The Novel of Financial Deception
Enters Its Third Year Online
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Casing Wal-Mart
Miller Risk Advisors

Rigged Chapter 11



Ross M. Miller
Posted July 15, 2004

Randy and I crammed into a relatively untrafficked corner of the drugstore with feminine hygiene products to our left and oral hygiene products to our right. We kept our backs to the surveillance camera and examined the merchandise while talking.

“What do you think?” I whispered.

“I’m just an amateur,” Randy whispered back. “You’re the pro. Why are you asking me?”

“I value an unpolluted second opinion, even if it seems that I always ignore them.”

Randy arranged some boxes on the shelves. He was not good at being inconspicuous. Neither was I, but for different reasons.

“It’s creepy,” he said. “They really seem made for each other. And they seem very studied, too studied, as if they rehearsed for the meeting.”

“I think they did. I would if I were in their position—only I’d do a better job of acting as if I hadn’t.”

“The top two are where the action is. The rest of them are just along for the ride.”

When a woman who looked too important to run errands for someone else but not important enough to have someone run them for her headed our way, we temporarily relocated to the magazine rack. The Mighty Quinn stared out at us from the cover of a business magazine. “You may be on a lot more covers next week,” Randy said to Mike’s gleaming pate. In a minute or two we went back to our corner and Randy said, “What do you think?”

“They’ve probably got something in the hole. I wonder about the guys upstairs.”

“One handsome bunch,” Randy said.

“I find it interesting that we got to visit them, yet they weren’t invited to the meeting. It could be just that they are so far down the pecking order that no one invites them to meetings. Sort of like Mike’s rank-and-file workers.”

“Too bad they have to miss out on all the fun.”

“We should buy something soon and get back to the meeting—”

“Before anyone suspects anything.”

I added to my collection of Boston postcards and Randy grabbed a DVD of an animated feature that was at the checkout counter. “I’m curious about what my old compadres are doing and we can always view the disk if the meeting gets too boring,” he explained as we purchased our items.

The cashier was scanning Randy’s DVD repeatedly, trying to get the sale price to appear, when a young woman pushing a stroller into the store caught our attention. Close behind her was a cute little girl in red curls and a blue flowered dress that matched her eyes. Upon seeing us, she dashed past the woman and toward Randy, latching onto his thigh. She hugged it as if he were a giant stuffed animal.

“Oh, I’m terribly sorry,” the woman said when she caught up with the girl.

“That’s alright,” Randy said before the women whisked the girl away.

“Does this sort of thing happen to you often?” I asked Randy after we left the store.

“More often than you might think.”

“Did she plant something on you?”

Randy patted his thigh in an exaggerated manner and then asked me, “Are miniature redheads supposed to be bad luck, too?”

“Maybe, but I think it’s illegal to have them blow on your dice.”

We got back to the conference room with minutes to spare and had the room to ourselves. I inquired, “Where do you think Wonder Woman is?”

“She’s touring the facility and picking up slack,” he deadpanned.

After a quick circuit of the floor, we found Lars and Tara by the coffee machine (a fancy device that turned special cartridges into steaming java) engaged in lively small talk. I expected things to run late again and so I visited the men’s room, hoping that I might run into Zero somewhere along the way. Randy remained with the other beautiful people.

In contrast to their waterfront offices, the financial district offices showed a surprising lack of character. Those who weren’t on the trading floor sat in cubicles that brought to mind an old image of holding pens in a bovine death camp. Offices that afforded any privacy at all were reserved for the portfolio managers and select senior members of the support staff. The artwork consisted exclusively of framed prints that looked like they were bought in bulk from one of the nearby art galleries that catered to the tourist trade. Large potted plants appeared to be the only distinctive perquisite of power, both the conference room and the offices that I looked into had them, but the masses did not appear to rate their own personal flora.

After a few minutes of searching for clues, I was surprised to discover that Zero had befriended Karen and that they were together in her office. I poked my head in and Karen said, “You know, your colleague here is quite helpful.”

“That’s what we always say,” I replied without letting on that I didn’t know what she was talking about. While admittedly Zero was critical to Alaska’s operation, no one ever described him or any other of the Binars as helpful.

“From what he tells me, we can double our LAN’s throughput by tweaking a few registry parameters. He also gave my a tip for getting better surround sound from my home theatre system that I can’t wait to try out tonight.”

Unsure of when the proceedings would start, the three of us walked back to the conference room. Zero and Karen were still comparing notes and I tagged along behind them. Lars, Randy, and Tara were much as I had left them and someone from marketing was said to be “on his way up.” A few minutes later, he arrived with Lloyd and Harvey. After a glint of mutual recognition, he walked up to me and said, “Hello. Richard Warren. I’m sorry that we didn’t have time to continue our discussion after this morning’s meeting, but I hope that everyone is treating you well here at Lowell.”

I could tell that Richard was especially taken with Tara in the perpendicular. When she turned and snapped into his focus, he exclaimed, “I had no idea that a scientist could be so stunningly beautiful.” As he took her hand, I wondered if he would kiss it, but all he did was shake it. Tara smiled at Richard and said, “It’s good to meet you.” He also introduced himself to Randy and Zero, but without commenting on their physical appearance.

Afternoon snacks, fresh from the company bakery, arrived shortly after Richard. As we sat back down in our seats—the lesser portfolio managers were no longer included in the proceedings—the scrumptious brownies, cookies, and other treats were having the desired mood-altering effects. Randy whispered to me, “I hope they have real clotted cream with high tea,” as we were settling in.

“So, Richard began, “what can I tell you about Lowell?”

“We were discussing how you determine which new funds to offer,” I said. “Anything you can add will be appreciated.”

“Certainly. The Group works closely with its clients and does everything that it can to respond to their needs. While many people purchase our funds through the usual retail channels—the major brokers, financial planners, over the Internet, and so on—the real focus of our growth is getting a bigger share of the retirement dollar. While we do handle pension fund assets directly, most of our attention goes to defined contribution plans—401(k), 403(b), that sort of the thing, the usual alphabet soup.”

“Which pension plans?” I asked.

“Mostly for governmental entities—cities, counties, and states. We also administer plans for small to mid-sized companies. Of course, now that we’re part of GFF, we have an eye on their pension and 401(k) assets as well. There’s no need for them to have their own retirement operation now that they have us.”

It was time to get back to the problem at hand with the following question: “Does your funds’ performance influence a company’s decision to pick Lowell to administer their plans?”

“It certainly matters, but there is more to it than that. While it’s never nice to have a bad quarter or two, no one is going to dump us on that basis. Performance is just part of our image. We have more experience in the markets that just about anyone else out there. We pulled through the Depression and several lesser bear markets. Most of our competitors only really got going during the last big bull market. And, of course, having Ken and Lars on TV is great for our image, too. Now, I’d be happier if Aggressive Growth were still barreling along, but it’s not the end of the world and I’m confident that better times are just around the corner. Anyway, our corporate clients look beyond the daily fluctuations to other things.”

“Such as . . .”

“Superior back-office support. All of our systems have to hook into their payroll systems. With GFF’s help we hope to do that better. And it’s not like they can steer their employees to one fund or another, federal law prohibits that. As long as we’re safe, convenient, and offer a reasonable menu of funds, everyone is happy.”

“Federal law?”

“Yes," Richard said,  "ERISA."

Before I could ask a question concerning a certain duck also associated with another five-letter acronym that I had seen, but thankfully not heard, during a GNN commercial break upstairs, Richard clarified, "The Employee Retirement Income Security Act. It falls under the Labor Department. You know, where that Reich kid from Harvard—isn’t he at Yeshiva now—worked before he ran for governor.”

It was not lost on me that he pronounced the name with a hard ‘ch’ and thought Brandeis was Yeshiva. “What else does federal law prohibit?” I asked.

“It’s just more bureaucratic hoops to jump through,” he replied. “Lots of little things. The point that I was trying to make was that once companies go with us, it is up to the employees and their financial advisors to determine which funds to invest in. As long as no one complains, companies care more about the service we provide than whether our index fund is slightly better or worse than someone else’s. You’d be surprised how many people switch their retirement money between funds as often as they are allowed. And there are newsletters and websites to help them do that.”

“Really? Is there a lot of switching going on?”

Lloyd returned to the meeting from wherever his mind had drifted and said, “It’s not a problem for us. Only a small percentage of our funds jump around like that. Anyway, orders have to be in before the market closes, giving us time to make adjustments. We’ve figured it out and always have just enough cash for redemptions and it’s easy enough to buy what we need at the close. Fortunately, our funds are not like stocks or those exchange-traded funds, people can’t trade in and out of them throughout the day, only at the price that is set using the value of the assets in each fund at the end of the day.”

“So, when your investors buy and sell shares in your funds, they don’t know what prices they are trading at ahead of time.”

Harvey piped up, “That’s right. In fact, it’s illegal for us to allow trades at today’s NAV, that’s net asset value, after the market’s closing bell. There are all kinds of exchange-traded funds that cater to day traders, market timers, and other gamblers. We’re happy not to attract their business. We want investors, not speculators.”

It didn’t take this gambler long to see how that arrangement might tilt the odds in favor of the mutual funds. On a day when stock prices are rising and close at their highs, as long as the funds buy their new shares at lower prices earlier in the day, they get to sell to their investors at an immediate profit. Similarly, when prices are falling and investors are cashing in shares, the fund takes a smaller loss. Given that I wanted to things to stay friendly, I kept this observation to myself. I knew that Lowell got a variety of fees for the funds under their management, but it also seemed like the rules provided them with an added edge over their investors.

“Well, there’s nothing to speculate on right now,” I said.

“That’s right,” Harvey replied. “With the stock market closed, no one can get in or out of our funds until trading resumes.”

“How is the NAV of each fund computed?” I asked.

“Soon after the exchanges close at four, we download the closing prices for all of our holdings,” Harvey said. “We then compute the total value of the holdings for each fund, net out commissions and management fees, and divide by the total number of fund shares outstanding to get the net asset value for each share in the fund. It’s all straightforward addition, subtraction, multiplication, and division and everything’s automated. Still, we have always have two people look things over to make sure everything checks. We aim to get the numbers out by five o’clock.”

“Which reminds me,” Lloyd continued, “it’s already after four and we hold a daily post-mortem on the market every day at four-thirty. Even though the domestic markets never traded today, we still have some indication from the overseas markets as to how things are trading. The usual beginning-of-the-month numbers—producer prices, consumer prices, etc., not to mention third-quarter earnings—start dribbling out soon. So if we could wrap things up for the day, I’d appreciate it.”

“No problem,” I said, remembering the mysterious message at the hotel about someone wanting to see me at quarter to five. “We can reconvene first thing tomorrow.”

Lloyd gave me a combination nod and grunt. The discussion continued, but with Richard tacking away from the topic of Lowell’s funds and back toward the Red Sox postseason prospects and sailing. By the end of the meeting, we had all secured invitations to go out on Richard’s sloop at an unspecified future date.

We were out the door at the bottom of the hour. If high tea was being served, we were not invited and we were on our own in Boston until nine o’clock the next morning. I once again walked with Zero and ahead of Randy and Tara. Immediately after we exited the building through two large brass doors, I spotted a long line of taxis and limos. Many of the drivers were standing next to their cars, either smoking cigarettes or looking off into space. One of the drivers, appearing quite official in full uniform, walked up to me and said, “Excuse me. Mr. Kenneth Paine hopes you can join him at five o’clock at the Aquarium. I am supposed to pick you up at quarter to five, but I’m happy to drive you over now.”

Recalling that important lesson from my youth concerning not getting into cars with strangers, I said, “No thank you. I can get there on my own just fine.”

I didn’t bother to ask if my entourage was also invited, as they obviously were not, but they could still escort me over. The Aquarium was a few wharves down the waterfront.

Once the driver was back to his car, I turned to Zero and asked, “How did you make out?”

“You be the judge; look at what I’ve got.” Zero pulled a hard disk drive from the inner breast pocket of his jacket.

“Before I jump to conclusions, I’ll let you tell me what’s on it and how you got it.”

“It’s the backup for The Lowell Group’s portfolio and trading databases, all two hundred gigabytes of it—current as of last Friday. My new friend gave it to me. It’s an extra copy and they want it back. The complete backup, which includes all of Lowell’s databases, is on tapes that are stored inside some mountain in West Virginia for safekeeping. Of course, this disk is useless without a server to house it.”

“Well, go buy one. While you’re at it, make it a double. We’re so pressed for time that we can’t afford a hardware failure, so it would be good to have a back-up server to mirror the first.”

“How about—”

“And get whatever you need to network all our machines together. We’ll want it fast and secure, so wireless is out.”

“I know a place in Cambridge were I can get all that stuff off the shelf. All I need is a way to get there. I assume that the company credit card can handle it.”

“And if it doesn’t,” I said, “I’m sure that you can manage until Roland reimburses you.” I gave Zero a key and a garage pass and told him where the car was parked.

After we crossed the Big Dig, Zero headed toward the hotel and the rest of us followed the water to the Aquarium. During our walk, the only unusual thing we saw was a large lawn and garden area that was protected by a tasteful iron fence adjacent to one of the twin residential towers. At the far end of the lawn was a large swimming pool that had just been drained for the season and was surrounded by stacks of lawn furniture.

The Aquarium, like the buildings and the parking garage that we passed to get to it, hailed from Boston’s concrete age, though renovations had provided it with a stainless steel skirt. We got there when the Custom House clock, which towers over the waterfront like an American cousin of Big Ben, read a quarter to five. Tara looked first at the clock, then at her watch, and said, “Six minutes slow. Well, what do you expect now that it’s just a bunch of timeshare condos?”

A steady stream of tourists were leaving the Aquarium and heading off in every direction. The ticket booth was closed but cast a useful shadow over our destination, the sidewalk in front of the seals—the only advanced aquatic life fortunate enough to have a window on the outside world. In exchange for this honor, they were on constant display to any passersby with not enough time, money, or interest to enter the Aquarium.

The two seals seemed unconcerned by their situation, content to swim back and forth underwater as a throng of gawkers crowded around them. Just as each seal appeared about to crash into one end of the enclosure, it executed an effortless flip that propelled it back to the other end. We watched along with the others, setting aside the seriousness of our mission to bond with the pinnipeds.

The seals’ recreation period was interrupted when the door that connected their enclosure to the Aquarium flung open. Two men and three women dressed in teal shirts and denim-blue slacks walked out. An older man and a younger woman carried yellow plastic beach pails and situated themselves at either end. The seals poked their heads up out of the water and opened their mouths to receive a meal of decapitated fish. The remaining three Aquarium workers watched the proceedings; perhaps they were there in case the seals went berserk. When the Custom House clock read six minutes to five, the workers left, as did Tara and Randy.

After a few more minutes of seal-watching, I saw the reflection of the man who had been with Sally nine hours earlier approaching me. From behind, I heard the words: “Human existence, you see, is a tragic thing.”

Copyright 2004 by Ross M. Miller. Permission granted to forward by electronic means and to excerpt or broadcast 250 words or less provided a citation is made to