Levine on Wall Street: Nice Year to Run a Private Equity Firm
Private equity guys make a lot of money .
Leon Black seems to be the winner in 2013, making $546.3 million last year; between them nine founder types at Apollo, Carlyle, Blackstone and KKR took home $2.6 billion. Most of it is in dividends, which is a fairly soothing way for company founders to get paid -- alignment of interests with the shareholders and all that -- though there are some quotes here to make it less soothing. Steve Schwarzman explains Blackstone's high dividends by saying "one reason I like cash is because I get paid $350,000 a year to work at Blackstone, so I'm a relatively low-paid employee here." And Jamie Dimon's $20 million pay package -- which doesn't include the $8.5 million he made in JPMorgan dividends, but whatever -- is brought up for comparison. And a headhunter is quoted saying "Still, $20 million is not bad. It's still a decent number, right?"
Banamex is quite a headache .
Citi disclosed on Friday that its Mexican affiliate misplaced $400 million, and followed that up yesterday by disclosing that that Mexican affiliate's U.S. affiliate -- don't ask -- is being investigated for money laundering. "People briefed on the matter say that the two issues — one involving fraud and the other involving money-laundering compliance — are unrelated," though the timing is suspicious.
Trading revenues are down .
Citigroup and JPMorgan have both warned recently that first-quarter trading revenues will be down around 15 percent year over year, driven by weak fixed income performance. Here you can read an assortment of possible explanations, with the Fed's taper, higher bank capital requirements, and derivative trading transparency all getting a bit of blame. Also Howard Marks of Oaktree says that "When things are rollicking and the market is permitting low-quality issuers to issue debt, that's when you need a lot of caution," which I guess is not the same thing as saying that investors are actually showing a lot of caution.
Computers are less likely to manipulate foreign exchange trading .
"'Electronic trading is compliant by its very nature,' the head of trading at a top-ten global investment bank says," and I guess that seems a little naive? People get really worked up about high-frequency trading. But, sure, go with it. I have to say that, as a deterrent to market collusion and manipulation and generally being terrible in chat rooms, replacing the whole business with computers does seem like a stronger approach than a few random jail sentences.
Why not have your CEO do your corporate espionage ?
This story of corporate espionage, in which Dick's Sporting Goods is accusing the chief executive officer of Modell's of infiltrating a Dick's store by pretending to be a Dick's executive "as he persuaded employees to give him access to the backroom of the store and grilled them about the business," will probably remind you of some pop cultural thing. I think of Bud Fox posing as a janitor in Wall Street, obviously, but another parallel is even closer to hand:
In 2012, Modell shaved his head and wore a walrus mustache for his appearance on "Undercover Boss," posing as "Joey Glick," a warehouse worker at one of his own company's facilities.
There is a picture of the mustache, though no word on whether he wore it for his spying gig.
Carl Icahn reads Dealbreaker .
I feel like not a lot of new substantive ground is being broken in the back-and-forth between Carl Icahn and eBay, but I was pleased to see that Icahn finds Jon Shazar's "hyperbole" "eloquent" and "no doubt funny." Though the dispute itself -- Marc Andreesen conflicts of interest, blah blah blah -- "is no laughing matter," per Icahn. Anyway, you can enjoy Carl Icahn's hyperbole here, and at some length.
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(Matt Levine writes about Wall Street and the financial world for Bloomberg View.)
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