Michael Lewis has a Vanity Fair profile of Michael Burry, the one-eyed, Asperger's Syndrome diagnosed founder of Scion Capital, who shorted sub-prime. At a certain point, Mr. Lewis writes, the banks that had sold Mr. Burry all the insurance betting that the sub-prime mortgages would go bad started to get nervous:
Three days later he heard from Goldman Sachs. His saleswoman, Veronica Grinstein, called him on her cell phone instead of from the office phone. (Wall Street firms now recorded all calls made from their trading desks.) "I'd like a special favor," she asked. She, too, wanted to buy some of his credit-default swaps. "Management is concerned," she said. They thought the traders had sold all this insurance without having any place they could go to buy it back. Could Mike Burry sell them $25 million of the stuff, at really generous prices, on the subprime-mortgage bonds of his choosing? Just to placate Goldman management, you understand.
The article goes on, later:
In the ensuing two weeks, the publicly traded index of triple-B-rated subprime-mortgage bonds fell by nearly 20 percent. Just then Goldman Sachs appeared to Burry to be experiencing a nervous breakdown. His biggest positions were with Goldman, and Goldman was newly unable, or unwilling, to determine the value of those positions, and so could not say how much collateral should be shifted back and forth. On Friday, June 15, Burry's Goldman Sachs saleswoman, Veronica Grinstein, vanished. He called and e-mailed her, but she didn't respond until late the following Monday—to tell him that she was "out for the day."
"This is a recurrent theme whenever the market moves our way," wrote Burry. "People get sick, people are off for unspecified reasons."
On June 20, Grinstein finally returned to tell him that Goldman Sachs had experienced "systems failure."
That was funny, Burry replied, because Morgan Stanley had said more or less the same thing. And his salesman at Bank of America claimed they'd had a "power outage."
..The Goldman saleswoman made a weak effort to claim that, even as the index of subprime-mortgage bonds collapsed, the market for insuring them hadn't budged. But she did it from her cell phone, rather than the office line. (Grinstein didn't respond to e-mail and phone requests for comment.)
If people on Wall Street are really using cell phones to get around the taping of conversations on trading desks, it seems like that might be the sort of thing that, you know, management might want to crack down on? Unless they tacitly approve of it and are just taping the conversations on landlines to establish a false appearance of propriety.