This was much easier than I thought. It seems the various underwriters were actually dying to share this information with us. They’d spent long periods of time with us. Many liked us personally. Plus there’d be no underwriting fees for them if we didn’t get this cleared up.

The PI firm was apparently all-powerful on Wall Street, though. When you received their oral report, it was, by agreement, under the strictest confidentiality. If you were the one who leaked it, there’d be hell to pay. And not only in the courts. Leaking it would mean you were no longer a member of the club. You’d given away the secret handshake, the members’ passwords. You’d violated your blood oath. You couldn’t be trusted anymore. The PI firm couldn’t let you know what was really going on anymore. The other members of the brotherhood couldn’t share information with you either. You were a rat, a squealer, a turncoat. You were, in a word, out. No one would risk the ire of the PI firm and face suspension from the club. Not for any size underwriting. That’s why no one told us anything.

Once we knew, though, then that was a different story. Once we knew and demanded confirmation, they couldn’t very well deny it. I mean, just refusing to answer would sort of be admitting the fact. Plus, if we knew enough to ask, then someone else had already told us, so it wasn’t a secret anymore. If it wasn’t a secret, then they’d have no responsibility for telling a secret. They might, however, have some liability with us if they lied.

“Yes, yes,” all the underwriters sooner or later admitted. “The secret oral report does say you’re under investigation.”

“By whom?”

“Well, if you don’t know by whom, we can’t tell you. But surely you can figure that out on your own.”

It turned out the question of legal liability was a big one to the underwriters. Once the PI firm had told them even confidentially that we were under investigation, it made it impossible for them to do any kind of underwriting for us. The underwriters, you see, are legally bound by securities laws to inform the investing public of all the risk factors of which they are aware concerning any offering they might sponsor. This is why most company prospectuses, which are theoretically trying to sell the company’s stock, are in actuality mostly taken up with enumerating various risk factors. The underwriter could be held completely liable if they knew of a risk factor, didn’t report it, and the risk came to fruition, making the investment less valuable. This degree of liability would be enough to collapse almost any Wall Street firm, and so failing to report the rumor would be impossible.

On the other hand, the rumor was only that: a rumor. The PI firm couldn’t prove it, so they couldn’t tell us a thing. Had to protect their sources. They were not even willing to put it into writing. They were not even willing to let the investment bank tell anyone they knew of it. So the bankers couldn’t report it. If they did and the stock collapsed and the rumor was untrue, all the current investors could sue them from here to kingdom come. Even if the rumor were true, they could get sued anyway. After all, hadn’t they agreed in writing with the PI firm to keep it secret? It was a perfect catch-22. You couldn’t say we were under investigation and you couldn’t say we weren’t. Only the PI firm could clear us, and they wouldn’t even admit they’d said anything.