Chapter 9
The Prudential Regulator’s role is to provide oversight to ensure best practices in the management of public institutions and listed companies and to supervise the Corporations Law so that breaches are prosecuted and illegal practices circumvented.
The visitors to Peter’s apartment said that they had become aware of substantial and similar trading patterns in the shares of a number of public companies that involved himself as the seller of shares, characteristically in companies whose enterprises were in decline for one reason or another.
Peter informed the two gentlemen that the Taxation people had also visited him as if they did not know this, and that they had been quite happy with his trading approach. He had, he said, paid all his capital gains tax in preceding years and was keeping records of all transactions as required by law so that his accountants would be ready at the end of the current financial year to make the appropriate payments as required by the law.
“What we are investigating is stock price manipulation” said the senior officer. “Do you understand what that is?” he continued.
“Yes” said Peter “but I’m not sure that I see how it applies to me.”
“Well we think that some individuals have been influencing market prices by a practice known as ‘spreading false rumours’ in relation to the financial health of various companies” offered the younger officer. “We have logged a number of telephone calls from this address to financial institutions involved in recent large losses on the stock exchange. For example...” and at this point he consulted a fairly lengthy list, “on the fifth of February there were 24 calls made from a telephone registered at this address. Each of those calls was to brokerage houses. Is that correct?”
“Well, I don’t keep a record of calls I make, but if you say it is I’m not going to disagree. I often call stock brokers” Peter replied.
“Do you have a stock broker who buys and sells for you?” said the senior officer.
Peter knew immediately that they would know everything about his method of buying and selling shares.
“No” he replied, “I buy my shares through an on-line broking firm. And I sell them the same way.”
“Then why all the calls to all these stock broking firms?” said the officer.
“I like to keep informed” replied Peter.
“If you are not a client of the broking house why would they keep you ‘informed’?” said the officer carefully. “Surely brokers only advise clients who are paying them?” he continued.
Peter knew that he was now sailing dangerous waters but he kept his calm and simply said:
“Oh well, I often begin by indicating that I’m dissatisfied with my own broker and thinking of transferring to a new broker. This nearly always gets them to open up a little just to show their style. So, I often seek particular information this way and they often give it. You’d be surprised how often this works” he finished, pleased with himself at least for now.
“Do you have a mobile telephone?” asked the senior officer.
“Yes” Peter replied, thinking fast, “why?”
“Would you mind if we examined it and checked the call record there?” was the reply.
“No, not at all” Peter responded, knowing that any resistance would signal the need for a more comprehensive search. “It’s actually in my attaché case right there” he volunteered. Peter picked up the attaché case and removed the mobile phone, handing it to the officer.
“And the number of this telephone is?” asked Mr Goldsmid.
Peter told him the number, upon which he pulled out a phone of his own and pressed a single button, followed by what was clearly Peter’s mobile telephone number. He then asked if Peter could kindly switch his fax machine on, and said it would take just a couple of minutes for all his calls of the last 2 months to be down the line.
“That’s impressive” said Peter, pleased with himself that this was not the mobile telephone he used for the key calls to stoke the fires of fright in the market. That phone was in a pocket under the seat of his Mercedez sports in the garage. Hopefully they would not conduct a thorough search and locate it.
The list duly arrived, and after some minutes examining it, the officer said:
“Every Sunday night you make a call to a person in Summer Hill. Who is this person?”
Peter was astonished that a pattern would show up and momentarily lost his composure. He said:
“Is this really necessary? That person is a friend of mine” and realizing that he would be asked, said Jim’s name.
“Does this friend of yours enjoy your passion for the market?” the officer asked, rather evenly.
“Well, yes in a sort of way” he replied, hoping he sounded relaxed for he did not feel so.
“So would it be fair to say you trade together on the share market?” the officer asked.
“Yes” said Peter, adding: “we do share information from time to time.”
“On more or less a weekly basis?” asked the officer.
“Yes” said Peter “I didn’t know that it was against the law.”
“It’s not. We just like to get a picture of how people are cooperating together” said the officer.
“Well is that all you need to know?” said Peter, a little emboldened.
“Perhaps for the present” said the officer, clearly leaving room for a return visit. But he was not quite finished with the interview.
“There’s just one more question” he said. “Have you or this friend of yours ever taken any action that might affect the price of any company so far as the stock market is concerned, independent of your own buying or selling activities?”
“No, not at all” lied Peter, thinking of a certain recent Prime Minister who once infamously said ‘never, ever’ when he meant ‘yes’.
“Well, thank you for your time and trouble Mr Milner. May we return if we have any more questions?”
“Of course” responded Peter in something of relief. But he knew that from now on he would need to be very much more circumspect in his activities. The gentlemen were shown to the door and Peter told Angelique that in a short while he would be taking a little drive over to see Jim. Then he remembered the secret telephone and went straight to the garage and dialed Jim’s number.
Jim was relieved to hear from him and they went into damage control.
“You’ll get a visit for certain mate. Maybe today. Just play it cool. Make sure they don’t get your prepaid mobile. Don’t deny cooperating with me but point out that it is all quite legal anyway, and that you do pay your taxes and so forth. They’ll struggle to find anything, but be careful what you say.”
“Okay mate” Jim replied. “Thanks. I’ll see you.”
True to the warning, Mr Jenkins and Mr Goldsmid were on Jim’s doorstep within another twenty minutes. They commenced with the fact that Peter would undoubtedly have called him in advance of the meeting and Jim confirmed that yes, his friend had let him know they were likely to visit.
“You also have nothing to tell us about the reason you have been so successful in the market in recent times then, Mr Archer?”
Jim decided to get onto the front foot at the outset so he said:
“How did you know I had been quite successful?” he said.
“We have ways of logging all unusual share movements Mr Archer and yours have come to our attention a number of times” replied the officer. “So you and your friend Mr Milner seem to have a very happy relationship” he continued as if in a throwaway line.
“Yes” said Jim, thinking hard “I’ve known Peter, Mr Milner, for many years.”
“What, since you were at school together?” the officer put in.
“Oh, not quite” Jim replied “I’m a few years older than he is.”
Then thinking again he said:
“But I knew him when we both went to school, it was just that he was in a lower class. No, we got really friendly some years after that, and we’ve been friends ever since
.”
“But Mr Milner seems to have done very well for himself, living at Point Piper and all, while I might venture that your own circumstances appear a little more modest” the officer teased.
Right, thought Jim, this is it.
“Well, you see I was foolish enough to stay in teaching all my life. This house here is the reward for a life of public service. Mr. Milner was a successful businessman and his house reflects this fact. I cannot see what the difficulty you have is” he finished, a little petulantly.
The officer began to regret the inquisition, having little else to go on. But he threw another wobbly just to test reaction, and he got it.
“So you haven’t done anything in particular that might have caused unusual share price movements in regard to the companies you have from time to time sold down in the market place?”
Jim was fed up and not keeping things cool. He had said the next thing before realizing that he could not retract:
“Oh yes, of course, I’ve placed some foot and mouth virus where it’ll infect all the cattle in the Northern Territory so I can sell the shares of the big pastoral companies and make a killing when they crash, and oh, I’ve just infected all the salmon in Tasmania so I can sell the companies that raise fish in sea cages and make heaps doing just that.”
“Do you realize that you have just admitted to bio-terrorism, a criminal activity?” said the officer.
“It was a joke” said Jim trying to stay calm.
“Well we didn’t come here for jokes Mr Archer ” said the officer. “Fortunately I do not believe you and therefore I will not take the matter any further, however I would caution you not to trivialize the questions properly asked of you in the course of our normal investigations. You do realize that from time to time we have to deal with real criminals who might do such things as you just described?”
“Yes, I’m sorry I carried on” said Jim with genuine remorse. “I just don’t know what came over me. I’m probably a little upset at having to answer questions about my investment strategies and I just did the sort of play acting that might have been appropriate in a teaching situation.”
“Would you have used those examples in a teaching situation?” asked Mr Jenkins.
“No, of course not. I was just trying to illustrate a point” replied Jim.
“Well I feel very uncomfortable with that sort of illustration” said Goldsmid.
“I’m sorry” said Jim, knowing quite well that he had revealed a side to his character that he was not particularly proud of. Mostly he was angered that his better judgment had slipped and that he would hereafter be watched somewhat more diligently by the authorities.
“Apology accepted” said the officer. “I think that’s all for today.”
Peg had been listening from an adjacent room and when Jim let the officers out the front door she made a signal across her throat with her hand.
“So that went well” she said.
Jim said nothing but sat down with a rather too heavy thump and was clearly more than a little angered at his own lapse.
“You gave them a perfect model of how the investment trick might run, Jim. They might not think you would do those particular things but they now know that you have given such things some thought and that if you’d even think of that there may well be other less obvious things you’d consider doing in the market place to give yourself an unfair advantage” said Peg.
“Yes, I know. I’ve blown it” said Jim, lamely.
Another hour went by then Peter’s coupe pulled up in the street outside. When he walked in he knew that something had gone wrong.
Peg made it easy for Jim. I’m afraid Jim cracked and gave them the recipe for the whole thing, at least indirectly, by suggesting that bio-terrorism acts could be used to kill off the salmon companies and the cattle companies.
“Oh great” was all Peter said, sitting down to take things in.
There was a lengthy silence then Peter said:
“Well that’s the end for a good while now. We’ll all be watched like hawks. Any false move, on the telephone or in the market and they’ll have us. I feel just like a bank robber after a successful heist but knowing that I’ve left my fingerprints behind.”
There followed a lengthy silence during which Peter just looked rather disdainfully at his older brother .
“I’m sorry I lost it mate” said Jim, as if to make amends. “I just couldn’t stop myself. I got so pissed off with this jerk and his simpering questions. We haven’t done anything wrong so what’s the big deal from them anyway?”
“Well actually, that’s the problem” said Peter. “We’ve done quite a few things wrong really. That’s why they’re sniffing around. Now they’ll know we have found some way or ways of influencing the market and that we’ve more than likely used them.”
“Yes” said Peg “it’s just been such smooth travelling for us so far that it’s easy to slip into the belief that we haven’t done anything wrong. In fact, we have all committed crimes to get where we are. I’ve just been reading the Corporations Law a little and I now realize how far over the line we’ve been.”
“Too late to turn back now, Peg” said Peter.
“Yes, I know that Pete, but let’s be more careful in the future.”
“I’m not sure that I know what you mean, but yes we’ll have to take extra care from now on” replied Peter to a visible nodding of the head from Jim.
Peter suggested they all have a drink and Peg went to the kitchen to organize some whisky just as Peter liked it. When she returned and the first commiserations had been shared by way of a clink of the three glasses, Peter said:
“It was probably time we had a setback. We’ve had practically a dream run to this point. It was bound to happen sooner or later. Even if we didn’t make another dollar we’re all very well off now and it might be nice just to relax and enjoy some of this wealth.”
“Sadly though, there goes the little love nest at Point Piper. There’s no way we could really give it a shake just yet and still keep funds for the sort of boat we want and for the income we need” said Jim, apparently somewhat revived with the whisky.
“I’ve always had a plan B for just such an occasion” said Peter, quietly observing the reaction. Peg’s eyes lit up and Jim straightened in his armchair.
“All we do is transfer our selling and buy-back into the hands of my legal friend in San Francisco. It will be slower and it will cost us in several ways including exchange losses and US taxes that of course we can partly offset here under the tax splitting arrangements, but after its all worked out our gains would only suffer about 5 percent extra MER plus or minus any currency gains or losses and legal fees.”
“What’s MER?” asked Peg.
“Management Expense Ratio” said Jim.
“I’m with you” said Peg.
“It might be useful if one of us was there to do the selling down. It can be a slow process” said Peter, continuing the theme.
“We’ll have to be very careful how we go about putting some sort of scare into the market” said Jim “they’ll be watching our every move.”
“Yes.” said Peter “By the way, on my way over here I dropped my prepaid mobile into a trash bin. You should do the same with yours Jim, and get another for a fresh start.”
“Right” said Jim “I’ll smash mine in the vice and put it inside an old paint can that I’m throwing away. It’s got plenty of wet paint in it.”
“Come over to the Point tomorrow night and we’ll sort out some strategies” said Peter. “Meanwhile I’ll telephone George Kuidel from a payphone and fill him in on what we’re going to do. I’ll make sure he can provide the office facilities he did before, and that the funds transfer arrangements will still be acceptable. You know they’re even making some of this stuff difficult now. But the Trust Fund cover seems as good as anything at getting the wheels turning.”
The following evening, Angelique having prepared a fine roast and baked vegetables, the
conversation recommenced regarding the next target sell down: Johnson and Jacobs, the investment-bank-come-multi-vehicle-money-management finance house.
“Let’s suppose Peg and I get over to San Francisco and organize a big sell down of their stock, what thoughts have you on how we can make sure that the share price takes a dive?” asked Jim.
“That’s my one concern mate. I think they’re on the way down now and we might be a little late” replied Peter.
“Well what about we go away with several options and start the ball rolling with the most likely when we get there?” proposed Peg.
“You took the thought right out of my mind, Sis” said Peter, in the most affectionate way Peg had heard him refer to her since their recent re-acquaintance.
“So what other targets do we have?” said Jim.
“There are three main listed investment houses and one other merchant bank” said Peter. “Why not go with all of them as potential targets and we’ll communicate further once you are there?”
Angelique chimed in with the suggestion that she’d try to get their air bookings and she’d book them some accommodation at the same motor inn they stayed in before if that would suit them. Relieved of the routine tasks, Jim made a note to get a pre-paid telephone and international dialing card together with some sleep tablets to help with the long flights across the Pacific.
“Don’t forget, ‘First Class’ this time Angie, not Business” said Peter. “Bill it to my card” said Peter.
“Thanks brother” said Jim.
“Least I can do, mate” said Peter, seeming pleased to be back in action.
The legalities in order, funds transferred for backing the sell-down, Peg and Jim once more set out for the haul to LA and then on to San Francisco by Air Alaska. By the time they reached the hotel Jim said that it was already beginning to feel like home. He particularly liked the coffee corner where the best of coffee was always on hand for guests and was complementary as a matter of routine. They had come to enjoy also the easy way the hotel restaurant provided meals of a standard and proportion that would cost at least twice as much back home.
They arrived in the office on Monday morning but it was by then the small hours of the morning on the Tuesday back in Australia and the trading week was already a day down. Their old acquaintance, George Kuidel, seemed genuinely happy to have them back in the adjoining office. Nothing seemed too much trouble for him in ensuring their comfort.
Communication with Peter was by email but it normally had to wait until about mid afternoon before Peter would be up and about in Sydney. This meant that they did not do any selling on the first day at the office. Coded messages had been agreed for obvious reasons given the state of the likely scrutiny of any activity they were involved in, so the particular stock exchange codes were sent with each letter progressively one forward of its true position in the alphabet. So instead of simply saying JOJ, the symbol for their first target the message would be KQM. This was a system that both Jim and Peter thought should be sufficient to avoid any problems.
Peter said that the shares were still holding at a level that he thought could be profitable and that they should just sell as many as possible in the hope that they’d catch the natural decline that he felt sure was coming. Jim placed an initial sell order with his broker in San Francisco.
The broking platform reminded Jim that he would be selling on the next business day in Australia which was quite a few hours away. So the trading was always delayed by at least 8 hours but more commonly up to 16 hours from placement to possible result. On the Wednesday in Australia, still Tuesday in San Francisco, Jim sold about 240,000 of the shares and saw that it had caused a little drop in the price. That afternoon he placed a small buy order just to tease the market and the next morning he was pleased to see a slight bounce in the price. An hour later, now Thursday in Australia, he was able to dispose of another 300,000 and they were still holding above 10 dollars per share.
“Not bad for just three days” he said to Peg. “We’ve already unloaded about half our target.”
By the Friday in Australia the market price for the stock had fallen to around $8.00 and the email from Peter was that they should switch to sell down DYF, another fund manager and merchant finance operative. Jim placed some sell orders that afternoon but they missed the market and it would be Monday’s market that would be open to the order. These difficulties of timing not withstanding, both Jim and Peter felt that the exercise had been worthwhile. Nevertheless, it still took the remainder of the following week to begin to stretch their broker limits, and when this was done the emails commenced in earnest.
‘Shot all the wallabies in the paddock, I think mate’ emailed Jim to his brother.
Some hours later:
‘It might have been just in time. They were getting quite old and diseased.’.
‘Do you know of any inoculations that could fix their problems without actually having to shoot them?’ Jim asked.
‘No, mate’ replied Peter.
‘Well then, perhaps we should just shoot them’ responded Jim.
Both Jim and Peter seemed to be enjoying the exchange, but Jim knew his brother well enough to know that he would be thinking along the necessary lines.
Back in Sydney, Peter made a point of going to a suburban shopping centre and buying a prepaid telephone and handing over some identification that had his name misspelled and an address that was no longer current. He paid cash for the phone so that there was no official record of who owned it. He then made several calls to the mainstream press and again pretended to be a sacked and disgruntled worker who was letting them know how serious were the problems at the respective financial institutions.
After some further fluctuations in the market prices of the institutions, some rather unfavourable press began to appear, was defended and kept the issue going for a few days. Jim and Peg had taken a few days off to await results and were doing the sight seeing things around the waterfront and especially the old maritime museum as well as visiting the San Andreas Fault and other attractions of San Francisco.
By the end of the next week the share markets of most of the world were jittery as credit was being further constrained by major central banks and debt was becoming more and more a crucial issue. For companies with high leverage the solutions were narrowing down to finding a merger partner, selling assets at fire sale prices, being taken over or going broke. Peter acted on the following Monday.
Using the prepaid phone he rang broker after broker and said he was looking for someone to help him manage his share portfolio and what did they charge for their services and such questions. Whenever he was put through to an unsuspecting advisor or assistant he would come out with the idea of the rumour that certain finance houses were in difficulty and ask them if he should sell his shares. The usual response was to say that they only acted for their established clients but if he wished to make an appointment and come in to the office he would be most welcome. He usually rang off with a promise to do so, but sowing the seeds of uncertainty regarding the designated companies nevertheless.
By the middle of the week both the market and the target companies were in serious decline but the target companies were faring particularly badly. The total losses were in the order of 40 percent since they had sold the stock and he emailed Jim to think about hunting some coyote. ‘I’m told there’s plenty about in Northern California so you should get in and shoot some as soon as you can’ he wrote.
By the time Jim’s buy orders were placed the markets had fallen further. Again, the buy back of the required number of shares was the relatively easy bit. It seemed everyone was trying to offload their holdings and buy orders were welcome almost regardless of how low they were. It still took until the Tuesday in Australia because of the intervening weekend but the task was successfully completed and funds back into account by that point in time.
When Jim’s mobile rang later in the day it was Peter on the other end of the line.
; “The fishing trip seems to have gone well mate” Jim heard his brother say. “I should say it’s been a very good result for the effort.”
“I got a bit worried there for a while when things weren’t happening” replied Jim “but all is now in order and the tally will be back in the bag in a few days.”
“I’ve had another visit from the Regulator blokes” said Peter. “Actually they’re a little interested in your whereabouts. They said they’d endeavoured to contact you for about a week now and had no luck. I told them you were in America. They’d know this anyway from the passport records, so they were obviously just fishing as well.”
“Did they say anything about why they wanted to see me?” asked Jim.
“No, mate. They are obviously interested in some aspect of your finances though, perhaps the transfer of substantial funds to an overseas bank account. They’re keeping pretty close track of us both now” Peter replied.
“Well I think I might leave some funds in the Trust Account over here when we come back, just for a few weeks until things settle down again. What do you think?” asked Jim.
“I was going to suggest the same thing. In fact why don’t you make the trip back home and Angie and I’ll come over soon after so we can do another fishing trip while the funds are still there?” said Peter.
“Sounds good to me. Actually Peg has been looking at return flights so will let you know as soon as we have it in hand” said Jim.
Just forty-eight hours later they were touching down at Sydney’s international air terminal and Peter was there with the car to pick them up and take them straight to the Point Piper unit for a relaxing day.
“How was the flight?” said Peter, somewhat distantly as though there was something pressing on his mind.
“It really is amazing how routine it’s becoming now” said Peg. “It does make a huge difference having the sleeper pod in First Class.”
“Can you actually sleep in those things?” asked Peter.
“Well I did, probably for seven or eight hours I think” Peg replied.
“Not me, mate” said Jim. “I spent the whole trip reading a novel.”
“What was it?” asked Peter.
“Oh, it was an oldie that I read years ago. James Clavell’s ‘Tai-Pan’ said Jim.
“Oh, yes” replied Peter “the founding of Hong Kong or just about power and corruption and all that stuff in early Hong Kong.”
“Yes, the power thing and the corruption did go hand in hand and both were part of the early colony” said Jim.
“So some things change and then again things don’t change, eh?” reflected the younger brother.
“I suppose you could say that” said Jim.
They arrived at the apartment to be greeted by Angelique and handed towels for a hot shower and sauna before morning coffee. The debriefing did not take long. Jim was more interested in the visit from the Prudential investigators and why they had returned. Peter suggested that he might wait a day or so then contact them and welcome a visit.
“This time, no wise cracks mate” said Peter, as if the caution was necessary.
“No, I’ll keep my cool, don’t worry” replied Jim.
“I don’t think they can do anything to us over this last caper because there’s nothing untoward that we’ve done” said Peter, thoughtfully. “The funds are now cleared and back in the trading account in San Francisco.”
“I think we should leave the funds there for a while” said Jim. “It could be” he continued “that all this moving of money back and forth across the Pacific has got them baffled.”
“Yes, I think you’re probably right, mate” replied Peter, none too certain of his conviction.
“Anyway, front the guys and play very innocent. That’s what I’ll do” responded Jim.
“I might give him a ‘Valium’ before they come, just to relax him” said Peg.
“No, don’t do that, it might make things worse” said Peter. “You’ll need to think carefully before you reply to every question, mate.”
“Okay, enough of the guilty man syndrome, do we have any other prospects for our little joint venture in the pipeline?”
“Yes, well as I told you on the phone I’m thinking of taking Angie over for a selling spree, ha! ha!” he laughed.
“Who’s the target?” said Jim.
“It’s one of our largest insurance companies” said Peter, following with the name they were all familiar with: “‘GLI’”.
“So why them in particular?” queried Peg and Jim almost in unison.
“This time, I’ve worked out some evidence myself” replied Peter.
“Well?” said Jim after a pause.
“I’ve drawn up a list of their assets and cash flow based on their last two annual reports, and together with a series of natural disasters that have rocked their bottom line over the last twelve months, as per their fiduciary disclosure responsibilities. I’ve figured that with the brakes on the credit market at present they are going to be in real trouble any time soon” said Peter.
“Don’t they also have other businesses apart from insurance?” said Jim, pleased that he was at least up to speed on this company.
“Quite right” said Peter. “They have funds management income, and they have mortgage income. Now at present, funds management is not doing well, to say the least, and the mortgage market has all but dried up. These mortgage providers have to have a constant stream of new money to help fund the older mortgages in their pipeline and without the new money they have to repay lenders from income that is almost inadequate just to run the company day to day.”
“What about their insurance business?” asked Jim “Surely they have good cash flow there?”
“Judging by their previous two annual reports their insurance income is between four and five billion dollars per annum. Now in the last two years, as you know, natural disasters including very serious flooding on the Gold Coast, at Brisbane and in other Queensland localities has resulted in insurance losses reported by them of over one billion dollars. On top of this, they’ve had storms in Sydney, Hobart and Adelaide, and fires in Victoria and New South Wales. Total insurance losses in two years: over six and a half billion dollars. They must have used pretty well all their insurance reserves” Peter replied.
“Okay ” said Jim “so you think we could do a sell on their stock then find a way to push the panic button?”
“I do, mate” Peter responded. “We’ll go back to our friends at Factsfair and also some of the old broker stuff. By the way, I’ve ditched my last pre-paid phone and just got another. How about you?”
“Not yet, but I will” said Jim.
“Get rid of it before you go home. Don’t let the Prudential guys anywhere near it” instructed Peter.
“Right mate” said Jim, taking the phone from his top shirt pocket “here it is. What do you want to do with it?”
“I’ll smash it and trash it inside a recycling bin for plastic items” said Peter, taking the phone.
“So when do you think you’ll head off to the States then, mate?” asked Jim.
“We’ve a booking for Friday” said Angelique.
“Run you to the airport?” Jim asked.
“No mate, thanks” said Peter we’ll keep it low profile and call a cab.
“I’m surprised the Prudential folk haven’t asked us to let them know of our travel plans by now” said Jim.
“They know anyway” replied Peter. “As soon as the passport is scanned at the exit gate, they get a blip that lets them know.”
“I knew there was a reason we were all going electronic scan on arrival or departure. Big brother is watching us all” said Jim.
“The price we pay for security” said Peter without conviction.
“So when you go over do you want me to keep a watching brief here?” asked Jim.
“Yes, just keep me up to speed on any extraneous press and other market stuff that breaks. As you know the newspapers are pretty poor in the State
s and their television news coverage might as well not happen” replied Peter.
“So you’ll work from George Kuidel’s, just the same?” asked Jim.
“Yes” replied Peter “I was talking with George just this morning and he’s getting quite a buzz out of our little adventures. Actually, he’s raised a very interesting proposition with me. I don’t have all the details yet but from what I can gather he has some investors over there who are very wealthy and they are pooling their resources to set up a publicly listed hedge fund. George has mentioned us to them and they think it might be a wonderful joint venture that gives us immediate international reach.”
“What is a hedge fund?” said Peg.
“A company that does the sort of things we do but just on a much larger scale” said Jim.
“Some companies run many different hedge funds, some specializing in particular market sectors such as energy or bonds and so forth but the idea is the same. They buy and sell within the market by going short when a company or a material is going to drop in value and by going long when they think the price will rise” Peter explained. “In any case, we’ll know more when I talk with George and we can make a decision at that point.”
“Meanwhile, Peg and I have decided we are going to put the Summer Hill house on the market as soon as we tidy up a bit, some painting to be done, that sort of thing. Then we’ll make a move into an apartment somewhere over this way” said Jim.
“With a garden and pool” added Peg.
“Great” said Peter. “Well, best get you home for some catch up sleep tonight. Ring this Prudential guy tomorrow mate and just breathe easy on it, okay?” said Peter.
They reached the Summer Hill home in less than half an hour and Jim still had time to call up the prudential official and leave a message that he was available for an interview the following day if needed. Within a few minutes the phone call was returned and a meeting set up for the following day at Jim and Peg’s home.
In the end, the meeting was rather low key and of no great concern. Mr Jenkins and Mr Goldsmid arrived, confirmed that Jim and Peg had again spent the last three weeks travelling in the United States and that while there they had done some share trading, none of which they denied. Both companies in which they had sold down shares had substantially returned to favour in the market and there was no evidence of any contribution they might have made to its very pronounced share price dip of the past couple of weeks.
“So they were just tying the pieces of the puzzle together” said Peter in their follow-up conversation.
“Well they were a lot more easy going this time” said Jim “almost as if we were old friends you know.”
“And you didn’t blow your stack or give them any information that they don’t already have?” replied Peter
“No mate” said Jim. “You two have a great trip over and give George my warmest regards. Might be looking for somewhere to live by the time you get back, eh?”
“Good luck” said Peter, and rang off.