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The Sucker Wears a Wire

As Jasper grew, Glass became quite a presence within Assent, running the equivalent of a boys’ club at his 39th-floor office near the Stock Exchange. He hosted daily poker games between bouts of stock trading. And on Thursdays in the summer, he took all his traders out for drinks at Ulysses, a popular Irish pub in the financial district, spending upwards of $2,000 an outing. As proof of his success, Glass once toted a book bag around the office containing two gold bricks he bragged were worth $18,000 apiece.

His savvy in beating the system had become legend. When the SEC began regulating a common trading practice of betting against a stock the instant it begins to decline—what traders call “shorting on the down tick”—Glass concocted a complicated formula that allowed him to continue the practice while obscuring the move to SEC observers. It took him only three days. Says one Assent trader: “The dude is a frickin’ hustler.”

But Glass wasn’t the only one with access to Tavdy’s trades. Others at Assent heard whispers of the “UBS guy,” and eventually as many as 30 day traders in multiple groups began copying Tavdy’s moves, according to Sam Childs in the FBI recordings. “This thing’s so deep,” he told Glass. By 2005, the rampant insider trading worried Childs sufficiently that he finally asked Tavdy to leave Assent before he jeopardized the whole company. After three years and, according to prosecutors, several million dollars in illegal trades, Tavdy was out in the cold.

It might have ended there—except that two of Tavdy’s Russian friends working at Assent set up a meeting between him and Glass. Tavdy needed a trading desk, and the Russians knew of Glass’s willingness to bend the rules. According to the government’s narrative of events, Tavdy told Glass that “a UBS employee was providing [Tavdy] with the UBS Inside Information and that [Tavdy] and the UBS employee were splitting the profits from the scheme.” If Glass didn’t know exactly how Tavdy had been getting so lucky before, he did now. In exchange for continued access to the tips, prosecutors say, Glass agreed to let Tavdy trade at Jasper Capital using a fake account—one registered in someone else’s name, making Tavdy invisible to Assent’s compliance officers.

For Glass, Tavdy must have been an attractive advertisement for easy money. Born in the former Soviet Union, he now owned a beachfront condo in Miami, a cigarette boat named Enough Is Never Enough (which he renamed Exodus), and a small fleet of sports cars, from a Porsche 911 to a 2006 Aston Martin. As their partnership blossomed, Glass and Tavdy became friends, planning a vacation together during the Jewish High Holidays in Florida, where Glass’s Goldman Sachs father-in-law has an apartment in Bal Harbor, a swanky Miami neighborhood.

To judge by the trades the government has cited as evidence, Glass and Tavdy bought and sold in relatively low volumes, usually earning profits in increments of about $10,000—$165,000 at most—presumably to avoid detection. Over time, Tavdy was able to rake in more than $6 million, according to the government. It’s unclear how much Glass made illegally: hundreds of thousands certainly, possibly millions counting the trades he made before going into partnership with Tavdy and passing the point of plausible deniability. By the fall of 2006, Glass seemed to be spending more money than usual, throwing a lavish birthday party for his wife at a posh private club in the West Village and giving her an enormous round-cut diamond ring he told colleagues cost him more than $50,000. Glass also bought an $85,000 BMW M5 like the one Tavdy had.

Glass was clearly doing well, but his brother was catching up. The accountant was steadily rising through the ranks at a $2.5 billion hedge fund.

In Boiler Room, Giovanni Ribisi’s character is apprehended in an FBI sting and forced to cooperate in taking down the scheme. In reality, David Glass escaped that fate, leaving Sterling Foster before 23 brokers were convicted of securities fraud. Now, however, his life is taking on an uncanny likeness to his fictional doppelgänger.

In late 2006, the SEC filed a request to see Jasper’s entire trading history. No one knew exactly how they had zeroed in on Glass’s company, but everyone at Assent was nervous. By that point, hedge-fund manager Erik Franklin, the first alleged co-conspirator with UBS’s Mitchel Guttenberg, had pleaded guilty and cooperated. That would have led the SEC to surveil the market for suspicious trades in relation to UBS ratings. And that would have led them to Jasper. Glass closed Tavdy’s fake account, but it was too late. The FBI had discovered the illegal trades, and they confronted Glass with evidence.