Levine on Wall Street: Bribes Subtle and Obvious
Morgan Stanley hired some
connected Chinese people
Apparently Morgan Stanley got "a letter from the SEC asking for information about its China hiring practices" as part of the same Foreign Corrupt Practices Act probe that snared JPMorgan and presumably caused some discomfort among the many, many, many investment bank employees around the world whose relatives are prominent government officials or client executives. This probe has the potential to turn into a general-use, whatever-the-government-wants-it-to-be stick to be used against banks; it is hard to imagine that any big bank hasn't occasionally hired a dud in order to improve its relationship with that dud's parents. I guess it's a question of how bluntly the banks said that in writing.
Weatherford did some more old-fashioned bribery
Speaking of the FCPA, oilfield services company Weatherford International, which operates in some ... foreign ... corrupt ... places, paid a bit over $150 million to settle FCPA charges and another $100 million for violating sanctions against Cuba, Syria, Sudan and Iran. For me a highlight of the FCPA complaint comes when Weatherford hires a Swiss agent to serve as a consultant -- er, a "consultant" -- to help renew "a lucrative oil services contract in the Cabinda region of Angola." Weatherford sent him a draft of a standard consultancy agreement but:
The original draft of the consultancy agreement used by Weatherford's legal department included an FCPA clause prohibiting the Swiss Agent from giving anything of value, directly or indirectly, to an official or employee of any government. The Swiss Agent rejected the clause in an email stating that "in view of the nature of the business I cannot accept the original wording." Despite this red flag, no steps were taken to ensure that the agent was not paying bribes to foreign officials.
I don't know, who's to blame here? On the one hand, yes, if your job is to pay bribes to Angolan officials, it does seem weird to sign a contract saying you won't pay bribes to Angolan officials. On the other hand, if your job is to pay bribes to Angolan officials, shouldn't you be at least a little subtle about it?
A hedge fund manager got in some more trouble
Daniel Shak, a former hedge fund manager and poker player who is famous for various things, settled with the Commodity Futures Trading Commission this week for some 2008 oil-market manipulation. What Shak did was (1) agree to deliver some things at the closing price on Monday, and then (2) buy a the things he had to deliver just before the close on Monday. This is called "banging the close," I guess, though in its rough outlines it is difficult to distinguish from just buying low and selling high, or taking risk and then hedging it out. Again, intent is what seems to matter.
People want to see what dirt the government has on JPMorgan
One reason for JPMorgan to settle the government's assorted mortgage-bond claims for $13 billion was to keep the government from filing complaints in some of those cases, since those complaints would be a useful road map for private plaintiffs in a way that the settlement's bland statement of facts was not. That only sort-of worked, because one such private plaintiff is trying to get copies of any draft complaints that the Justice Department shared with JPMorgan during settlement talks, and so far a judge wants JPMorgan to hand those complaints over. This is sort of rough on JPMorgan, since much of the point of the settlement was to keep those draft complaints out of the public eye. On the other hand, the private plaintiff is the Federal Home Loan Bank of Pittsburgh, which is a sort-of-government-sponsored thing; you'd think they could just call up the Justice Department and ask nicely to see a copy of the JPMorgan dossier.
Poor traders !
Here you can read a claim that junior and mid-level traders at investment banks are catastrophically underpaid and barely able to afford to live in London, and then only paycheck-to-paycheck and with roommates. This is the sort of claim that people enjoy making and reading from time to time, to make themselves feel better or worse about their life choices and opportunities, though you should not take it as particularly true. If investment bank jobs are so bad, how can they be used to bribe Chinese officials?
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Matthew S Levine at email@example.com