For the past few weeks, the daily headlines have included report after report of insider dealings, trades that were rigged, interest rate setting practices where banks fix things to make a buck and worse. Here are three examples from just this morning's news:
- Senior bankers caught up in film investment tax probe - The Telegraph
- L&G employee arrested in trading probe - Financial Times
- Libor probe shines light on voice brokers - Financial Times
We even have the Church involved in the scandal now, with the news from the Vatican that four priests are to go on trial for money laundering, but that’s nothing new.
What is new is the number of insider trails taking place, the fines, the witch-hunt or dealer-hunt if you prefer, and the whole way that this has come to the fore in the last few months.
Maybe it’s partly to do with the Bribery Act that came into force recently in the UK, or the whole bank-bashing anti-capitalist, post credit crisis angst of politicians and regulators, but it strikes me that those doing dodgy dealings should be a little concerned.
After all, we have the prime example folks like Bernie Madoff, but when you get hedge fund managers who are like Lewis Chester, you really know that someone is taking the biscuit.
What was Chester’s crime?
Purely late trading in the US mutual funds markets, a practice that is outlawed by the Securities & Exchange Commission, and ignored by the likes of Lewis Chester.
In a court case this week, he got taken to the cleaners by the US courts and fined $77 million, a pretty hefty fine for a hedge fund but even more embarrassing for Chester himself who came out of this case as clearly not realising how emails to his broker could be incriminating.
Take this one.
Mr. Chester allegedly wrote in an email to James Wilson, a broker: “I really EXPECT you guys to go out of your way to make sure I get late trading.”
Sounds pretty incriminating, but nowhere near as bad as his attitude, which is deflected as being pure “broker banter”.
An example is this email to his broker for not doing what he wanted when he wanted: “Poor souls, working past cookie and milk time...for once in your lives, you can work like real men and do a proper day’s work. (You really are a bunch of women of the first order)”, tells you that one.
People are people and humans are humans, you should treat them as such.
Mind you, the hedge fund manager market is a breed apart.
Take the hedge fund manager who posted this email response to a girl he asked for a second date: “I will be sure to add you to the list of people who, after receiving an invitation to a second date, require extra time to write back (my internet was down! work was crazy! family business!), and then proceed to inform me of how great I am before insinuating that I have the attractiveness of a toad.”
You may think that’s fairly innocuous, but it’s the start of a lengthy diatribe where he effectively tells his proposed second dater that she really must learn a lesson about how to turn a guy down.
No wonder she forwarded the whole thing to Gawker with the cover note: “Oh, I never mentioned his attractiveness, much less that he was a toad!”
All in all, you get the sense that the stereotype of an investment banker, trader, hedge fund manager and any other testosterone fuelled male in the City is one of some big fat, condescending, arrogant arsehole.
Oh, and then a study is produced that proves this is totally true.
According to Wednesday’s Wall Street Journal: “A University of Southern California researcher found insomnia, alcoholism, heart palpitations, eating disorders and an explosive temper in some of the roughly two dozen entry-level investment bankers she shadowed fresh out of business school.”
The study basically shows that most folks who enter investment banking rapidly become shrivelling wrecks who either handle it by taking every drug known possible to man or imploding.
“John Chrin, a former managing director at J.P. Morgan Chase & Co. who left the firm in June 2009 to pursue an executive-in-residence position at Lehigh University, recalls seeing junior staff gain 30 or 40 pounds within a couple years on the job.”
As Dealbreaker summarises this article: “Study Concludes Banking Brings Out Your Inner Fat Asshole”.
Sure does.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
