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Authors: Scott Turow
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defense of his business was instinctive. He had started extolling futures in the little rural communities, and over three decades had made Maison Dixon a colossus with corporate clients, commodities pools, managed accounts. MD was a clearing member of all the major exchanges in Chicago and New York, and maintained large offices with humming telephone banks in both cities as well as here, In the meantime, in the late 1960s, Dixon had led a group of local futures merchants in the formation of a small commodifies exchange in Kindel County. Dixon's notion was to trade in lot sizes that were more in keeping with the needs of smaller retail customers. The Chicago Exchange would not trade a contract for the future delivery of wheat or soybeans of less than five thousand bushels. In Kindle, you could trade five hundred at prices that followed Chicago's, tick for tick. The Kindle County Futures Exchange--the KCFE had established its 'minimarket' in all the most popular contracts, and Dixon continued to press his fellow directors for innovations. For the last two years, he had been relentlessly courting the approvals needed to trade a future on the Consumer Price Index. Dixon had made not one smart play in his life but half a dozen. He was regarded with the usual mix of awe and distaste in the financial community. A maverick. A shark. Shrewd.
Unreliable. But talented. He had fierce enemies and many admirers.
"Who are these customers, Dixon? What do they have ,in common?"
"Nothing. Nada. Different commodities. Different strategies. The only thing I'd say is, they're probably the five biggest customers I have." He uttered this with considerable resentment. The government was attacking at a vulnerable spot.
"And what have you to do with these accounts Dixon?"
"Not much. Those are big trades they're looking at," said Dixon.
"House rule is that I'm notified on anything that size. But that's it."
"Big trades?" asked Stern.
"Look at 'em," said Dixon. "Everything there is fifteen hundred contracts, two thousand contracts. Pit's gonna jump with those kinds of orders."
"Explain, please."
"You understand this, Stern. Take pork bellies. One car of bellies--one contract--is 40,000 pounds. I get a customer who wants fifteen hundred cars, that's a whole lot of bacon. The price is gonna take off like a rocket. It's supply and demand. You know, we try every gimmick known to man to slow things down. We lay off trades to friendly brokers. We buy the cash commodity and sell the future. But you can't stop it completely. It's like changing nature."
"Ah-ha," said Stern. So they did know something. The government was investigating large trades, trades which MD handled, trades which Dixon knew about, trades which, when placed, had had a significant impact on prices. "And is there nothing else which occurs to you?"
Dixon shook his head gravely. Nope, nothing, he didn't know a thing.
Stern laid his thick finger again across his lips.
Even with this news, it remained difficult to assay the government's suspicions. The records called for could relate to a number of schemes, particularly on the futures exchanges where knavery of all kinds was rife. Were Stern to guess, his estimate would be that Ms. Klonsky and her colleagues suspected market manipulation of some kind.
There were all manner of baroque ploys. A month or two ago, the papers had been full of stories about a foreign government with a failing sugar crop which had tried to force down the world sugar-futures price so the government could buy and fulfill upcoming delivery commitments more cheaply. They had circulated authoritative rumors that something tailed 'left-handed sugar,' a no-calorie form of natural sugar, had been perfected. For three days prices plummeted, then the futures commissions merchants across the country had discerned what was occurring and bid prices out of sight. Dixon, perhaps, had found some less obvious-but equally illegal--way to tamper with the markets' responses to
Unreliable. But talented. He had fierce enemies and many admirers.
"Who are these customers, Dixon? What do they have ,in common?"
"Nothing. Nada. Different commodities. Different strategies. The only thing I'd say is, they're probably the five biggest customers I have." He uttered this with considerable resentment. The government was attacking at a vulnerable spot.
"And what have you to do with these accounts Dixon?"
"Not much. Those are big trades they're looking at," said Dixon.
"House rule is that I'm notified on anything that size. But that's it."
"Big trades?" asked Stern.
"Look at 'em," said Dixon. "Everything there is fifteen hundred contracts, two thousand contracts. Pit's gonna jump with those kinds of orders."
"Explain, please."
"You understand this, Stern. Take pork bellies. One car of bellies--one contract--is 40,000 pounds. I get a customer who wants fifteen hundred cars, that's a whole lot of bacon. The price is gonna take off like a rocket. It's supply and demand. You know, we try every gimmick known to man to slow things down. We lay off trades to friendly brokers. We buy the cash commodity and sell the future. But you can't stop it completely. It's like changing nature."
"Ah-ha," said Stern. So they did know something. The government was investigating large trades, trades which MD handled, trades which Dixon knew about, trades which, when placed, had had a significant impact on prices. "And is there nothing else which occurs to you?"
Dixon shook his head gravely. Nope, nothing, he didn't know a thing.
Stern laid his thick finger again across his lips.
Even with this news, it remained difficult to assay the government's suspicions. The records called for could relate to a number of schemes, particularly on the futures exchanges where knavery of all kinds was rife. Were Stern to guess, his estimate would be that Ms. Klonsky and her colleagues suspected market manipulation of some kind.
There were all manner of baroque ploys. A month or two ago, the papers had been full of stories about a foreign government with a failing sugar crop which had tried to force down the world sugar-futures price so the government could buy and fulfill upcoming delivery commitments more cheaply. They had circulated authoritative rumors that something tailed 'left-handed sugar,' a no-calorie form of natural sugar, had been perfected. For three days prices plummeted, then the futures commissions merchants across the country had discerned what was occurring and bid prices out of sight. Dixon, perhaps, had found some less obvious-but equally illegal--way to tamper with the markets' responses to
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