vacancy in fixed income support, so I tried out for it and lucked out. When it came down to it, however, the job was really nothing more than a glorified PA, as I ran around photocopying things, and undertaking menial tasks like going out to get lunch for busy traders.

After a while, however, I started to get into what I was doing, and learning the lingo. Gradually, I learned what terms like ‘ABS’, ‘MBS’ and ‘CDO’ stood for (although I never really got what they actually were). In time (after 18 months or so), I even found myself on the telephone speaking to clients, who were eager to buy ‘top-rated commercial paper’ from the firm. Although nervous at first, I soon discovered that as long as the clients thought they were getting investments which would yield good returns, they didn’t mind speaking to a young buck, and my confidence quickly grew. Very soon I had my own small portfolio of clients (mostly smaller clients who no-one else had the time to cover). Anyway, although I was never the best salesperson on the block, I closed several deals and walked off with a decent bonus in 2006 (not huge by any means, but substantially more than I ever expected to earn in any one year).

We hit the ground running in 2007, and, in the first-half of the year, our numbers were strong. Then the fixed income markets began to show signs of stress, and concerns started to grow about a sustained downturn in the US housing market. Investors soon became spooked about the true nature of their promised returns, and the safety of their ‘risk-free’ investments. The likes of Citi and Merrill Lynch started to post losses on huge asset writedowns, and soon the CEOs of both firms had fallen on their swords. We struggled through into 2008, and there were persistent rumours that Lehman (and other firms) had liquidity problems. In March, Bear Stearns fell into the arms of JPMorgan Chase. And, in September, well, you know what happened to Lehman.

In truth, I didn’t even make it through until the September. The appetite for asset-backed securities had already dried up, and I was laid-off a couple of months before. At first, I wasn’t that bothered – I fell into the markets by accident, so it wasn’t as if my dreams had been shattered. But after being knocked back following several job interviews (both in the industry and outside), I started to panic. The financial meltdown that followed the fall of Lehman had spread to Main Street, and it was proving difficult for a young woman who had little by way of transferable skills to find alternative employment. And, to top it all, my severance (such as it was) had run out.

Anyway, I lived on my savings for a while, then noticed a wanted ad in a women’s magazine. An out of town ‘dancing bar’ was seeking an ‘exotic’ dancer for four night’s work each week. I knew that I could dance, and I wasn’t bad looking (and, despite working with a group of lardy traders, I had managed to keep my svelte figure). I kept the magazine, and every few days would pull it out and re-read the ad. One afternoon, after receiving another rejection letter from a would-be employer, I called the number listed, and made an appointment to see the manager of the bar.

To say that it was seedy would be a major understatement. The bar was dark, and the carpets smelled of alcohol (and worse). ‘Can you dance ?’, the manager asked. ‘Sure’, I nodded. He looked me up and down. ‘You’ll do. Be here tonight at 10pm. You’ll finish at 2am. $120, plus tips. You should do OK’.

That night I joined the group of women in the back (it was described as a ‘dressing room’, but was really just a large bathroom with a few dressers pushed together). I was really nervous now, and kept eyeing the exit, thinking that the smart thing to do was just to leave. But, despite my reservations, I stuck with it, and, shortly before it was my time to go on, one of the older ‘performers’ pulled me to one side. ‘You’re in charge, honey’, she said, ‘Remember that. The punters will take advantage of you if you let ’em. But there’ll be putty in your hands if you show them that you’re calling the shots’.

The next thing I remember was that the announcer was calling my name (I was to be known as ‘Amazing Grace’), and I was pushed onto the small stage to the cheers of what seemed to be scores of paying clients. Although they could clearly see me, the bright lighting fortunately meant that I could only see the few at the very front. The music started, and I began my first routine’.

Episode 2

‘The truth is, I can’t remember a whole lot about that first time. I recall my stomach in my mouth as I was pushed onto that stage. I grabbed hold of the pole, closed my eyes tight, and tried to block everything out apart from the beat of the music. The next thing I remember, the music had stopped, and I was being dragged off stage by one of the security guys.

‘You should have taken a fortune’, one of the other dancers said to me as I passed by, ‘The crowd went nuts for you’. I wasn’t sure what she meant, but it soon became clear.

‘You f.cking idiot’, Chad, the manager of the bar said between clenched teeth. ‘Didn’t you hear us shouting at you ? You’re supposed to let go of the f.cking pole and go shake your stuff up close to the punters. How the else do you think they are gonna get close enough to stick cash in your panties ?’. I had broken the golden rule, and Chad was really angry. ‘God knows why, but those guys were loving you. All you had to do was ease to the edge of the stage and we would’ve done great’. Chad had lost 50% of what he thought I should have taken in tips (my belief that all the tips I made would be mine was very short-lived).

I was gutted. I felt like I did when I first interned at a Fortune 500 company all those summers ago. I felt intimidated, and useless, humiliated. But I had overcome adversity before, after the company told me that perhaps working in a large corporate wasn’t for me, and I would do so again now. Although my first thought was to run away, I knew that I had it in me. I was convinced that I could deliver. And it wasn’t just the thought of the money – even in this job, I wanted to be a success.

Although the performers could shower and change on the premises, I just couldn’t face it. Chad said that I shouldn’t do anymore turns that night, and that I should just stay and watch how the older pros did it. But I didn’t want to hang around. Telling him that I’d see him the following evening, I slung my coat over my skimpy costume and headed quickly for the exit. When I got home I spent over an hour in the shower, trying to wash off the smell of that place.

‘Didn’t expect to see you again’, Chad said as he looked over at me when I came in the next night, taking his eyes only briefly off the porn magazine he was ‘reading’.

‘Whatever doesn’t kill you makes you strong, and all that’, I replied cheerily. But Chad wasn’t interested. He was back to his magazine.

Things were a little better that night, and I went up three times. After a few more evenings, I started to get used to it. And dare I say it, I actually started to enjoy myself. Strange as it may seem, there was power in it. I realised that, after all those years thinking that lap dancers and their ilk were exploited, it was the punters themselves who were the ones being taken advantage of. They came in in packs, were encouraged to drink themselves silly and, before they realised what they had done, had spent a fortune paying for the odd dance, some ‘companionship’, or drugs (and sometimes all three). And mostly they were taken for a ride. The ‘companionship’ usually never led to anything physical (apart from the odd shove in the chest if the punter tried to get too frisky), and the drugs were cut so thin that they would hardly have had any affect. Still, the ‘clients’ seemed to get off on it. At least they kept coming back.

It was a little over a month after I first started, that the unthinkable happened. I had put all thoughts to the back of my mind of ever coming across any former Lehman colleagues at the bar. In fact, one of the main reasons why I thought it would be safe to dance at this bar was that it was a bit off the beaten track. But I was being naive – most firms had banned their brokers and traders from ‘adult entertainment’ clubs (especially if they had clients in tow), so these guys took their partying as far away from Madison Avenue as possible. And, that night, this already alcohol-fuelled group had decided to head my way.

‘They’re a really rowdy lot tonight’, Jane, one of the other dancers remarked as she came off stage. ‘And loaded – in more ways than one’, she smiled at me as she quickly took some of the cash from her panties and stuffed it down her bra. It looked like Chad wouldn’t be getting his full 50% that night either.

Anyway, these high-rollers intrigued me. I squinted out from behind the curtain, and thought that I recognised a couple of them. It couldn’t be, could it ? Jesus, it was some of the old Lehman crew! Panic immediately set it, but I quickly calmed down. None of these guys were from my business unit. The last thing they would expect would be to see a former colleague strutting her stuff on this stage. And they were so drunk, I was confident that they wouldn’t recognise me. And, even if I was found out, did it really matter ? When my turn came, I took a deep breath and went on stage to bring in some cash.

By now, I had become much more adventurous. I was able to use all the talents God blessed me with to extract every last dollar from the punters. I was really into it now, and completely forgot about the Lehman crew. Until I came face-to-face with one of them. ‘Grace, you old tart’, he shouted. ‘You’ve finally found your true vocation!’. Taken aback for just a moment, I quickly composed myself. ‘ off back to your wife, you jerk’, I retorted, turning around and pushing my rear-end right in his face. At that moment I knew no fear. I had been recognised, but I didn’t care. After all, was my current job any more immoral than my last ? At least now I was taking advantage of clients who mostly wanted to be taken advantage of!

‘What was all that about ?’, Jane asked, as I came off. ‘Oh, just some jerk that I used to work with. Alan something’.

‘He’s quite cute, though’.

‘Still a loser’, I replied cattily.

It was almost 3am when I finally came out the side door and headed to my car for the short ride home. And I was tired. But there waiting for me was Alan.

Episode 3

‘Hi’, he said, looking sheepishly down at his Gucci loafers.

‘God’, I groaned, ‘What do you want, Alan ? I’m dead beat, and want to go to bed’.

‘I just’, he stammered, ‘I just wanted to apologize’.

‘Fine. Apology accepted. Goodnight’, I replied as I slammed the car door closed and fiddled with the key in the ignition.

‘Wait a minute, Grace’, he said as he indicated for me to open the window. ‘Can’t I buy you a coffee, or something ?’

‘Not tonight, Alan’, I replied as his cell phone rang. ‘Answer your phone. Your wife will be wondering where you are’.

‘My wife left me months ago, Grace. She doesn’t call me anymore’, he retorted while he fiddled with his cell phone.

‘I can’t imagine why’, I replied cruelly, ‘Who did she go off with – your best mate, or your boss ?’.

‘The TV repairman, actually’, he said as he turned off his cell, cutting off the incoming call. ‘I always wondered why the f.cking TV keep going wrong’, he laughed.

I smiled. At least he had a sense of humor.

‘When you next on ?’, he asked, clearly not put off by feeble attempt at giving him the brush-off.

‘Two days. Bring some more cash, and I’ll make sure you get a good view!’, I teased as I drove off into the night.

I looked back at Alan through the rear mirror. He was quite a sight in his rumpled suit and with his dishevelled hair. But he was kind of cute. I wondered if I’d see him again. These banker types are mostly wimps, though. One put down is usually enough to scare them off. I kind of regretted that I’d given him a hard time. But I was too tired to mull on it very long, and the dancing made you hard anyway. I’d already noticed that I was becoming emotionally detached from reality. Guess it was a survival mechanism.

It was a few days later, and I’d forgotten all about Alan. He hadn’t been back to the bar, and I can’t say that I was that surprised. I got in early that night and, before I’d even had the chance to dump my stuff, Chad called me over.

‘Grace, Grace, can you come into my office please ?, he asked. I was immediately on my guard. I’d been at that place nearly two months and the only time I’d heard Chad say ‘please’ was when he was trying to persuade one of the other girls to let him have his evil way with her. He could beg all he wanted, I thought, as I followed him back to his office. He wasn’t getting anything except a turn-down from me.

‘Listen, Grace’, he began. ‘You’ve been with us a while now, and you’re doing really well. You’ve got quite a following…….’.

‘Forget it, Chad’, I interrupted. ‘I’m not sleeping with you’.

‘No, no, Grace. You’ve got it all wrong. It’s not me I want you to sleep with’.

‘What the hell are you talking about, Chad ? Are you on something ?’

‘Just calm down and listen, will you’, he replied, ‘Now, how would you like to make some real money ?’

‘Are you offering me a raise, then ?’, I retorted.

‘In a way, I guess I am’.

‘Spit it out, Chad. Just get to the point will you’. I was feeling even more uneasy now.

‘Calm down, Grace. I’ve just got a business proposition for you, that’s all’, he said as he closed the door to give us some privacy. ‘Listen, from time to time, I give some of the best girls the opportunity to make some extra money on the side. I just wondered if you wanted in ?’.

‘I’m all ears, Chad. But exactly what do I have to do for this extra cash ?’.

‘Well, let’s just say that I have a few ‘special clients’. And I do favours for them every once in a while’.

The son-of-a-bitch was actually offering to be my pimp! ‘Don’t you mean you get the girls to do the favours, Chad ? Well, you can right off. I’m no hooker if that’s where this is going’, I shouted. ‘Just because I’m down on my luck doesn’t mean that you can take any more advantage of me than you already are. You’re just scum’, I screamed at him.

‘It’s $500 an hour’, he continued calmly.

‘$500 an hour ?’, I exclaimed, ‘Do your clients take block bookings ?’. Chad had pressed the right button, after all.

‘Well, yeah. But then there’s my cut. But this client doesn’t want you for a hour anyway. He wants you for a whole night. And that’s $3,500, split right down the middle between you and me. A cool $1,750 for you just to do what comes natural, babe. I presume we have a deal’, he added triumphantly.

‘Chad, if you think that I’m going to spend the whole f.cking night shagging some loser, only to give 50% of the fee to you, you can think again’.

‘40%, then’, he replied, ‘Final offer’.

‘25% or take a hike’, I quickly came back.

‘Done’, he smiled. Damn, he gave in far too easily. I knew right then that I could have got a better deal.

‘But no kinky stuff’, I insisted. ‘And I get the evening off this place the day after’.

‘Of course, Grace. You’ll be treated like a princess now’. He was like the cat that got the cream now.

‘So how does this work ?’, I asked.

‘You’ll be picked up outside this place tomorrow night. Just make sure that you’re clean. And wear something tasteful. And remember, it’s just like the dancing. Don’t get too involved with the punters. Always remember it’s just a job’.

‘Tomorrow!’. My heart was in my mouth. I hadn’t expected that I’d have to ‘perform’ quite so soon. But Chad was a fast worker. He had seen his prey, and moved in quickly for the kill.

‘What about the money’, I asked.

‘Don’t worry about that’, he said. ‘I’ll get the money and then sort you out’.

‘No way, Chad. You must think I’m really stupid. The guy will need to let me have the cash as soon as I arrive. No cash, no sex. And you’ll get your cut from me – after I’m happy with the way things turn out’, I insisted. ‘But let me be clear. No threesomes, no drugs, no more than once in one night. And no S&M!’.

‘Relax, Grace. You’ll be fine. You took to the dancing like a duck to water. This will be no different’.

No different. Just a few months before I was working for a top US investment bank, was earning a lot of money and was the envy of my friends. Just look at me now, I thought. I had descended to lap-dancing, and then hooking in short order. Did I have no shame ?

‘So just who is this guy’, I asked as I headed out of Chad’s office. ‘And how do you know he will like me’.

‘Oh, some hedge fund guy. He’s got his own fund, or something. He’s rolling in it. Very well connected, apparently. And don’t worry, he’s seen your picture. He’s gagging for it’.

‘Well he’ll be the only one ‘gagging’, Chad, as I’m not doing that either! And you’ve got a f.cking cheek taking my picture and showing it around to your dirty ‘clients’!

He laughed, and I left to get ready for the evening’s show, having entered into yet another sleazy deal with the Devil.

The chauffeur driven car drew up outside the bar at 9pm the following evening. Although I had serious misgivings, I knew it was too late to back out now. Chad would fire me, and I was already out of cash. In truth, I needed this job. I needed the money, no matter how I had to earn it.

And I was, indeed, treated like royalty. The chauffeur doffed his hat and opened the door for me. As I sat in the back of the limo, sipping champagne and watching the old Nicholas Cage film that was playing on the screen, I wondered what this hedge fund guy would be like. I’d had hedgies for clients before, of course, but this was clearly different. Anyway, I wouldn’t have long to find out, as, after just a 20 minute drive, my ride pulled up outside one of New York’s finest hotels……….’.

Episode 4

‘I expected to be shown straight up to a hotel room but, to my surprise, the maitre’d led me to a discreet table in the restaurant. Sitting there, with his cell glued to his ear, was Alex. Another surprise. The maitre’d smiled and signalled for me to take a seat. I sat down and looked around the restaurant, remembering the last time I was there with a client, some 18 months before, under very different circumstances. Alex looked over at me and nodded, but continued talking in a whisper into his cell.

‘Delighted to meet you, Grace’, he said after finishing his call, ‘I’ve heard lots of good things about you’. He stood up and walked over to kiss my hand. ‘Your photographs do not do you justice’.

I smiled hesitantly. Alex wasn’t at all what I expected. He was tall and elegant, and fairly in shape. I guessed that he was around 40, much younger than I assumed he would be. And although not traditionally good looking, he had an aura about him. I had seen that aura many times before – it came from the confidence of knowing that you had power. This was clearly a man used to getting his own way.

For once, I was tongue-tied. I nervously played with my napkin, and looked down at the table.

‘Relax, Grace’, he said in his New York accent. ‘I know that you haven’t done this kind of thing before. Let’s have some dinner and get to know each other’.

I hadn’t eaten that evening, and food was the last thing on my mind. But I nodded meekly, and took the menu the attentive waiter held out for me.

‘The food’s very good here, Grace. You’ll enjoy it’.

‘Yes, I know’, I replied.

Alex looked up quizically from his menu, clearly taken back that I may have eaten there before. ‘Have you been here before then, Grace ? My, you are a dark horse’, he laughed.

‘No’ I lied. ‘It’s just that this place has a good reputation’. The last thing I wanted was for Alex to know anything about me. I planned to keep the evening strictly business. It was the only way that I knew I could get through it. And I thought that Alex might freak if he knew that I once worked for Lehman. It was just too close to home. As Chad kept reminding me, it was my job to ensure that Alex felt comfortable too. And if he wasn’t, there would probably be no repeat business.

Anyway, the first part of the evening passed without incident. Alex was clearly educated, had an opinion on most things and appeared to be on his best behaviour. He was clearly determined not to scare me off. And, I have to admit, he was quite entertaining. He even managed to get me feeling slightly more relaxed. The only thing that irritated me was that his cell phone seemed to constantly ring. He must have excused himself from the table at least six times, as he moved to the corner of the restaurant to take each incoming call. And every time he returned, he seemed to be in an even better mood. I’d seen that look before, too. Clearly things were going his way. He was doing what he loved best – making money.

After a couple of drinks at the bar, Alex suggested that we ‘retire’ for the evening. His hotel suite was amazing, but I expected nothing less. He offered me another drink, and then suggested that I go to the bathroom to freshen up. It was then that it hit me.

I splashed some water on my face, and found myself staring at my reflection in the mirror. Had it really come to this, I thought. Was I about to hit a new low and, for the first time in my life, actually take money for sex ? I thought about my mother. She’s British, and typically rather reserved. What would she ever think if she found out what I was doing ? She would never understand (but, then again, she never understood what I did working in an investment bank!) I sat on the toilet seat, and put my head in my hands. This was the big moment. Decision time. If I was going to back out, now was my last chance. I knew that if I went in that room and took my clothes off, that there would be no escape. I’d spoken to one of the other girls about this, and she said that I’d be at my most vulnerable when I was naked. If I was going to duck out, it would need to be while I still had my clothes on. Once I crossed that line, there would be no turning back.

My mind was in a whirl, as conflicting thoughts came in and out of my head. I needed the money, but I was disgusted at myself. And I kept thinking about my mother. I wasn’t sure that I could do it. At that moment, Alex knocked on the bathroom door. ‘Grace’, he said apologetically, ‘ I need to pop out for a while. Will you be alright here on your own ?’

‘Eh, yes’, I stammered in reply, clearly taken by surprise.

‘I won’t be long. I just need to see someone down in the lobby. Feel free to call room service if you need anything’. And with that, I heard the hotel room door close behind him.

I unlocked the door, and emerged from the bathroom. I couldn’t help myself, I started to have a good look around the suite. I looked through the hand-made suits hanging in the wardrobe, noticed the designer shoes and the luxury watch Alex had taken-off and left by the side of the bed. Clearly his visitor was unexpected. Alex had treated me like a princess. He had been on his best behaviour. But, when it came down to it, I knew that, no matter what the consequences, I couldn’t go through with it. I don’t know why, but I felt compelled to leave him a note, apologizing that I had let him down. I grabbed my purse, and slowly opened the door into the hallway. A quick look out was enough to confirm that it was all-clear, and I headed for the stairs, not wanting to run the risk of bumping into Alex in the elevator on his way back up. I was free, but I didn’t feel elated. In fact, I felt guilty that I’d let Alex down. I wondered what he’d think when he returned to find me gone. But I smiled when the thought struck me that Chad would go berserk when he found out what I’d done.

It was two days later, when the pounding on my apartment door woke me up. I looked over at the alarm clock. It was almost three o’clock in the morning. What the heck was all this about ? As the banging continued, I got up sleepily and headed for the door, peering through the spy-hole to see who was making all the noise. It was Alan!

‘What the Hell do you want, Alan ?’, I hissed, without opening the door. ‘And how did you get my Goddam address ?’.

‘Sorry, Grace, but your boss at the bar gave it me. He knew that I’d been trying to get to see you the last couple of days, and he’s been calling and texting you too. He’s worried. He wanted me to make sure that you were alright’.

Chad had been trying to get hold of me, it was true, but I had blocked his calls and texts. I’d not been back to work either. I knew it was all over, and I figured that there wasn’t much point listening to him sound off.

‘Can you let me in, Grace’, Alan begged. ‘It’s freezing out here’.

I looked around my apartment. It was a mess, and, in truth, I was ashamed that it wasn’t full of designer furniture and all the nice things I had when I was working at Lehman. That all went months ago.

‘Sorry, Alan’, I replied, ‘I’m going back to bed. Thanks for checking in on me, though. And you can tell Chad that I’m still alive and kicking. Well, alive, anyhow’.

‘Oh come on, Grace’, he insisted, ‘I’ve a note from Chad for you. For God’s sake, just let me in, will you ?’.

What the heck, I thought, as I took the chain off the latch. Alan was inside in an instant. ‘Here’s the note’, he said passing me an envelope. I quickly tore it open and, to my surprise, saw that it was filled with cash.

‘Hey, breakfast’s on you’, Alan laughed, eyeing the money. I swiftly put it in my purse. ‘Thanks, Alan’, I replied, ‘But they’ll be no breakfast this morning. I’m going back to bed’.

‘We can do breakfast after bed, Grace’, Alan came back. ‘Nice try, Alan’, I said as I opened the door and pushed him out.

‘Look, Grace, can I see you ?, he turned and asked. ‘How about dinner sometime ? It would be good to catch-up’.

I looked at him. He was a trier, that was for sure. And he was starting to get me interested in him. There was something about him. And I needed a friend. ‘OK, wait’, I said, before quickly scribbling out my cell number on a piece of paper for him. ‘Call me in a few days. We’ll sort something out’.

‘You can count on it’, he beamed. And I knew that I could.

Closing the door behind Alan, I rushed over to retrieve my purse. Opening the envelope from Chad, I counted out $3,000 – more than I was due for the ‘overnight’. I hadn’t expected anything. In fact, I was convinced that Alex wouldn’t have paid at all, bearing in mind that I hadn’t delivered on my end of the bargain. In with the cash was a note in Chad’s spidery handwriting:


Here’s your money (plus a tip from Alex). He is really sorry for what happened the other night, and wants to make amends. Can you call round tomorrow ? There’s more money in this if you want it.


Episode 5

‘Grace, where have you been ?’, Chad asked as if he almost really cared, ‘I’ve been worried sick’.

‘About me, or your ‘pension’ ?’, I retorted.

He smiled and indicated for me to follow him into his office.

‘Look, Grace, I don’t know what that stunt you pulled on Alex was all about, but all is forgiven now. But we do need to know if you are still up for this’.

‘Up for what, exactly ?’, I interrupted.

‘To be honest, Grace, I’m not sure. Alex seems to have a thing for you. He wants to see you again and start over. And what Alex wants he usually gets’.

‘Well he didn’t last time, did he ?’, I laughed.

I wasn’t really sure where this was going. I was happy to continue with the dancing, but I had drawn a line on the escorting. And I made this clear to Chad. It was a self-respect thing; I didn’t mind using my body to get money, but I wasn’t prepared to sell it. But Chad seemed fine with it – as long as I agreed to give Alex another chance by going on a proper date.

‘A proper date ? Let’s be sure we understand what that means, Chad’.

‘Yes, Yes’, he cut in before I could elaborate. ‘I understand. Sex not guaranteed. I get it’.

‘More like ‘sex not likely”, Chad, I continued. ‘And the most important thing is that Alex gets it too. Otherwise you’ll end up with real egg on your face next time’.

‘Leave Alex to me’, he reassured, ‘He won’t be a problem’.

‘But what’s in it for me, Chad ?, I asked.

‘You get to keep your job. And you might even enjoy yourself’, he laughed.

So that’s how I ended up in the hotel lobby again the next evening, waiting for Alex to take me to his ‘club’.

‘Grace, you look stunning’, he said, rather overdoing it, as he swept through the lobby, kissing me on the hand once again. ‘I’m so sorry about the other evening. It’s just that I get so wrapped up in work…….’.

I wondered just how long he was away after leaving me in that room. In fact, I started to believe that he had perhaps forgotten all about me!

Anyway, before we could engage in anything more than a few minutes of harmless small talk, the limo pulled up in a rather seedy looking street in Lower Manhattan.

‘We need to walk the rest of the way, Grace’, Alex said in response to my quizzical look, ‘Bear with me, you’ll understand in a little while’.

He grabbed my arm and we walked a couple of blocks, until we came to a old hotel which had clearly seen better days. The guy on the desk beamed when he saw Alex, jumped up to pump him by the hand, and quickly led us both out back. From out of nowhere, a door opened in the wall, and we ascended a narrow wooden staircase until we reached a second door that literally opened into another world. My jaw dropped.

‘Nice, isn’t is ?’, Alex said, clearly happy that he had obviously impressed me.

‘It’s…it’s like a casino’, I spluttered.

‘It is a casino, Grace’, he replied, ‘But a rather exclusive one. Come on, let’s go and explore’.

I’d heard about places like this. Some of the guys at Lehman even said that they had visited them, but I doubted it. These were exclusive private clubs where unregulated gambling took place. They were playgrounds for the super-rich, where there were no rules and no limits. Tens of millions of dollars would change hands during just one evening outside the restrictions imposed by New York’s gaming laws. To keep one step ahead of the cops (and the Feds), the ‘casino’ would spring up in a particular location just for one night, before moving on to the next venue several weeks later. And it was all here. Craps and roulette tables, blackjack. There was even a bar and a restaurant area.

We moved quickly to the restaurant, and were escorted to a discreet table in the corner. Alex was clearly a regular at these events, as he was acknowledged by some of the other gamblers, and greeted profusely by many of the staff.

This guy really was a big-shot, I thought, as I sat across the table from him. You had to be worth a mint to get in with this crowd.

‘Why did you bring me here, Alex ?’, I asked after taking the first sip from the drink that I’d ordered, ‘You don’t even know me, yet you risked taking me somewhere illegal. For all you know, I could work for the FBI’.

‘Grace, my dear, the risk is all part of the fun’, he replied. ‘Besides I don’t know of too many Feds who go in for exotic dancing’, he laughed.

I smiled too. He was an interesting guy. And it wasn’t just the money or the power. There was something about this man.

‘Let’s hit the tables, Grace’, he said excitedly the moment we finished dinner. ‘Roulette is my passion’, he gushed, ‘Do you have a lucky number ?’.

‘Seven’, I replied.

He rushed over to the first table, and a place was immediately found for him to sit. I stood behind him, as was astounded when he threw a thick wad of one hundred dollar bills on the table, which he quickly exchanged for chips which were then all placed on number 7.

‘It’s not that lucky’, I cried when I realised what he was doing. In fact, it was not lucky at all, as he lost the lot. Undaunted, he continued to bet on number 7 until his cash ran out. It hadn’t come once.

‘Just off to the cashier’, he smiled. He checked his pockets again and found a few more bills. ‘Here’, he said, ‘have a play with that’.

There must have been three thousand dollars there, which I quickly passed across to the croupier in exchange for some chips. (It’s amazing that $3,000 in my new circumstances seemed an awful lot of money. In the old days, of course, it was the cost of a nice weekend away).

I took $100 and placed in across a couple of numbers. ‘Sorry, Madam’, the croupier said as he pushed the chips back towards me. ‘Minimum bet $500’. My face reddened. I was clearly out of my depth. I decided to wait it out until Alex came back.

Alex returned, and we spent the next several hours jumping from table to table as he continued to place large bets on a variety of numbers. He insisted that he had a ‘system’, but I couldn’t work out what it was, and it didn’t seem to be a very good system, as he continued to lose throughout the night. At one point he did win big on number 7, and insisted that I take half the ‘winnings’. I put up a token fight, but soon relented. I needed the money, and he could clearly afford it. He was soon back on a losing streak, but it didn’t bother him one bit. He wasn’t here to win – he was just here to play.

It must have been close to 4am when we sat back down in the restaurant to have ‘breakfast’. Alex was in an expansive mood, despite dropping a fortune.

So tell me, Alex’, I ventured. ‘What do you actually do for a living’.

‘I’m an investor, Grace’, he replied as he leaned back in his chair and drew on his large cigar.

‘An investor in what’, I continued to probe, doing exactly what Chad had forbidden me to do.

‘Equities….Stocks to you’.

‘And you clearly do it very well’.

‘Let’s just say that I’m very well connected, Grace, and those connections help me make money’.

‘You mean like insider trading’, I asked in as disarming a manner as I could muster.

That unexpected question threw him. He coughed, and for a moment I thought he was going to swallow his cigar!

‘Insider trading’, he repeated quietly. ‘Keep your voice down, Grace. People like me don’t talk about things like that, even in jest. Wherever did you get to learn about that anyway ?’.

‘Oh, let’s just say that I have some interest in the markets, Alex’, I replied coyly.

‘Now you are beginning to worry me, Grace’, he laughed. ‘You have me wondering if you really are working for the FBI, after all’.

When the night was finally over, I insisted on being dropped a few blocks from where I lived. I gave Alex a peck on the cheek. He seemed satisfied with that. He had clearly enjoyed himself, and so had I. As I walked back to my apartment I thought back over the last few months. I had come a long way – from Lehman Brothers to exotic dancing. From investment bankers to hedge fund managers. And now into a world where laws were clearly there to be broken, and the biggest crime was getting caught. I went to bed that morning flushed with excitement. I was living on the edge again, and I liked it’.

Episode 6

Chad was full of beans when I got into work the next evening. He was clearly getting some kind of rake off from Alex, and was determined that I carried on seeing him. I didn’t mind that he was profiting at my expense though, as Alex was fun and I’d had a really good time the night before.

‘He’s loaded, Grace. You know that, don’t you ?’, he said excitedly. ‘And he’s dead keen to see you again’.

‘Relax, Chad’, I replied. ‘You needn’t worry about your retainer. I dare say Alex and I will hook up again soon’.

I’d got the dancing down to a fine art now. In fact, I was a master. I even looked forward to getting up on that stage and strutting my stuff now. It was good thinking time, as I found that while I was turning on the guys in the audience, I was able to tune out and think about other things. And that night, I found myself thinking about Alex. And I kept wondering if he was married.

While I was holding that thought, all Hell broke loose. It took me a while to realise what was going on, but I first heard the shouting, and then some of the audience jumped up on stage to get out of the way. Finally, the music stopped and the lights came up. And there they were – a group of drunken bankers throwing beer bottles and trading punches. I stood back and watched the fun unfold, and realised that, even though times had been tough for me over recent months, I’d rather be on stage than working in an investment bank. These would-be masters of the universe were wound-up so tight that they simply had to blow off steam every now and then. But they were pathetic creatures; overweight, out of condition and out of control. And as the traders tried to knock seven bells out of each other, even more trouble arrived. Someone had called the cops. There were at least 10 of them, all with guns and all chewing gum. Typically, the traders ignored the warnings, and three ended up being hauled off to spend the night in a cell. Another two were booked for possession of cocaine. Two others ended up in a hospital bed.

Typically, we got closed down for the night, and I was heading back home for a long bath and a good sleep when my cell rang. It was Alan. He’d been trying to reach me for a few days, but I’d avoided taking his calls. I still thought he was an amusing guy, but life was becoming complicated enough as it was. The last thing I needed was to get something going with Alan. But he was persistent, so I knew that I had to deal with this before it got out of hand.

‘Hi’, I answered, perhaps a little too disinterestedly. I didn’t want to come across as being rude, just firm. I had to end it with Alan, even though there was really nothing to end. He was clearly keen to start something, but the time just wasn’t right for me.

‘Hi’, he responded, ‘You’re a difficult girl to get hold of’.

‘Just busy, Alan. That’s all. I’ve just got back home’, I said, as I locked up the car and headed across the street.

‘I know’, he said. ‘I can see you. I’m just outside your door’.

I looked over, and there he was, waving at me from under the tree that stood just outside the apartment building. And he had a silly grin on his face. This guy was always just turning up!

‘So what happened with Lorraine’, I asked as we sat down in my living room to drink some coffee. I kicked off my shoes, expecting a long story. I wanted to get Alan to talk, so that I could think through how to put him off without hurting his feelings. ‘Did she really run off with a TV repair man ?’.

‘No’, he laughed. ‘It was actually the cable guy. There was me working all the hours to earn the big bucks for our future, and she was screwing the cable guy. And in my house, in front of my kid!’.

‘Your kid ?’. I didn’t know that Alan had a kid.

‘Yes. He’s five years old now. And I hardly ever get to see him. She took me to the cleaners when we got divorced. She got the apartment, the car, the kid. And all I got was the fucking bill and limited access!’.

‘Oh, I’m sorry, Alan. I didn’t know. What happened to the cable guy. Is is still around ?’.

‘Nope, he replied nonchalantly, ‘He moved on. It was just a bit of fun for him. But I don’t blame him. He didn’t cause the split. It was all my fault. I never got the balance right. I became so wrapped up in my job that I just forgot about my marriage. It was an accident waiting to happen. I guess I learned my lesson the hard way.’

Alan had more luck with his career, however. He had the good fortune to secure a new job offer just the week before Lehman filed for bankruptcy. Although Barclays Capital, which took over the firm’s US businesses a couple of days after the bankruptcy filing, did try to get him to stay on, he went to work for one of Lehman’s bigger rivals, and had been there just a few weeks.

‘And how’s the new firm ?’, I asked.

‘It’s different’, he replied. ‘It’s not Lehman. It’s much more corporate. But it’s a job’.

‘And the market ?’.

‘It stinks. In my sector, there’s just no appetite for deals. It’s not a good time to be in M&A’.

The more he talked, the more I started to feel more relaxed with him. For the first time, I thought that I was seeing the real Alan. The more we talked, the more he let his barriers come down. All the bullshit evaporated, and there before me was just an ordinary guy, as vulnerable and as hurt as the rest of us.

As the night started to turn into morning, Alan and I continued to talk. And we had graduated from coffee to wine. I can’t blame the drink, though, for what happened next, for we were starting to feel more comfortable with each out, and soon began to flirt. Alan then reached over and touched my hand, pulling me towards him. In a moment we were locked in a passionate grasp, and quickly moved on into the bedroom.

Alan was asleep now, sprawled across me. I lay on my back thinking. A few hours ago I was going to ditch him, but now things had changed. I wanted Alan, but I wanted Alex too. In fact, I wanted it all.

‘Do you think I’m crazy, Jane ?’ I asked.

Jane and I had become quite close over the last few weeks. Although Chad told me never to discuss Alex with any of the other girls, I had to tell someone. Jane was around my age, and had been dancing at the club for a good 18 months before me, so she was more experienced and, if truth be told, had a wiser head than mine.

‘Life is always complicated’, she replied. ‘Even a woman with a good husband, a nice house and beautiful children has her complications. I wouldn’t worry about Alan or Alex. Just play it by ear. But don’t make any promises you can’t keep – to either of them. Otherwise it could get nasty’. It was a warning I would later look back on and wish I had taken more seriously.

‘Davos! He wants me to go to Davos with him ?’

‘It’s some banking conference, or something’, Chad replied.

‘I know what Davos is, Chad. And it’s not just some ‘banking conference’.

So that’s how I found out that Alex wanted me to spend a few days in Switzerland with him while he attended the World Economic Forum. And although it wouldn’t be such a grand affair that year (as many top banking CEOs would remain close to home dealing with the unfolding financial crisis), Davos was still the place to be in January if you worked in the financial markets. I’d never been anywhere near the center of such power before, and the thought was intoxicating. My only concern was that I’d have to lie to Alan about where I was going. I’d been seeing him three or four times a week since we slept together, and I had to find an excuse to explain why I’d be out of town for a few days. I was already having to start covering my tracks. Life was indeed becoming complicated, but it seemed a small price to pay to go to Davos!’

Alex was in an ebullient mood as we headed for JFK International, and he kept talking about ‘the big one’. But he was also starting to annoy me with his smug attitude. I forget how many times he asked me just how many hedge fund managers I thought were making money at that moment in time. And predictably, he confirmed that he was one of the very few. These guys have egos as big as houses!

Before we checked in, Alex left me with the luggage and told me to get a coffee and wait for him. He had to meet a ‘big’ contact, who had apparently come to the airport to discuss some business with him.

‘This is the one, Grace’, Alex said as he returned. ‘Mark my words, in a few weeks I’ll be a household name’.

He was off on one again when, incredibly, I saw Alan in the distance, just leaving the airport. The bastard must have been following me! He wasn’t happy that I was going away, and I’m wasn’t sure that he bought my story that June’s mother was gravely ill, and that I was going to New Hampshire to help her through what was looking likely to be a very difficult time. Telling Alex that I need to pop to the ladies room, I rushed off to call Alan and give him a piece of my mind.

‘You slimeball!’, I shouted into my cell. ‘How dare you follow me!’.

‘What ?!’, he seemed taken aback. ‘What the fuck are you talking about, Grace ?’.

‘Following me to the airport. That’s really low, Alan. I never had you down for a loser like that’.

‘Calm down, Grace’, he replied. ‘I didn’t follow you anywhere. I went to JFK to meet someone. And anyway, you’re in the wrong terminal if you saw me. Domestic flights fly from Terminal 8!’.

I was on the back foot now. ‘Oh, I’m sorry’, I apologized. ‘I just jumped to the wrong conclusion. It’s just one of those silly co-incidences. And yes, you’re right, the cab driver dropped me off at the wrong terminal. I’m sorry, I’ve got to rush, I’m late for check-in now. I’ll call you when we land’. I couldn’t cut him off soon enough. I felt so stupid and, at the same time, scared that he would catch me out.

But as I walked over to where Alex was waiting, my mind started to process what had happened, and it suddenly dawned on me. Was Alan Alex’s ‘big’ contact. Was he feeding him inside information ? If so, what was I to do, and what kind of mess was I now in the middle of ?

Episode 7

Davos didn’t go well. And my opinion of Alex had started to change. He was ever the gentleman when he was trying to woo me (although he had yet to get me between the sheets), but I started to see signs that this man might not be quite the catch I originally thought he was. I called Chad to tell him that things were becoming difficult, but he begged me to stick with it. The last thing he wanted was me ditching Alex in Davos.

‘The fucking suite hasn’t been been cleaned!’, he yelled when we returned after a late breakfast that first morning. Alex was straight on the telephone screaming for the hotel manager, who quickly appeared with an army of cleaners.

‘I’m sorry, Mr Raban’, the manager said as he entered. ‘Please just give us a few minutes and all will be sorted’.

‘This is a fucking disgrace!’, Alex shouted, his eyes staring wildly and the veins in his temple appearing to stand to attention. ‘To think that I’m paying thousands of dollars for this room, and I get treated like this!’.

‘But Mr Raban’, the manager replied, ‘You had the ‘Do not disturb’ sign on the door. My staff clearly wouldn’t have interrupted you to clean the suite in those circumstances’.

‘Rubbish!’, Alex shouted. ‘That’s a poor excuse for a pathetic service! I demand to be compensated!!’.

But it wasn’t rubbish at all. I remembered that Alex had placed the sign on the door the evening before (clearly hoping that he would be having fun with me!). Alex was making a scene, when it was all his own fault. But he just wouldn’t back down and admit that he was wrong. And I wasn’t impressed.

Alex soon rushed off to participate in the World Economic Forum, and I was left kicking my heels in the hotel, thus setting a pattern that would last for a few days. I was being truly naive when I thought that I would be rubbing shoulders with the great and the good in Davos. But Alex was full of it, returning to the suite each evening with tales of which global CEO he had met, and who he had added to his rolodex. And I just found myself laying in bed for most of the day, drinking alone most of the afternoon and becoming bored senseless with Alex’s stories long into each evening.

My thoughts, however, kept turning back to seeing Alan at JFK. Was it really just all one huge co-incidence, or was something going on between him and Alex ? I wasn’t sure. Alan wasn’t a bigshot. Sure he’d worked on a few high profile deals while at Lehman (as part of a team), but would he really have access to the kind of information that Alex could use to his advantage ? And why would someone like Alex need someone like Alan ? They inhabited different worlds. Indeed, it would have been a truly strange relationship. But I decided to try and press Alex on his ‘contacts’, to see whether he’d give anything away that might identify just who was feeding him his inside information. And I didn’t have long to wait to get my opening, as Alex returned on the third evening slightly drunk, and clearly in an expansive mood. It didn’t take much prompting for me to get him to talk about how wonderful he was, and how he was going to rake in millions from his next big deal.

‘I shouldn’t be talking to you about all this, Grace’, he said as he relaxed with his feet up on the sofa, and a glass of brandy in his hand.

‘Humor me, Alex’, I said, ‘I probably won’t understand what you are talking about anyway, but I guess I want to learn something about what you do, and what makes you tick’. I was trying to coax him out by appealing to his vanity.

‘Well, Grace’, he started to pontificate. ‘Life is not a level-playing field. There’s always an advantage to be had. And my job is to find that advantage and exploit it. And that’s what I’ve been doing for much of my career’. He kicked off his shoes, and continued: ‘Don’t let anyone ever tell you that being fair will make you a success. Nothing in life is fair; ask the people in countries in Africa what fair is. Explain to them why they and their children continue to die through lack of food and because of disease, while the West lives high on the hog on a diet of fast food, cable TV and prescription drugs. I learned long ago that being fair would get you nowhere. You need to find an edge. And that’s what I do well’.

‘But does that have to mean breaking the law ?’, I asked.

‘The law ?’, he sneered. ‘Who do you think made these laws ? They were made by people simply to ensure that they themselves retained an advantage. Your so-called laws are not there to protect anyone, they are there to protect the status quo. No, those laws mean nothing. Not anymore. And I am proud that I can flout them so easily’.

‘And how do you get an advantage ?’, I continued pressing.

‘Information’, Grace. ‘Information. I pay well for information that the general public does not have access to. I get ahead of the curve, out front of the information flow. And that gives me my advantage’.

‘Insider trading, then ?’, I asked boldly.

‘Smart trading, Grace’, he replied, ‘Just smart trading. And I’m so close to making the big kill, I can almost smell it’.

‘The ‘big kill’ ?’

‘Yes’, I have a reliable new source who has fed me some very good information recently that I have been able to capitalize on. And this same source has given me another sure thing. I’m so confident that this will mean the big time for me, that I’ve literally bet the bank. I’m practically all in on it! And I won’t have long to wait, as the action is due to go down next week’.

But that’s as far as I got. He didn’t go into any specifics, and I didn’t want to arouse any suspicions by pushing it. I was none the wiser about his mystery informant, although I was a lot wiser about Alex; he was just another big-mouthed, self-righteous, arrogant hedge fund manager who thought that he was above the law and free to operate by a different set of rules than the rest of us. I was beginning to despise him. And needless to say that, as I continued to evade his amorous advances, our time together in Davos became more and more tense.

I was glad to get back at the end of the week, and determined that Alex would have to go. Having said that, Alex appeared to be less bothered as the week wore on, becoming bored when his constant attempts to seduce me were thwarted. I planned to tell Chad how I felt, and either he could tell Alex that it wasn’t working out, or I would.

It was as I was approaching the apartment that I saw a figure emerge from the tree outside the building. For a moment I thought it was Alan, and my heart started to beat faster. I had missed him. But it wasn’t. It was a woman in her late twenties, and she had a young child with her. Dragging the boy along after her, she headed straight for me, stopped in front of my path, and looked me up and down before slapping me hard across the face.

I was too shocked to react. I just stood there, staring at this crazed woman. ‘That’s for sleeping with my husband!’, she screamed uncontrollably. She let go of the child’s hand, and launched a new offensive against me, grabbing hold of my hair and kicking me simultaneously. I’d usually have a pepper spray easily accessible for situations like this (although I’d imagined that I’d first have to use it against a drunken or over-sexed man who’d seen me doing my thing at the club). But I didn’t think that I’d need the spray in Switzerland, so I was defenseless as this woman continued to try and take lumps out of me. In the end, it was the tears from the young boy that saved me. The sound of her child crying brought this woman back to her senses, and she was distracted just long enough for me to pull away and run up the steps to the apartment building.

‘I haven’t finished with you’, she yelled as she saw me make my escape. ‘You’ve not heard the last of me for what you’ve done with Alan!’.

Alan! I stopped in my tracks and turned back towards her. ‘What’s this got to do with Alan ?’, I shouted, already fearing the response I’d get. As I walked back down towards her, I saw that this feisty woman was crying too. I then realised that she was the real victim in all this, not me. I approached her slowly, and touched her gently on the arm. ‘You’ve got to believe me’, I said, ‘I had no idea that you and Alan were still together. He told me that you split up a long time ago, that you were divorced’.

She said nothing, but nodded and looked down forlornly at her young son. ‘Hey, it’s cold out here’, I said rather impulsively, ‘Do you want to come up for a coffee or something ?’. She nodded again, and we all tramped up to the apartment for a more civilized showdown.

Lorraine wasn’t a traditional beauty, and looked like she’d let herself go a little, probably since she had her son. But I was unable to recognise the picture that Alan had painted of her. She didn’t seem to be the money-grabbing fatal attraction that he delighted in describing. And she seemed at her wits end. Her small hands shook as they grasped the mug of coffee. Sitting in silence for a short while, as Thomas played with one of my old teddy bears, Lorraine slowly came out of her shell.

‘He’s done this before’, she whispered, ‘He can’t help himself. He’s a fantasist. He’s sick. I keep trying to get him to go to the doctor, but he won’t have it. Every few months he goes off the rails and leads this fantasy life. It’s like an escape for him, but it does the rest of us no good. I just don’t know what to do’, she sobbed.

‘So how does he keep his job down ?’, was all I could think to ask.

‘His job ?’, she half-laughed, ‘That’s a good one. I think that’s the problem. Since he left Lehman, he’s found it tough. The market is so bad, he just can’t find anything. Things started to go downhill for us soon after Lehman went bankrupt’.

‘I thought he was at JPMorgan now ?’, I asked incredulously.

‘I wish!’, she replied, ‘That’s where he’d like to be, but he can’t even get through the front door for an interview. They’re not hiring in his area. In fact, no-one seems to be hiring in his area’.

‘I’m sorry’, I said rather lamely, ‘I truly didn’t know. I guess I just fell for Alan’s story. There was really no reason for me not to believe him’.

‘Don’t worry’, she replied, ‘You’re not the first. I think he’s stringing along another dumb female too. I found your name and address scrawled on a scrap of paper he left in his wallet. And there’s also a cell number for a girl called Alex’.

‘A girl called Alex’. It all fell into place now. Lorraine was wrong about Alex’s gender, but she had unknowingly confirmed to me that the two main men in my life were in cahoots.

We swapped cell numbers, and agreed to keep in touch. I wanted to try and help, as it was clear that Alan wasn’t well. Lorraine hadn’t seen him for several days, and I agreed to let her know when I next saw him. In the meantime, we both agreed that neither would say anything to Alan about us having met. And I said nothing to Lorraine about Alex – that would have been far too much for her to have to deal with. I went over to the apartment window and saw them walking off slowly into the distance. I smiled as I saw that Thomas was holding his mother’s hand tightly, and was dragging my old teddy along with the other. I didn’t mind that he had taken it. He probably needed it more than I did.

Despite being exhausted from the Davos trip, I found it difficult to sleep that night, as I tried to put all the pieces together. Alan remained married, and my relationship with him was a fraud. That had to end, but I had to do it in a delicate way that didn’t make life anymore difficult for Lorraine and Thomas. I felt that I at least owed them that. Alan was also clearly Alex’s informant. But quite what information Alan was feeding him was unclear. And where that information came from was another question, bearing in mind that Alan appeared to have been out of the deal action for months. But how was I to confront Alan ? And what of Alex ? He was a nasty piece of work, but looked like he was placing huge bets on unreliable information provided by Alan. I had to let him know, not because I cared about Alex’s financial well-being, but because I feared what he would do to Alan and his family if he lost most of his money.

But it was too late. Alex called me later that evening. He wanted to see me again soon – to celebrate. His ship, he said, would be coming in the next day or so. He told me to watch the financial news for details of a really big deal that would soon be announced which would blow the markets away. And he had taken a huge stake in the company being acquired (and had encouraged a number of his friends to invest too), and was sitting back expecting a massive killing. But had Alex been set-up for a fall by a fantasist ?

Episode 8

All went quiet for over a week, and I started to think that I was making a big thing out of nothing, and that perhaps things weren’t going to be as bad as I had feared. Then Chad called.

‘Have you seen the news ?’, he asked breathlessly’.

‘The news ? What news, Chad ?’, I replied

‘It’s Alex’, he continued. ‘Quick. Tune in to CNBC’.

CNBC! I knew it was serious if Chad was watching CNBC!! I put the receiver down on the dresser, and rushed over to turn on the TV. And there it was – pictures of Alex, surrounded by Feds, being escorted out of his building in handcuffs. And the commentator was all excited, talking about ‘insider trading allegations’ and another ‘mini-Madoff’!

‘What’s going on ?’, I asked Chad as soon as I retrieved the phone.

‘Beats me’, he said gloomily, realising that another meal ticket had gone west. ‘But it sure looks like Alex’ll be out of action for a while’.

Although I had seen the nasty side of this man, and I realised that he was up to no good, I took no pleasure in Alex’s apparent demise. From the limited time I had spent with him, I knew that he was a very proud person, and, even on TV, I could see the hurt in his eyes. And I pitied him. Only a few days before, he was on top of the world (or so he thought), and now everything had fallen down around him. Fascinated, I watched the screen as he elbowed photographers out of the way, was bundled into a waiting car, and driven off at high speed to be booked for securities fraud. Alex had got his wish. He really was public property now, but not quite in the way that he had imagined.

The business press was full of it the following day. It seemed that Alex was being watched by the Feds, under suspicion of insider trading. An informant, someone who he had relied on for information, had apparently turned him in. More arrests were expected. My heart sank. Was that Alan ? Was he the informant ? And, if so, what was going to happen to him ? But there was more. It soon became apparent that Alex had only resorted to insider trading as his own investment strategy had been a disaster. And he had been hiding his losses from clients, issuing false claims and phony statements. Quite how long the fraud had been going on, no-one yet knew, but a lot of investors stood to lose a lot of money. Like many rogue financiers before him, Alex was hoping to pull-off one big investment coup and make good the losses before anyone noticed. But he was caught out, and now looked like paying a heavy price.

I had to speak to Alan. I had attempted to get him a few times after the episode with his wife, but his cell just kept going to voicemail. It wasn’t that I was angry with him or anything, but I just needed closure. I wanted some kind of explanation, and I thought that I would be able to move on more easily if I could just talk things over with him. After a few days of trying, however, I gave up. I imagined that he knew the game was up with me anyway, and that the last thing he probably needed was me bending his ear. And I had no better luck getting him on this occasion either. My mind was racing as I had him on continued speed dial, and, as I just had to find out what was going on, I decided to try Lorraine, and searched around for the cell number she had given me when we met.

After several rings, Lorraine answered. She was clearly in a state, and I immediately regretted bothering her. But as soon as she realised it was me, she started to unburden herself. ‘I’m at my wits end’, she sobbed. ‘We had a huge row when I told him that I’d met up with you, but then things started to get back to normal. We were doing OK…….’. Her voice trailed off.

‘So where is he ?’, I asked.

‘I don’t know’, she replied. ‘He’s been away for hours. He just went off to the drugstore, and never came back’.

‘How about his cell ? Have you tried it ?’, I rather stupidly asked.

‘It’s here. He didn’t bother to take it with him. That’s why I’m so worried. He was only supposed to be gone for 15 minutes at most. I’m worried that he’s gone off the rails again. I really thought that we’d turned a corner this time; I managed to get him back to his counselor, and he even started taking his pills again’.

‘Have you called the cops ?’, I interjected.

‘No, not yet’, she replied. ‘But I’m frightened, Grace. I think that something really terrible has happened to him’.

My heart went out to this woman, and I really wanted to help, but I was reluctant to get even more involved in what was turning out to be a real drama. In the end, however, I couldn’t help myself. ‘Do you want me to come over ?’, I asked. After a brief moment’s thought, she said that she could do with the support. I wrote down her address, quickly showered and changed, and headed downtown to her place.

As the taxi cab wound its way through the busy streets, I thought how strange this was. Just a few days ago I was the subject of all Lorraine’s anger, and yet now I was going to be her emotional support. I thought it was sad that she had no-one else that she could rely on.

The taxi pulled up outside a shabby apartment block, and my first thought was that the cab driver had gone to the wrong address. Trash was spewing along the sidewalk, and young children were playing in outside in the dirt.

‘Are you sure that we’re at the right place ?’, I asked.

‘Look, Miss’, the cabbie replied. ‘I’ve been doing this beat for 16 years. Believe me, this is it’. I paid the fare and walked towards the building, carefully avoiding the vomit, discarded food and general mess that seemed to be everywhere. I called the elevator. ‘Doesn’t work, ma’ma’, an old gentleman with a walking stick called out as he was hobbling by. ‘Hasn’t worked in years……… We don’t normally see your sort here’, he added quietly as an after-thought. I headed for the stairs, and the smell of urine was at once overpowering; I had to run up to the third floor without drawing breath. I wondered why Alan and his family were living in a place like this. This didn’t make sense. Although Alan was not the master of the universe he liked to make out he was, he would still have earned a fair living from Lehman; a decent salary, good bonuses over a number of years and other perks. I was dumbfounded.

As I came on to the landing and approached the door, I noticed that it was slightly ajar. On further inspection I saw that someone had used a jemmy to force it open. My heart started to beat faster. Reluctant to enter the apartment on my own, I looked around outside to see if there was anyone who could perhaps help me out, but I was alone. I pushed against the door, and slowly walked in. The lights were on, and I could hear the sound of a TV coming from somewhere out back. I could also smell home cooking. ‘Lorraine!’, I called as I proceeded down the narrow hallway. ‘It’s me, Grace’. Not a word.

The first room was the sitting room, and there was nothing unusual there. I passed the kitchen, and noticed that something was boiling away on the stove. I pushed the door to a small bedroom, where Thomas clearly slept, but the room was empty. As I approached what turned out to be the main bedroom, I noticed a bloody smudge on the door. I stopped in my tracks. I now feared the worst. My throat was dry and my hand was shaking as I slowly entered the bedroom. Although it was early afternoon by now, the curtains were still drawn and the room was in darkness. I fumbled for the light, found it, and quickly threw the switch. The room was a mess. There had clearly been a struggle; there were books strewn across the floor as an old bookcase had been overturned, and there was a broken lampshade on the bed, with a cord trailing down to the floor. My eyes immediately fixed on the cord, and, to my horror, I saw Lorraine, motionless on the carpet, with the other end of the cord wrapped tightly around her throat. I rushed over to her, pushed her over onto her back, and slowly unwound the cord from her throat. On autopilot, I then felt for a pulse, but there was none. I was too late. She was dead.

I leapt up, with my heart in my mouth. ‘Thomas!’, I shouted, as I ran from room to room searching for the young boy. I looked under the beds and in the cupboards, searching in all those places where I remembered hiding myself as a child. But he was nowhere to be found. In a state of panic, I headed back out of the apartment. I knew that I had to call 911, but I needed to get some air. I rushed for the door, knocking against some furniture in my haste to get out. I was feeling dizzy, and thought that I was likely to throw up at any moment. But, before I knew it, I ran straight into something. I was startled and scared at the same time. It was a man, and he was standing at the apartment entrance, barring my exit. Wiping away the tears that had welled up in my eyes, I looked up and realised, to my horror, that it was Alan. And I could straightaway see that he was out of control. He was unshaven, and his face was contorted with rage. I screamed at the top of my voice, convinced that I was to become his next murder victim.

Episode 9

Not even the sound of my piercing scream seemed to register with Alan, who rushed passed me and headed back into the apartment. In a state of panic, I ran out and scrambled quickly down the stairs. I must have gone at least three blocks before I felt safe enough to stop and call 911. The operator calmly took the details, and told me to head back to the apartment and wait nearby until the cops arrived.

Although I was reluctant to go back to the scene I had just left, I clearly had no choice. I was a witness of sorts, my fingerprints were all over the flat (not to mention Lorraine’s body), so I had to come forward if only to clear my name. The cops were already there when I got back; three squad cars, all lights flashing. And the neighbors were out in force too. I noticed that the cops had taped off the stairwell and cordoned off Alan’s apartment.

‘Excuse me’, I said as I approached one of the uniforms, ‘I’m looking for the detective in charge’.

He simply nodded his head in the direction of a man in his mid-thirties, who was busy scribbling down notes and listening intently to one of the locals. I caught his eye, and went over. ‘Are you the detective in charge ?’ I asked. He smiled, and for a moment he reminded me of Alex. Alex, too, had that glint in his eye when he smiled (at least when he wanted to). ‘I’m Grace Driver’.

‘Oh, yes’, he replied, ‘You’re the person who called this in. I’m John Dinallo’. He came closer and extended his hand. ‘Thanks for coming back. So, can we go over it ? All of it – from start to finish’. Although he told me that I’d have to go to the station to sign a statement, Dinallo wanted to walk me through the crime scene, and tell him everything I remembered while it was still fresh in my mind.  I took him through the background, too. How I knew Alan, the affair, the meeting with his wife, Alan’s illness, the reason for my visit to the apartment earlier that day, my discovery of Lorraine’s body, my feeble attempt to revive her, and the final sight I had of Alan. The worst bit was having to see Lorraine again. Her unblinking eyes seemed to be staring straight at me. It was so unnerving, as I looked down at her and speculated that I could quite easily have suffered her fate at Alan’s hand.

It was as we were in the car on the way to the station that my cell rang. I looked down at the incoming number. My heart started to beat off the scale. ‘It’s him!’, I shouted. ‘It’s Alan!!’.

Dinallo pulled over and told me to answer it. ‘See if you can get him to meet you. Somewhere in a public place, preferably out in the open’, he ordered. ‘And we’ll need at least an hour to get our men in place’.

‘Alan’, I exclaimed when I picked up. ‘What the fuck is going on ?’.

He was crying, and I struggled to make any sense of what he was saying.

‘Look, Alan’, I insisted, ‘The cops are all over your apartment. You can’t go back home. Let’s meet. I want to help’.

He grunted, and wanted to know when and where.

‘Somewhere open’, I said. ‘You can’t be too careful’. I looked over to Dinallo for some help, but he just shrugged his shoulders. He couldn’t say anything for fear of giving the game away.

‘How about the Children’s Zoo at Central Park ?’, I finally suggested, again looking over at the Detective. Dinallo gave me the thumbs up. ‘Let’s meet outside the Acorn Theatre in ninety minutes’, I said.

‘You’ll need to wear a wire’, Dinallo insisted as I ended the call. Strange as it may seem, this appeared to be the most normal thing in the world to do. The events of the last few weeks had been so extraordinary, but now even the most bizarre suggestions seemed fairly run-on-the-mill.

Dinallo had a technician meet us at my apartment, as I needed to change into something more substantial in order to hide the wire. And it was when I was back in the sanctity of my apartment, being fitted, that I started to freak out. I grabbed the wire and ripped it off, throwing it down on the ground. ‘I can’t do this!’, I shouted as Dinallo looked on. ‘I can’t face him. I’m sorry, but I just can’t. I’ve had it. I can’t cope with any more’.

The detective grabbed my arm as I tried to walk away. ‘Listen Grace’, he said soothingly, ‘I can’t force you to do this, and if you want to back out, then that’s fine. We’ll catch up with him sooner or later. But you’ll be safe if you go ahead. I can guarantee that. And we stand more chance taking Alan alive if we can get him when his guard is down and he least expects it’.

‘You mean you might have to shoot him, or something ?’, I asked incredulously.

He nodded. ‘He’s dangerous, Grace. We may not have a choice’. He looked me straight in the eye, knowing that this would strike a cord with me. For all that he had done, I didn’t want Alan to come to any harm. He needed help; he wasn’t well.

‘OK’, I finally blurted out, ‘Let’s do it your way, and I guess I’ll just have to trust you’.

‘Don’t worry, Grace’, he said, ‘There will be at least six expert marksmen with rifles trained on him. And we’re covering the place with undercover cops too. You’ll be fine’, he said squeezing my arm gently now.

Just over an hour later, Dinallo dropped me at the Lehman Gates (somewhat appropriate, I thought), and I nervously headed towards my rendezvous with Alan. The cops had also fitted me out with a miniature ear-piece, and Dinallo was making reassuring noises to me every step along the way. It was 10 minutes before the agreed time, and I was hanging around the theatre, trying to work out who among the several passers-by were actually undercover cops, when my cell rang. I glanced down at the incoming number, almost certain it would be Alan. But it wasn’t. Although I didn’t recognise the caller, I picked up.

‘Grace, you cheating whore!’, came the voice at the other end. It sounded like Alex! Dinallo was screaming into my ear, demanding to know if it was Alan. He instructed me to drop the newspaper I was carrying under my arm if it was. Clearly he was somewhere close by, watching. I shook my head vigorously, trying to make Dinallo understand that this was something else. I didn’t want Alex involved in all this. He had enough problems of his own, and it was far too complicated to have to tell Dinallo about him, especially when I was confident that it wasn’t really relevant.

‘Sorry ?’, I replied still somewhat taken aback. ‘Is that you Alex ?’, I asked, wondering whether it really was him, as it wasn’t like Alex to shout at me in that way.

‘You know damn well it’s me, you bitch!’, he shouted. ‘I don’t know how or why you are involved, but I’ve uncovered your involvement in setting me up. You’re dead meat’, he screamed.

‘Alex, what are you talking about ?’. He was scaring me now, and this was the last thing I needed going into the meeting with Alan. And thank God Dinallo couldn’t hear what was going on.

‘I know you were in on it. I know all about you and your fucking boyfriend’, Alex continued, ‘And you can tell him that we’ve got his kid too, and unless you both get over here pronto, the kid will go the same fucking way as the wife!’.

I felt sick to my stomach. My hands started to shake, and my face flushed. ‘Alex, you’ve got it all wrong’, I declared. ‘I’m not involved in anything!’, I cried.

‘Leave it out, Grace. You had me well and truly fooled, but I’ll sort you both out for what you did to me. I’ll text you a time and location, and you and your boyfriend had better be there, or you’ll never see that kid, or your fucking teddy bear, again!’.

‘Alex!’, I shouted into my cell. But he had hung up. The teddy bear! So that was it. Alex had only been to my apartment once (I was late, and asked him to come up for a quick drink while I changed). I remember him aimlessly picking up the teddy bear and making some smart remark about it. It was all falling into place now. Alex had been the one behind Lorraine’s murder, and had arranged to abduct Thomas in order to get at Alan. And Thomas must have taken the teddy with him when he was kidnapped, Alex recognised it as mine, and naturally assumed that Alan and I were in some way in cahoots, and that I was therefore responsible too for the mess he found himself in!

Now I was in a panic! I looked up, and Alan was heading towards me, totally unaware that he was being set up. He was about to be arrested for a crime I now knew he didn’t commit. Worse, unless Alan and I somehow got to Alex, Thomas was done for. I glanced over trying to locate where Dinallo was hiding, but succeeded only in seeing the sun glance off the barrel of a rifle, which was pointing directly at Alan. Were the cops going to take him down ? Had I lured this troubled, but innocent man, to his death ?

Episode 10

There was nothing I could do; I was completely powerless. I wanted to warn him, to shout at Alan to run, but I knew that if I did so, he wouldn’t stand a chance. If he made a break for it, he would be shot, and possibly even killed.

I didn’t want to be responsible for his death. I just had to keep him alive; we could always explain what had happened when we got back to the station. It would all be alright, wouldn’t it ? I knew that I’d have to get up as close as possible to protect him. The cops were unlikely to take him down if I was too close. I rushed over to greet him, placing my arms around him and hugging him. I held on to him as tightly as I could. He looked even worse than when I saw him just a couple of hours before. He was clearly startled by the way I ran over to him, and mumbled something I couldn’t make out. He was disorientated. Confused, and in a state of high anxiety.

‘I’m sorry’, I whispered into his ear. Alan looked me in the eye, clearly unable to understand why I was apologizing.

In just seconds we were surrounded by undercover cops. They quickly separated us, grabbed Alan and pushed him to the ground. Strangely, he didn’t protest. He hardly moved. As I looked over at this sad and desperate man laying face-down on the ground, I could only imagine what he was going through. I just had to help him.

‘OK, good work’, Dinallo was beaming as he emerged from his lair. ‘Grace, you were excellent. If you ever need a job in law enforcement, just give me a call’, he joked. ‘Secure him inside my car’, Dinallo told the officer who now had custody of Alan, ‘We’ll take him downtown to book him’. The officer pushed Alan into the back of the car, handcuffing him to something in the rear which presumably would prevent him from making a getaway.

‘Detective’, I interrupted, ‘Please let me come with you. Maybe I can help you get some sense out of him’, I implored.

Dinallo looked over at me, unsure whether to grant my request. It was obviously a breach of protocol, as I was a witness who could put Alan at the scene of the murder. ‘OK’, he said after a long pause. ‘But you’re in the front with me. Officer, you’re in the back with the suspect.’.

The car pulled away with the four of us inside. My head was spinning. Although part of me believed that all this would be sorted out, I knew that I couldn’t take the risk. What if the cops didn’t believe us ? And Alan was hardly in the best frame of mind to fight his corner. I could just imagine the cops taking him into interrogation and quickly emerging with a signed ‘confession’. And what about Thomas ? His life was in danger. We had to be there when Alex called. We had to be ready to meet with him.

Dinallo’s cell rang, and he picked up, continuing to drive while he talked. And, as he held the cell to his ear, I got a glimpse at the handgun in his shoulder holster. Dinallo was off his guard now, pleased with himself that he had Alan in custody. And he was talking to someone at the precinct, detailing the chain of events that led to Alan’s capture. I looked back over at Alan, and noticed that the officer by his side also seemed to have his mind on other things. Alan was neutralized now, so what possible danger could there be ?

The next few seconds seemed to happen in slow motion. Acting on total impulse, I lunged at Dinallo and reached into his shoulder-holster. In a flash, I had his pistol in my hand. As luck would have it, the safety catch was easy to recognise, and I threw it and pointed the weapon straight at the startled detective’s head. ‘Stop the fucking car!’, I shouted. Dinallo dropped his cell, and slammed on the brakes, pushing everyone violently forward. In the meantime, the officer in the back had drawn his weapon, but the forward-movement of the squad car loosened his grip, and it fell from his hand.

Dinallo recovered quickly, and made a grab for his gun. I swung back round and faced him. ‘Don’t do anything stupid, Detective’, I screamed, ‘I know how to use this’. I was shaking from top to toe. But I didn’t have time to think about the magnitude of what I was doing. I was operating on pure adrenalin. ‘Tell him to take the cuffs off Alan!’, I ordered, nodding my head in the direction of the officer in the back, ‘And tell him not to try anything clever, or I’ll blow your fucking brains out!’, I screamed. I knew that if the detective called my bluff, I was done for. There was no way that I could have pulled that trigger. And Dinallo was clearly mulling over the odds in his mind, trying to work out whether I had it in me to go through with my threat. In the end, he backed-off and, after a brief hesitation, turned to the officer and nodded his agreement for Alan to be uncuffed.

As soon as Dinallo and the officer got out, I slid across into the driver’s seat and pushed the accelerator to the floor as hard as I could. Off we roared. I looked in the rearview mirror, and saw the two cops standing helplessly in the middle of the road. I looked over at Alan. He was just sitting there, still in a daze. My mind was racing overtime. I was now on the run from the law, having threatened to kill a detective. In the back of the car was a man wanted for murder. I had no idea where I was headed, and no plan for what to do next. I knew, however, that we’d have to ditch the squad car. And quickly. Its location would obviously be tracked by the cops.

I was busy scouring the street for another vehicle, when I spied a young man in a pick-up waiting outside a deli. And, as luck would have it, his engine was idling. I could see him freeze when the squad car pulled up behind him, wondering just what kind of trouble he was in. ‘Out the car!’, I shouted as I jumped out of the police vehicle, pointing the gun at his head. ‘Now!’, I shouted as he hesitated, not knowing what to make of the situation and now in fear for his life. Alan had by now regained some of his equilibrium. He ran round to the passenger door and jumped inside. As soon as the startled driver got out, I jumped into the driver’s seat, and we continued our getaway in yet another hijacked vehicle. After a few minutes, Alan looked over and smiled. ‘I’m not entirely sure what’s going on’, he said, ‘But I guess I should thank you for what you’ve done’. Now wasn’t the time for explanations though, so I simply returned his smile and focused on the road ahead. But it was good to see that he could still smile.

Thankfully I had the presence of mind to stop off at an ATM and take out as much cash as I could from all the cards I had in my possession. And I got Alan to do the same. Then we had to get as far away as possible, as the cops would be monitoring our bank transactions and would doubtless soon be following our trail.

We kept on the move, but I decided it would be sensible to remain close to New York City, as Alex would probably want to meet us somewhere nearby. In the end, we ditched the pick-up and took a Greyhound to Newark, registering at the County Motel.

Although Alan and I were both exhausted due to the full-on events of the day, we knew that neither of us would be able to sleep straightaway. So, after we showered and ordered in a pizza, we began to unwind. Then, over the course of the next two hours, we brought each other up to speed on what had happened. First, I laid it all out for him; the way I came to meet Alex; how he boasted that he had bet the ranch after receiving sound insider tips; the visit from Lorraine and Thomas; my telephone call to Lorraine after discovering that Alex had been charged with securities fraud; my trip to Alan’s apartment and discovery of Lorraine’s body; my suspicion that Alan was the murderer; the agreement to help the cops bring him in; the last minute phone-call from Alex admitting that he had Thomas and that he was responsible for Lorraine’s death; and the teddy bear, which appeared to tie me to what Alex was convinced was the plot that brought him down.

Alan mostly listened, throwing in the odd question. Then it was his turn, and slowly he started to come out of his shell.

‘I was always a bit of a journeyman, Grace’, he admitted. It was the first time that he gave me the impression that he was anything less than perfect. ‘I had average grades through college, and I only got to work at Lehman because they acquired the mortgage firm I was working for. I fell into M&A, mainly doing the grunt work. Although I joined a deal team, I was never an originator of business; I just didn’t have the contacts. I met Alex last spring at a hedge fund poker tournament in Chicago. I fancied myself as a bit of a player, but Alex took me to the cleaners that night. In truth, I was close to busted; I never was any good with money. It always seems to just fall through my hands’. As he was speaking, I remembered my surprise when the taxi pulled up outside his apartment earlier that day; it certainly wasn’t the kind of place I expected an investment banker to live in with his family. Now things were beginning to fall into place.

‘It was only afterwards, at the bar, that Alex and I got talking, and he started to push me into giving him information about pending M&A deals. But I didn’t tell him anything, at least not at that stage’, Alan continued. ‘But things then went from bad to worse for me. The deals dried up at work, and I was spending more and more of my time just looking out the window at work. And Lehman was making the news for all the wrong reasons. We were all worried about our livelihoods. Anyway, I went into a deep depression, and did what I usually did when the pressure was on – retreated into a kind of fantasy world. I starting mixing with the wrong crowd, people who really did have money. I struggled to keep up with them and, before I knew what I’d done – spending money that I never had – we were almost bankrupt. We had to sell our apartment. Lorraine went spare; I thought she was going to leave me and take Thomas, but we found a place to rent and things settled down. And then, just as I managed to stave off bankruptcy, fucking Lehman went belly up, and I lost my job. How ironic is that ?’, he laughed.

‘I couldn’t find another job. I looked for weeks’, He continued. ‘But I didn’t get one interview. Nobody was hiring then. And it was soon after that that Alex called me out of the blue. He assumed that I’d been taken on by Barclays after they took Lehman’s US businesses, and it was fairly easy for me to lead him on. He wanted information, and I needed money. You work it out, Grace. Anyway, that’s how it all started’.

‘But how come that last deal went bad, Alan ?’, I asked.

‘Simple’, he replied. ‘Because the information I fed him was mostly made up, or at least based on conjecture!’.

‘Made up!’, I repeated incredulously.

‘Listen, when you work in M&A at a firm like Lehman, there’s always lots of ideas for clients being thrown around. I knew that most of these were long-shots, and I was never really in the loop on any big deal anyway. Even more so after I lost my job. But I just pieced a few things together and made some logical assumptions’.

‘But how were you able to gain his trust ? Alex must have believed in you to stake everything on that last deal’, I asked.

‘I just got lucky, Grace. There were a couple of things that were tentative deals that I knew some of guys were working on when I was at Lehman. I didn’t really have a clue if they would progress, but I was in such a hole that I just feed Alex the information as if it was fact. He went for it, and made a small amount of money on each deal as they were announced. No one was more surprised than me that these deals went through! It was then that he started pestering me for more. I had no idea that he was in any kind of financial difficulty, but he clearly persuaded himself that I was the solution to all his problems. His calls became more frequent and, in hindsight, more desperate’.

‘So, what was the last ‘deal’ ? What happened ?’, I asked, becoming more and more intrigued as his story unfolded.

There was a brief pause. ‘Well’, he laughed, ‘You’re not going to believe it, but I told him that Satyam Computers was going to be bought out by one of the big boys! How wrong was I ? I couldn’t have picked a worse company’.

Satyam had been the main topic of conversation in the financial community over the last few days, and was being described as ‘India’s Enron’. The company’s founder and Chairman, Ramalinga Raju, was on the run, after writing a letter to his board confessing that he had overstated revenues and profits for years. The stock nosed dived 90% overnight. No wonder Alex was pissed!

‘Why Satyam ?’

‘Oh, I remembered a few guys talking about the company as a possible target, that’s all. Nothing concrete. And I read something about it in The Times, I think. I was just clutching at straws, the same as Alex really. When I woke up to the news that the stock had plummeted, I literally threw up. And Alex kept calling and calling. He wouldn’t leave me alone. In the end, I just couldn’t handle it. I left the apartment to go get some air and just walked around, in a daze. It was a few hours later that I plucked up the courage to pick up one of his calls, and Alex told me that he had Thomas. I rushed back to the apartment, but it was too late. I still don’t remember you being there. I was in shock. I couldn’t believe that he had done it. And seeing Lorraine there……………’. His voice trailed off as he started to relive the terrible scene he had witnessed just a few hours before. The tears welled up in his eyes, and he started to shake. ‘We have to save him’, he sobbed. ‘We’ve got to get Thomas back! He’s the only thing that I’ve got left now’.

But the ball was in Alex’s court. We were now playing a waiting game. He was in control. We just had to stay one step ahead of the law and await Alex’s call. And Alex was still in custody.

‘And were you the mole who shopped him ?’, I asked.

‘No’, he said, shaking his head and regaining his composure, ‘He thinks it was me, but it wasn’t. It could have been anybody, though. I later found out that Alex was known all over the Street for paying for information. Word is that he had someone on the inside at most of the big firms’.

I’d just turned off the light, and was looking over at Alan, who had already fallen asleep on the couch. And no wonder – it had been one Hell of a day, especially for him. But one thing was still troubling me; I couldn’t understand how Alex had managed to put that call into me earlier in the day. It didn’t make any sense. He was in police custody. But, before I could reflect anymore on it, I was distracted by a noise outside. I rushed to the window and slowly pulled back the curtain. It was Dinallo. The cops had found us already! I bet we’d been fingered by the pizza delivery boy. I knew we were making a big mistake when we ordered in. Now what were we to do ? The place was probably surrounded’.

You will have to go to the source to read the rest…

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Penjing Asset Management Ltd, Hong Kong to Expand Seeding of New Hedge Funds

Ronnie Wu, chief investment officer of the $400 million hedge fund of funds house Penjing Asset Management Ltd., will start a pool of money dedicated to providing early investments to new hedge funds next month.

It aims to make five to six investments with the flagship Penjing Asia Fund by year-end, he said in an interview yesterday. The new pool will begin with about $25 million from Wu’s family and friends and then raise capital from investors after the initial money has been deployed.

Wu is seeking to profit from the spurt of start-ups emerging from a financial crisis that’s caused $1.5 trillion in losses and writedowns at financial firms globally and seen more than 300,000 jobs lost, according to data compiled by Bloomberg.

“When I first managed Asian funds of funds back in 2002, we saw a lot of talent but very little capital after the 2000 technology bubble,” said Wu. “The current environment is worse than 2002. You have a lot of experienced talent whose alternative to starting on their own is to sit at home.”

About 150 new funds were set up globally in the first quarter, the highest since the second quarter of 2008, according to Chicago-based Hedge Fund Research Inc. Managers are finding it harder to raise money as investors pulled more than $103 billion from the global industry in the three months to March, reducing total assets managed to $1.33 trillion.

Some managers have left investment banks cutting down on proprietary trading, while others are striking out on their own after the worst hedge fund industry performance on record made some firms unable to charge performance fees, prompting job cuts.


Nick Taylor, ex-head of Citadel Investment Group LLC’s principal investments business in Asia and Europe, Shafiq Karmali, a former Goldman Sachs Group Inc. trader, and Edwin Wong, previously a Lehman Brothers Holdings Inc. managing director, are among those starting new hedge funds in Asia.

“This is turning out to be the year of start-ups as we see an increasing supply of successful and quality managers who are leaving the prop desks of big banks and global hedge funds to start their own shop,” said Christophe Lee, chairman of the Hong Kong and China national group of London-based Alternative Investment Management Association.

Penjing most recently seeded a fund three months ago and will invest in another next month, he added.

The new pool will have fewer seeding restrictions than Penjing’s existing funds of funds, which cap any single holdings at 5 percent of their investments to diversify risks.

“If we like a certain manager and think we can benefit from their growth by seeding them, the flagship fund is not an ideal vehicle because of its diversified nature and stringent liquidity requirements,” said Wu. “If we create a dedicated seeding vehicle, then the participation is much higher, together with a high risk profile.”

Wu is looking for candidates that meet at least one of the following criteria: strong performance, unique investment strategy, or the potential to rapidly expand assets, he said.

While his seeding activity will focus on startups, it may also include new offerings from managers that have been in operation for a while.

Penjing’s seeding investments so far range from $5 million to $15 million each. Future investments could amount to as much as $25 million after the new pool is set up, Wu said.

Capital Inflows

The company has attracted new capital from investors since May, Wu said. The inflows, the first Penjing has seen since Lehman’s collapse in September, came mostly from private banks representing wealthy individuals, he added.

Yet Penjing is still experiencing some investor withdrawals, leaving its assets under management largely flat, said Wu.

Penjing Asia Fund, set up in April 2005, returned 9.8 percent this year through May, according to a newsletter to investors. The Eurekahedge Asia-Pacific Multistrategy Fund of Funds Index, tracking 54 members, gained 3.8 percent in the same period.

Patrick Kemmis
Senior Partner
VBK Partners LLP


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MAS Releases Investigation Findings on the Sale and Marketing of Structured Notes Linked to Lehman Brothers

Singapore, 7 July 2009…The Monetary Authority of Singapore (MAS) has completed investigations into the sale and marketing of structured notes linked to Lehman Brothers (the Notes). Given the degree of public interest, MAS is releasing a report on our investigation findings (Click here to view the report).

2. MAS’ investigations found that the 10 financial institutions that distributed the Notes (see Annex 1*) had policies, procedures and controls in place for the approval, sales and marketing of the Notes. However, the extent of the due diligence and level of internal controls differed among them. As a result, there were various forms of non-compliance with MAS’ notices and guidelines on the sale and marketing of investment products. The nature and extent of these failings and their potential impact on the sales process and customers differed for each institution. Some of the specific failings included:

a) risk ratings assigned by some financial institutions to some series of the Notes that were inconsistent with risk warnings stated in the prospectus and pricing statement;

b) insufficient steps taken by some financial institutions to ensure that all their financial advisory representatives were properly trained before marketing and selling the Notes; and

c) weaknesses in how some financial institutions ensured that their financial advisory representatives were properly equipped with accurate and complete information about the Notes.

The findings for each financial institution are specific to that institution and are not general findings.

3. MAS takes a serious view of all instances of non-compliance by the financial institutions with MAS’ notices and guidelines on the sale and marketing of investment products. In deciding on the appropriate regulatory action, MAS considered the nature and impact of the failings, the steps taken by the financial institutions to rectify these, and the extent to which they accepted responsibility and resolved investors’ complaints.  Taking all these into account, MAS has imposed bans on the sale of structured notes by these institutions for periods ranging from a minimum of six months to a minimum of two years.  In addition, MAS has issued formal directions to the financial institutions to rectify all the weaknesses identified by the investigations and to review and strengthen all internal processes and procedures for the provision of financial advisory services across all investment products. The financial institutions are also required to appoint an external person approved by MAS to review their action plan and report on its implementation, and appoint a member of the institution’s senior management to oversee compliance with MAS’ direction. The financial institutions will not be able to distribute structured notes until MAS is satisfied with the measures they have put in place.

Settlements offered by financial institutions

4. The financial institutions have generally adopted MAS’ recommendation not to take an overly legalistic approach in resolving customer complaints. In reviewing each case under their complaints assessment framework that MAS required them to put in place, they considered whether there was a reasonable basis for recommending the product to the client, the extent to which it was properly explained to the client that the product was being sold on an advisory or execution only basis and whether proper procedures were adhered to in the advisory and sales process. In deciding the outcome of each complaint, the financial institutions weighed a range of relevant factors including the investment experience of the investor, the degree of reasonable reliance on the advice provided and the investor’s ability to understand the product and any documents signed during the sales process. The financial institutions also took into account the failings identified by MAS’ investigation. Settlements were offered by the financial institutions on a “without admission of liability” basis.

5. For the Minibond Notes, where a partial settlement is offered, the investor will retain all or a portion of his notes.  He will keep any residual value arising from the notes that he retains.  The residual value, if any, will depend on the ultimate value of the underlying securities.

6. As of 31 May 2009, the three banks and one finance company have offered settlements to 67% of investors whose cases have been decided at a value of about S$105 million.  Over 50% of cases decided have been offered settlements of 50% and above with 26% receiving offers of full settlement (see Annex 2**, Table 1 for details). 85% of settlement offers by the three banks and one finance company have been accepted, 3% have been rejected and the rest have yet to decide. The stockbroking firms have offered settlements amounting to S$2.7 million to 33% of investors whose cases have been decided (see Annex 2**, Table 2 for details). 70% of settlement offers by the stockbroking firms have been accepted, 11% have been rejected and the rest have yet to decide.

7. The settlements offered differ across financial institutions. These differences generally reflect the varied target profiles of customers of the financial institutions and their different business models as well as the differences in the nature, extent and impact of the failings identified in the investigation for each financial institution.

8. The failings identified in MAS’ investigations do not automatically mean that the financial institutions are liable to individual investors. An investor would have to show that he relied on the particular recommendation or representation based on the specific facts and circumstances at the time of purchase. These would include the various documents that the investor signed or acknowledged receipt of as part of the transaction such as documentation containing risk warnings and disclaimers about the liability of the financial institutions distributing the Notes.

Going Forward

9. MAS expects all financial institutions operating in Singapore to maintain the highest professional standards by acting fairly, in the best interests of their customers. These standards are clearly set out in MAS’ regulations, notices and guidelines. The financial institutions’ senior management should have exercised more care in carrying out their responsibilities to ensure standards were consistently implemented across the whole organisation, especially in the sales practices of their front-line staff.  MAS has reiterated in our Fair Dealing guidelines issued on 3 April 2009 that the Board and senior management are responsible for ensuring their financial institution delivers fair dealing outcomes to its customers. We intend to intensify our supervisory scrutiny of how the Board and senior management of financial institutions are implementing the guidelines to deliver these fair dealing customer outcomes.

10. In March this year, MAS released a consultation paper on proposed enhanced safeguards for investors when they purchase investment products.  We received a range of useful comments from various stakeholders which we are considering carefully. MAS will issue our response to the feedback shortly.  Meanwhile, all financial institutions should carefully examine their current business models, including product range and remuneration structures, to ensure they are consistent with acting in the best interests of their customers.

11. Investors too have to play a role by reading product disclosures and making the effort to understand the products they purchase.  This will reduce the risk of investors buying products that do not meet their needs. MAS will work with the industry to step up investor education initiatives and raise the level of financial literacy in Singapore.

12. Shane Tregillis, Deputy Managing Director, Market Conduct, MAS, said “MAS’ investigations have been thorough and objective. Based on our investigation findings for each financial institution, MAS has taken appropriate regulatory action. The industry as a whole needs to carefully reflect on these findings, take immediate steps to win back the trust and confidence of their customers and prevent similar problems from emerging in the future.”

* For Annex 1, please click here.
** For Annex 2, please click here.

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Viathon Capital Launches New Credit Hedge Fund

I know it’s in the US but I always like a new “credit opportunity fund”…

Viathon Capital, LP has officially launched the Whitewater Master Fund, LP, a credit opportunity fund focused on non-correlated absolute returns.

Employing a fundamental, credit-intensive research process in order to identify long and short investment opportunities in the United States and Europe, the hedge fund’s objective is to seek long term capital appreciation by investing in high yield and investment grade corporate bonds and bank debt.

As part of this launch, Viathon Capital has affiliates of Citigroup Alternative Investments, LLC (CAI) as its seed investor in this new fund. The fund launched in May of 2009 with $50 million in capital and had a net return of +0.92 % for the month of May and estimates +2.10% for June bringing it’s inception to date return to approximately +3.02%.

Viathon Capital’s team includes four investment professionals and two
trade support/back office personnel with backgrounds from Marathon Asset Management,
Goldman Sachs, Merrill Lynch, Neuberger Berman, SAC/Sigma, Providence Investment
Management and Lehman Brothers.

Big Thank You to Hedge Fund World for the news

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A new credit hedge fund in Singapore: SaKa Capital

Another day, another Credit Hedge Fund… I am starting to see a pattern here 😉

June 26 (Bloomberg) — Assan Din, a former Lehman Brothers Holdings Inc. credit trader, is setting up a hedge fund to trade corporate bonds and derivatives in Asia.

SaKa Capital’s fund, which will have a capacity of more than $500 million, will start in September with $25 million to $50 million sourced mainly from founding members and friends, Din, 38, said. The Singapore-based firm will subsequently raise capital from institutional investors, including U.S. pension funds and endowments, once it builds a track record, he added.

“We chose Asia because we believe over the next few years there will be a lot of great opportunities to make money in the credit markets here,” Din, who ran Lehman’s credit trading businesses in Europe and Asia from 1998 till 2006, said yesterday. “If there is any region that is going to grow, it will be Asia.”

SaKa Capital, named after the ancient nomadic tribe that conquered parts of Asia, is seeking to take advantage of trading opportunities in credit markets as financial companies become more averse to risk. Financial institutions worldwide have reported almost $1.5 trillion of losses since the U.S. subprime mortgage market collapsed, data compiled by Bloomberg show.

“The days of large principal businesses at banks competing with hedge funds is over for the foreseeable future,” Din said. “Banks and existing funds are suffering from illiquid legacy positions on their balance sheets and hence are handicapped to take advantage of the credit opportunity today.”

Uncertainty, Opportunity

The SaKaCapital Liquid Credit Fund will target annual returns of about 15 percent, with “moderate leverage,” said Din, who joined Lehman in 1997 as a credit derivatives trader in London. Lehman in September filed for the biggest bankruptcy in U.S. history.

He headed European and Asian operations for Lehman’s $8 billion global principal strategies group, and helped set up R3 Capital Management LLC in May last year when Lehman spun out the unit. He left R3 before the hedge fund was taken over by New York-based money manager BlackRock Inc. in April this year.

Din was Lehman’s London-based head of European credit trading from May 2004 to June 2006, after running the bank’s credit trading business in Asia outside of Japan for six years.

The fund will trade corporate bonds and derivatives, convertible debt, credit indexes as well as options, focusing on securities that are liquid, or are easily traded, Din said. It will also use equities markets to hedge.

“There’s still a lot of uncertainty in the markets and a lot of opportunity to make money right now, particularly in credit markets,” Din said. “It’s a great time to make money in the markets; it’s not the best time to raise money.”

Benchmark gauges of corporate credit risk rose earlier this week after the World Bank warned the global recession will be deeper than previously forecast.

Jean Viry-Babel
senior partner
VBK partners

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Savvy Fund Sees an Asia Backfire

The traders behind a Singapore-based hedge fund that outperformed last year are betting government efforts to stabilize Asia’s markets will backfire, yielding opportunities in foreign exchange and credit.

Last year, Artradis Fund Management’s flagship Barracuda fund returned 27% by betting on price swings in Asian stock markets through derivatives, or financial instruments whose value is based on an underlying investment. By contrast, the benchmark MSCI Asia ex-Japan index fell 27% in 2008.

While the plays on stock volatility were good to Artradis last year, now the firm is changing gears.

“We felt that the glory days of equity derivatives business in Asia were going to be restricted going forward,” partly because hedge funds bid up the prices of derivatives, squeezing returns, says Steve Diggle, one of the firm’s founders.

In addition, issuance of structured products containing derivatives has slowed, as wealthy individuals who bought these products in the boom have been burned and pulled back. “In order to grow, we needed to broaden to other markets and products,” Mr. Diggle says.

Artradis is wagering that government efforts in Asia to stimulate the economy and create stability will actually create market imbalances and, as a consequence, lucrative trading opportunities.

“Asian markets have a long history of government involvement,” with mixed results, says David Dredge, 44 years old, who recently left his job as deputy head of local markets at Royal Bank of Scotland Group in Singapore to help spearhead Artradis’s new effort.

Mr. Diggle and Richard Magides, in their mid-40s, previously worked together on the derivatives desks of Barings Bank in Singapore, where the rogue trader Nicholas Leeson caused the bank’s collapse in 1995. They founded Artradis in 2002 with about $4.5 million of mostly their own money. Since then, they have built it into one of the largest home-grown Asian funds, with about $2.5 billion under management.

When shares were rising, their funds produced lackluster returns. The situation reversed in mid-2007, when markets got clobbered and their bets on volatility paid off. Even amid success, Artradis was hit with massive redemptions of approximately $2.3 billion, which the firm attributes to the liquidity squeeze that forced clients and competitors to sell assets and raise cash quickly.

Also hurting the fund was the bankruptcy of Lehman Brothers, which the fund says owes it more than $100 million because of trades in which Lehman acted as counterparty and assets that have been frozen at the firm.

For investors in Asia, the ripple effects of U.S. stimulus efforts offer a road map, Mr. Dredge says. He points to moves by the U.S. Federal Reserve to stimulate lending. Concerns about inflation and the U.S. dollar have partly prompted investors to dump U.S. Treasury bonds, pushing up their yield and undoing Fed efforts to keep rates low. The trick for investors, he says, is to spot opportunities where government actions won’t be enough to override market forces.

The past week, short-term bank lending rates rose sharply in Asia as the region’s banks displayed concerns about the Fed’s ability to manage rates. “It follows that interest-rate volatility in the U.S. will be mirrored in Asia,” Mr. Dredge says.

Separately, the dollar’s weakness has led to gains in most Asian currencies this year, including the rupiah, the rupee and the baht. But expections that the dollar will continue declining could come to an abrupt halt, Mr. Dredge says. Some currencies, such as the Australian dollar, have weakened slightly this week amid worries that an economic recovery isn’t coming to fruition anytime soon.

Another possible macro shock could come if China and Hong Kong let their currencies appreciate against the U.S. dollar. While Hong Kong pegs its currency at a fixed rate to the dollar, China allows its currency to fluctuate, albeit in a highly managed way.

Big changes seem unlikely with either currency right away, though the wisdom of being so tightly bound to the dollar has come into question as fears grow about the dollar’s long-term prospects. Recently, Hong Kong’s monetary authority has intervened aggressively to uphold the 26-year-old peg.

From Laura Santini at the Wall Street Journal

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