“Wait. The counterparty has to be our custodian. Isn’t it part of the package?” U.S. Bank holds all our lending arrangements across our funds. We didn’t color outside the lines. What was good for our mutual funds was good for our ETFs.
“No.” Alyssa and Temor steal glances at each other.
“But that would mean...” I recognize the curiosity on both their faces. They figured out this agreement might be juicy. If this agreement was executed with anyone else, it could be quite bad for Garman Straub and specifically our investors. I freeze, my hand halfway to my drink.
“What else did you just figure out?” Alyssa leans toward me.
Temor begins to respond, but Alyssa speaks over him. “No, not you. Give Meredith a minute. She sees something else.”
They both wait for me, but I’m not ready to share. “I’m going to need more than a minute.”
Alyssa bites on her bottom lip, likely the only way she’ll telegraph her disappointment in me. I was right, Alyssa needs more challenges. She’s too good for her day job.
“Was this just an oversight? Like someone drafted it but never intended to use it?” Temor asks.
“Maybe. When we pitched the idea of the funds to the board almost three years ago, I explained that the revenue we could make on lending out our more unusual assets could offset their expense. Our teams always look for opportunities. Makes no sense to lend Apple stock, for example, as it’s easy to source. But some of our securities are difficult. Easier to borrow from us than to try to purchase.” The existence of this contract could imply an illegal arrangement. Why would someone risk it? The most obvious answer is money. But that might be too simple, as loaning out our securities is not exactly going to bring in major financing revenue.
“Excuse me if I ask a question I should know the answer to.” Temor clears his throat. “Our custodian manages the bulk of the lending, but we have these additional contracts for deals we see as lucrative?” He studies the small platter the waitress lays in the center of our table.
“No. All lending runs through our custodian.” I stop talking as Alyssa catches my eye. We both have been in the business long enough and know where this could end. It’s kind of like that beach bungalow, if we had an exclusive deal with Airbnb to manage all its rentals but went rogue to rent it on our own. Of course, Airbnb allows that for real estate. But our policies and prospectus require we only rent through our version of Airbnb and with precise policies in place. The SEC demands it. Any arrangement outside of our custodian looks like fraud.
“Where do you want us to take it from here?” Alyssa pops an olive from the Mediterranean appetizer plate into her mouth.
From the way Temor is attacking the rolled grape leaves, I probably should’ve ordered something more substantial. They probably skipped lunch.
Where do I want them to take it from here? Easy question. It’d be great to have their sharp minds dig into the investment data on the thumb drive—confirm it’s real and how Betsey could’ve created it or gotten her hands on it. Was that what she was doing on those unscheduled office visits? Creating or simply verifying the data she’d found?
Temor is running a piece of pita bread through the oil-slicked hummus. Alyssa seems to have given up on the plate and is instead watching as two more couples are seated next to us.
We can’t stay here, and I’m not going back to the office. I need somewhere with privacy. And they need food.
“On the train here, I sent you a brief summary of the board pitch idea. I’d like you to shift gears and look at my presentation for Monday.” I go on to explain about the premise for the new funds.
Both Alyssa and Temor take notes, but I sense an edgy frustration from Alyssa in the way she grips her pen. She knows most of this already and therefore knows exactly what I’m doing.
After a bit more explanation, I rise to leave.
“Are you sure this is all you need?” Alyssa unhooks her bag from under the table and then looks directly at the booth I’ve been avoiding for the last hour. Her gaze swings slowly back to me. “We want to be most helpful.”
The steeliness in her eyes so matches Betsey’s, my breath catches. I would swear they’re working together, but if that was the case, Betsey wouldn’t need me. Alyssa could hand over the agreement and anything else Betsey wants. Alyssa can’t be involved.
But she sure thinks she knows something.
It’s starting to feel like everyone knows something they shouldn’t.
I force my shoulders to relax. “Reviewing my presentation is the way to be helpful. I’ll arrange for some food to be delivered to the office. This can hardly qualify as lunch.” I wait until they both standand collect their bags. I then point to the table and lower my voice. “As for the matter we just discussed. I’m confident there’s something we’re not seeing or agreements we’re not privy to. So, leave it with me. I’ll circle back, but for now, you’ll both move on.”
I make a mental note to remove their permissions from the fundamental share drive folders.
For the sake of their own promising futures, I need to be in this alone.
30
AFTER A COUPLE HOURSholed up in a coffee shop across from Bryant Park, I slink off the elevator and make a beeline for my office. Hardwin, and maybe Phil, are expecting me to be at home getting ready for my date night. I’m sure whoever is behind the data and stand-alone contract wants my prying eyes many miles away from here. But it’s too late; I can’t unsee what I’ve seen. If they bypassed our custodian, it’s been happening since launch. Come to think of it, I’m pretty sure someone in Legal gave an update to the board on the status of the custodial arrangements a good two months before the seed capital was released, which was right before launch.
I need to find those meeting minutes.
As I’m blocking Alyssa’s and Temor’s access, I recognize that the same could happen to me at any moment. I need all the files on my laptop. Regulations about emailing corporate documents to personal accounts are strictly enforced. Maybe hard copies are best.
