Octopus — the page-turning tale of how Sam Israel’s dream of becoming a Wall Street trader turned into a nightmare that ultimately landed him in prison — is both a thrilling and a scary read.
Born into one of the big-time Wall Street commodity trading families, Sam Israel was a teenager serving drinks at a party in his parents house when he first encountered Freddy Graber, “the man they called “the King” on Wall Street.”
When Graber gave him a business card and an insincere invitation to drop in to the office, Sam recognised the opportunity and before long was knocking on Graber’s door. Determined to work for his hero, Sam’s persistence eventually paid off and before long he had quit college to take up a junior role on Wall Street. He spent a number of years working with Graber. This was the 1980s and Sam saw that the introduction of computers in the was transforming the trading environment. Access to the right computer programs could deliver a critical advantage in an environment where speed played a key role in profit — the high tech, high velocity world that would subsequently become a trigger of the global financial crisis.
Bayou, the hedge fund that Sam founded in 1996 planned to use a computer program, “Forward Propagation” to analyse and reveal hidden patterns in stock prices which he believed would give him the ability to make predictions about the highs and lows for his watch list of chosen stocks.
When Bayou lost money at the end of its first year through a misjudged move into gold stocks, a decision was taken to fudge reporting the loss and before long, what had begun as a temporary plan to cover a relatively small loss had spiralled into ‘a big Problem’ .
Sam’s attempts to solve the big Problem led him down some truly hair-raising paths involving encounters with the owner of a video that purports to show the assassination of JFK, agents and double-agents, an attempt to get access to a trading program owned by Octopus which Sam believed was a secret cabal that controlled the world …
It is hard to know to what extent Sam’s account is reliable — he is a self confessed con man who has SpongeBob SquarePants on his cheques, who abuses cocaine, has chronic back problems, a heart condition that one of his shady contacts tells him was caused by poison because he is ona lis of individuals considered to present an intellectual threat to the State, he takes a cocktail of meds including meds to treat bipolar disorder.
As the story becomes increasingly bizarre, you have to keep reminding yourself that this is based on fact, not fiction.
Whatever the truth, it’s a fascinating tale told with pace and style by Guy Lawson.
A copy of Octopus: Sam Israel, The Secret Market, and Wall Street’s Wildest Con was provided free of charge by the publisher for the purpose of this review.
Octopus: Sam Israel, The Secret Market, and Wall Street’s Wildest Con by Guy Larson is published by Crown Publishers.
ISBn: 978 – 307 – 71607 – 1