which helps give them the edge they need. We provide securities to cover short sales, make margin loans, clear trades, provide reporting services and custody assets, provide research. And we even help hedge funds raise money. As a prime broker, we probably execute twenty-five to thirty percent of a hedge fund client’s transactions. We also provide a daily NAV—”
“Sorry,” Justin said. “I’m a little rusty with my financial acronyms.”
“Net asset value.”
“That it? No free tennis lessons and shiatsu massage?”
“If need be. We provide whatever is necessary. We can set up a rudimentary risk management system for our clients; we’ll find office space as a hedge fund company expands; we’ll find someone an operations officer and traders; and, if necessary, we can even provide the accounting system.”
“I assume you’re not doing this out of the goodness of your heart.”
“That’s a phrase that no one even understands on the Street.”
“So explain to me how you make enough to justify this extremely impressive office and your suits that cost more than most people’s rent.”
“We get commissions from every single trade and order flow.”
“At no risk.”
“We handle the transactions; we’re not putting our own money in. And hedge funds probably account for a third of our trades now.”
“You want to tell me how much that might come to a year?”
“We don’t give out our financial figures,” French told him.
“But if I say ‘a lot’ I’m not going to be far off,” Justin said.
“No. That would be extremely accurate. But we also do a lot of margin lending, and that’s at least as profitable.”
“So you did all of that for Ascension?”
“As I said, and quite a few other hedge funds. We have many resources that smaller firms, money management companies and funds like Ascension, don’t have. We can get better deals, get in earlier than other companies, sometimes get in on an investment opportunity when other firms can’t get in at all. One of our jobs, one of the key aspects of Ellis’s job, is to bring money in to those deals. Let’s say one of our clients wants to raise three hundred million dollars in an IPO. We’ll certainly have a share of that, if not the entire thing. We might need to raise half, a hundred and fifty million. So we go out and get it.”
“And you might get it from Ascension? Telling them this is a good investment.”
“Sure. But as I keep saying, we go to many other hedge funds like Ascension. We don’t put all our eggs in one basket. Or even a hundred baskets.”
“So Ellis is a salesman in a lot of ways.”
“Yes. He’s a salesman and an adviser and an investor and a deal maker.”
“Can you walk me through a typical day-to-day deal?”
“I don’t think it’s appropriate for me to give you real cash numbers—”
“Just hypothetical. I want to make sure I understand the relationship.”
“Is this really relevant to your investigation?”
“It might be. I can’t say for sure until I know a lot more of the facts. And the background.”
“You don’t think Ellis has anything to do with what happened to Evan?” French asked. He didn’t seem particularly horrified or shocked at the thought. More curious.
“I didn’t say that. I’d just like to understand the kinds of relationships Harmon had with people who he worked with. It’s very unlikely that Evan was killed by someone he didn’t know. The odds are it was someone he knew extremely well.”
“All right,” French said. “Let’s say the head of research into new media comes up and says we should invest in . . . oh . . . companies that are working on technology to make it easy to download original product into iPod-like devices. Got that?”
“So far.”
“Let’s say they’ve come up with a way to do it for audiobooks.”
“Don’t listen to them. I like to read the real thing.”
Justin watched as French did his best not to roll his eyes. The
“Sorry,” Justin said. “I’m a little rusty with my financial acronyms.”
“Net asset value.”
“That it? No free tennis lessons and shiatsu massage?”
“If need be. We provide whatever is necessary. We can set up a rudimentary risk management system for our clients; we’ll find office space as a hedge fund company expands; we’ll find someone an operations officer and traders; and, if necessary, we can even provide the accounting system.”
“I assume you’re not doing this out of the goodness of your heart.”
“That’s a phrase that no one even understands on the Street.”
“So explain to me how you make enough to justify this extremely impressive office and your suits that cost more than most people’s rent.”
“We get commissions from every single trade and order flow.”
“At no risk.”
“We handle the transactions; we’re not putting our own money in. And hedge funds probably account for a third of our trades now.”
“You want to tell me how much that might come to a year?”
“We don’t give out our financial figures,” French told him.
“But if I say ‘a lot’ I’m not going to be far off,” Justin said.
“No. That would be extremely accurate. But we also do a lot of margin lending, and that’s at least as profitable.”
“So you did all of that for Ascension?”
“As I said, and quite a few other hedge funds. We have many resources that smaller firms, money management companies and funds like Ascension, don’t have. We can get better deals, get in earlier than other companies, sometimes get in on an investment opportunity when other firms can’t get in at all. One of our jobs, one of the key aspects of Ellis’s job, is to bring money in to those deals. Let’s say one of our clients wants to raise three hundred million dollars in an IPO. We’ll certainly have a share of that, if not the entire thing. We might need to raise half, a hundred and fifty million. So we go out and get it.”
“And you might get it from Ascension? Telling them this is a good investment.”
“Sure. But as I keep saying, we go to many other hedge funds like Ascension. We don’t put all our eggs in one basket. Or even a hundred baskets.”
“So Ellis is a salesman in a lot of ways.”
“Yes. He’s a salesman and an adviser and an investor and a deal maker.”
“Can you walk me through a typical day-to-day deal?”
“I don’t think it’s appropriate for me to give you real cash numbers—”
“Just hypothetical. I want to make sure I understand the relationship.”
“Is this really relevant to your investigation?”
“It might be. I can’t say for sure until I know a lot more of the facts. And the background.”
“You don’t think Ellis has anything to do with what happened to Evan?” French asked. He didn’t seem particularly horrified or shocked at the thought. More curious.
“I didn’t say that. I’d just like to understand the kinds of relationships Harmon had with people who he worked with. It’s very unlikely that Evan was killed by someone he didn’t know. The odds are it was someone he knew extremely well.”
“All right,” French said. “Let’s say the head of research into new media comes up and says we should invest in . . . oh . . . companies that are working on technology to make it easy to download original product into iPod-like devices. Got that?”
“So far.”
“Let’s say they’ve come up with a way to do it for audiobooks.”
“Don’t listen to them. I like to read the real thing.”
Justin watched as French did his best not to roll his eyes. The
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