Chapter 77: Preparations Before the Stock Market Crash
William calculated in his head. The NASDAQ was currently at 5,000 points. In five days, on March 7th, it would reach its historical high of 5,048 points. With a principal of $350 million and a 3% margin rate, he could buy 9,039 contracts. The $49.56 million in additional margin could withstand a move of more than 20 points against him, so there was no problem.
William immediately made a decision. "You're afraid that my additional margin will be wiped out suddenly. I can sign a contract with you: as long as the losses on that $49.56 million in margin reach 90%, you can forcibly liquidate my account."
"That remaining 10% gives you a buffer to liquidate, ensuring you won't incur any losses. Besides, I have a principal of $350 million in my account."
"If you can't make a decision, Mr. Gries, then I'll have to take my business to another bank."
Gries thought for a long time before saying, "Mr. Devinshire, it's almost noon. Why don't I have Felix accompany you for lunch? By the time you return at 1 PM, I think we will have determined your margin rate."
"Alright. This is my first time in Switzerland, so it would be great to have a local show me some authentic Swiss food."
Felix proved his worth as William's exclusive client manager. He took him for a meal of Zürcher Geschnetzeltes—sliced beef with roasted potato strips—along with grilled cheese and seafood soup. The food was excellent.
At 1 PM, Gries called. "Mr. Devinshire, the board of directors has approved my request. You'll get the 3% margin rate, with a mandatory close-out if your additional margin loss exceeds 90%. Congratulations, Mr. Devinshire."
William knew the Swiss National Bank would grant his request. With his terms, there was no risk of loss for them. Besides, the NASDAQ was so high that many people expected it to keep rising toward 6,000 points.
William had no intention of telling the bank his specific strategy. He simply said to Gries, "When can we draw up the contract?"
Gries replied, "We can do it right now, Mr. Devinshire."
"Okay, I'll head to the bank shortly. See you soon, Mr. Gries."
"See you soon, Mr. Devinshire. Goodbye."
After hanging up, William turned to Felix. "Felix, I need the best law firm in Switzerland to send a lawyer to meet me at the bank in half an hour. The fee is $100,000. Can you arrange that, Felix?"
"No problem. For $100,000, I guarantee I can get it done." Felix then excused himself and stood up to make the call.
William waited for about five minutes before Felix returned. "Mr. Devinshire, it's done. We can go to the bank now."
"Okay, let's go."
Twenty minutes later, William returned to the bank where the lawyer was already waiting for him. William shook hands with the Swiss lawyer, and they introduced themselves.
After shaking hands with Gries, they began the negotiations. After three hours of discussion and a few revisions at the lawyer's suggestion, William finally signed the contract before 5 PM.
Then William said to Gries, "Gries, I need your bank to prepare a professional team of traders for me."
"No problem, Mr. Devinshire. I can assign one of our best teams to you right away," Gries said. "Felix will prepare everything. Our fee is 5% of the profits, or an employment fee of $100,000 per day."
William considered this and countered, "If there's a loss, I'll pay the daily employment fee. If we're profitable, the daily fee is waived and you get 1% of the profits. However, I require everyone on the team to sign the most stringent non-disclosure agreement."
William turned to his lawyer. "Can we include a penalty clause in the NDA that specifies a prison sentence of more than 20 years for any breach of confidentiality?"
The lawyer, Simon, thought for a moment. "If the leak causes you significant financial losses, then certainly. But if there is no direct monetary loss and only reputational damage, it becomes difficult to enforce. The legal boundaries are quite broad."
"However," he continued, "if you're willing to pay each team member a substantial bonus for signing this specific NDA, then I can guarantee that anyone who leaks information will spend 20 years in prison."
"How large of a bonus are we talking about, Simon?" William asked.
"One million Swiss francs per person, which is roughly one million US dollars."
William turned to Gries. "Can you arrange that, Gries?"
"Of course, Mr. Devinshire. Even without that money, I can assure you that no one from our bank will ever leak information."
William didn't believe bankers for a second. To him, they were all vampires. A man might be decent in his personal life, but when it came to money, no truly successful banker was a good person.
William waited for an hour, and then the ten-member trading team arrived. After introductions and handshakes, Simon explained William's requirements to them.
When offered a one-million-franc bonus each, all ten traders signed the contract without hesitation. As for the 20-year prison sentence for any leaks, they didn't seem to take it very seriously.
After William and his newly formed team of traders signed the contracts, it was already 7 PM. William and Felix then took Simon to a Michelin three-star restaurant for an excellent dinner.
After dinner, William wrote out a check for $100,000 and handed it to Simon at the table. Simon took the check happily. "Thank you, Mr. Devonshire."
"If you run into any trouble in Switzerland, please call me. Our firm is the best in the country. We can help you with anything, as long as you can afford it."
Hearing Simon say he could get anything done as long as one could afford it, William scoffed internally. *Isn't that just stating the obvious?*
"Thank you, Simon. Good night. I'll call you if I need anything. Goodbye." William shook Simon's hand and they parted ways. As for William's new team of traders, they were already in a secure room at the bank, making preparations.
Upon entering the secure VIP room, William saw his traders resting with their eyes closed on the sofas and recliners. He didn't disturb them, simply finding a chair to sit in. He had just finished a glass of whiskey when his cell phone rang.
William answered quickly. "Hold on for ten seconds," he said into the phone. He walked out of the VIP room and into the hallway before continuing, "Hello, who is this?"
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