Assaf Gavron - The Hilltop

“One more drink at Ulysses before calling it a night?” Foriner asked one evening.

“Sure, why not?” Roni replied. They went to the Irish pub; Roni drank a Guinness, and Foriner a Ballantine’s on the rocks.

Meir Foriner worked at a credit-rating agency on the West Coast. Roni was aware of the importance of such companies, which determine the risk levels or viability of an acquisition or investment in companies or countries. Most important, Roni knew, was that the rating agency people were in the picture during the lead-up to acquisitions and mergers, and knew which way the wind was blowing long before the public at large.

What started out that evening as a veiled and alcohol-driven tip turned into a measured and consistent stream of valuable information. Foriner dropped blunt hints ahead of large acquisitions, taking care always to do so in person, in Hebrew and in code, unmediated by electronic communication, because all the phone calls, e-mails, and chats between traders and clients and brokers were recorded. Roni knew that after several such gifts thrown his way by Foriner, he’d come calling for payback: Foriner asked Roni to open a fictitious account for him, and in that account Roni managed investments to the tune of millions of dollars that came via a convoluted and complex transaction from a Swiss bank account.

Foriner worked cautiously, maintaining a low profile for months until opportunity arose. One time he showed up at the Hummus Forum and with a whisper in Roni’s ear arranged a meeting that Saturday, at a barbecue restaurant in Williamsburg. The small piece of information he gave Roni at Fette Sau’s bar — the acquisition of an international hotel chain by a Texas-based holding company, a deal to be announced within days — had huge financial implications. Roni had to act with caution to ensure that he didn’t attract attention or leave behind any traces. But to realize the potential of the deal, he again broke through his investment budget ceiling by forging Dale Savage’s signature. The tightrope he was walking this time was thinner than ever.

He chalked up another success. Another rung on the ladder. And after that success, smoke still rising from the skid marks it left on the trading room floor, he gazed upward and searched for the next rung on the ladder. He increased the sums, upped the risks. (Once he took a $300 million position instead of $30 million. If someone asked: The extra zero sneaked in by accident. He wasn’t asked.) Dale Savage and Jujhar Rawan-deep allowed him to continue, and even encouraged and fired him up and at a certain point demanded success from him and entrusted him with investment budgets in the hundreds of millions — he no longer had to add zeros at his own discretion. He knew that they were playing the game alongside him. Other brokers bought him drinks on their companies’ expense accounts, and so did his own coworkers, and of course his Israeli clients, whose numbers grew, and who increased the sums they invested. Of that he was particularly proud, the trust they placed in him, his standing in the Hummus Forum, among the wielders of power and influence — a fleeting recollection of the wooden deck in Basel Street flashed through his mind for an instant. He ended the year with a bonus of close to $600,000. He paid back his school loans well before the four years he had allotted to himself were up, and moved into the penthouse in his building — a few more rungs on the ladder. He felt invincible.

The bad omens, which had been evident in the market for quite some time, began making their mark. Two hedge funds folded. People lost jobs. Rumors were rampant about an approaching real-estate crisis and liquidity problems at banks and investment firms. All this served only to ramp up the pressure to succeed and the demand to bring in more profits. Falling markets and losses also had the potential to yield significant profits if you played your cards right.

Idan Lowenhof approached Roni at one of the Hummus Forum gatherings. The two had drifted apart of late — both were too busy for socializing and rarely went to the forum. That evening, when Idan asked how he was doing, Roni felt a little uneasy. He was indebted to him — Idan had introduced him to this world, encouraged him, helped him with the application forms and admission interviews. Moreover, Idan symbolized for Roni the right kind of success story. He was infinitely likable and a straight shooter. Roni was certain that every single dollar of the millions Idan must have already earned was squeaky clean. Idan and Roni weren’t cut from the same cloth. Idan got to Wall Street and felt at home. He adopted the American accent, embedded himself in the culture, went with the locals to baseball games, mastered the rules. Roni refused. Way back when he was still a student and talking to the companies’ recruitment people about Doron Sheffer and Nadav Henefeld, he felt that his way in would be on his terms, not theirs.

They were both smart enough to understand the divide between them. Roni noticed at the time that Idan wasn’t in any hurry to help him get into Goldman Sachs. Idan didn’t recruit Roni into his company, but tried to look out for him, to warn him not to stray off course. In all likelihood, Lowenhof had heard of Roni’s success. And from his knowledge of Pilpeli and Goldstein-Lieberman-Weiss, he must have figured out things weren’t entirely kosher. So, after inquiring into his well-being, Idan said, “Let’s go get a drink.” Roni couldn’t get out of it.

“Listen, Roni,” Idan began, as if he had prepared a speech. “I’ve thought highly of you ever since I showed up at your bar in Tel Aviv. I saw what you did there and recognized the potential. I knew you’d be successful here, too.”

“What’s this, a pep talk?” Roni tried to joke, but he knew where it was going, and knew he had no choice but to sit and listen. He scratched at the label of the Mexican beer.

“I feel responsible for you, in a way…,” Idan said.

“You’re not. I’m a grown man. I’m responsible for the things I do.”

Idan ignored the remark. “I know the temptation is huge. The connections and information. That you see all these insane sums of money and you know you can simply reach out and grab them.”

Roni looked at him. “What do you want, Idan?”

“I know you’re not a criminal,” Idan continued, gazing into Roni’s eyes. “I know those people. They aren’t people who were raised badly, who have no choice but to be criminals. It’s merely greed. There are two principal behavioral patterns that make people operate within the law, a sense of right and wrong, or the fear of being caught, going to jail, losing a lot of money. I’m telling you this because it’s easy to forget this stuff in this line of work, and because I care about you. I’ve seen people trip up. It’s not pleasant. I don’t know what you’ve done or haven’t done. But I’m not stupid. Whatever you’ve done, you did well. But stop here. And be careful. I know you trade for many Israelis, and some aren’t exactly the nicest people. If they fall on the ground because of you, you’ll be in trouble.”

By this time in his career, Roni was trading almost exclusively in options. With the options, he bought or sold the right to purchase a share at a designated price by a predetermined date. The options were cheap — hundreds of thousands of dollars — but the opportunities and the risks inherent in option trades are exponentially greater than trading in the share itself. A slight fluctuation in the value of the share could have a significant impact on the value of an option. A deal that costs ten thousand dollars can yield a profit of hundreds of thousands but can also run into a huge loss. An option is a gamble that’s been raised to the power of itself: Juj once said to Roni that if trading on the stock market is roulette, trading in options is Russian roulette.