Making news for all the wrong reasons – it was a common theme on Wall Street in 2013. In July, we listed a dozen of the most head-scratching banker moves that made news during the first six months of the year, ranging from a sleep-induced $293 million wire transfer to an investment banker whose Excel spreadsheet of online dating adventures went mistakenly viral.
While the first-half of the year featured some doozies, the final six months was equally competitive. Below are some of the most embarrassing moments for banks and bankers during the latter part of the year, ignoring the more major overly-reported scandals.
Or lack thereof: Common Sense Investment Management, a once $3.2 billion fund of funds operator, suffered an outflow of assets this fall after its founder, Jim Bisenius, was arrested in a prostitute sting in Oregon.
The fallout from Bisenius responding to the fake online ad has been immense. As a fund of funds, Common Sense had to pull investments in other funds to pay off customer redemptions. As one of the top allocator to short-biased hedge funds, Common Sense’s scandal ended up rocking the short market, which was already suffering in the late 2013. Bisenius is still on the job as far as we know.
#Poorchoice: On the surface, it seemed like a good idea for J.P. Morgan. Host a Q&A session with company exec James B. Lee Jr., allowing the general public to tweet inquiries to its top deal maker. Simple, right?
Scandal-plagued J.P. Morgan likely regretted the decision within minutes after nothing but sarcastic and biding questions began flowing in, with the media closely tracking the event. “Has the raw cunning of the electricity bid-rigging scheme has been unfairly overshadowed by the scale of the mortgage settlement?” read the first tweet. “If it came out Jamie Dimon had a propensity for eating Irish children, would you fire him? What if he’s still ‘a good earner’”? asked another user.
Thousands more soon followed, forcing the bank to eventually cancel the Q&A after taking a virtual beating.
“#Bad idea! Back to the drawing board!” a spokesman later tweeted. Indeed.
The Crystal Methodist: Paul Flowers, the former chairman of the Co-op Bank and a 40-year minister for the Methodist Church, was arrested in November after allegedly buying crystal meth and cocaine. The whole ordeal, including a monologue with a dealer where he explained his affinity for ketamine, cannabis and club drug GHB, was caught on tape.
Following his arrest, questions around Flowers’ banking credentials – and the 141-year-old bank – began to mount. Finance minister George Osborne ordered an inquiry into the bank, which nearly collapsed on Flowers’ watch. Co-operative Group chairman Len Wardle, who helped pick Flowers, was forced to resign.
We later learned that Flowers quit his post amid speculation around his competence, his expenses and his habit of using his work computer to access pornography. He is now planning to move to the U.S. to become a Mennonite.
Chubby Cheeks: Calling anything related to the Madoff scandal a “PR nightmare” is obviously the understatement of the year, but a few recent revelations are too good not to include. Prosecutors allege that, during one meeting with regulators, workers placed a newly cooked document in the refrigerator before handing it to auditors in an effort to mask the fact that it was hot off the printer. Another story notes that Madoff, while reading a Wall Street Journal report that should have had him shaking in his boots, was more worried about how big his cheeks looked in his ink-dot portrait looked in the paper.
Damned if you do, damned if you don’t: Deutsche Bank was left with egg on its face in November after a court forced the bank to reinstate four traders that were fired as part of the Libor rate manipulation scandal. Deutsche Bank was also required to award the four men nearly $500,000 in back pay.
While the evidence seemed to favor the bank, the court ruled that it couldn’t fire the men because the firm “didn’t have sufficient guidelines on rate submissions, didn’t control the process, and had systems in place that fostered the behavior.” Deutsche Bank ‘‘is complaining about a behavior the bank itself only made possible,” the court said.
So, at the end of the day, Deutsche Bank remains at the heart of the Libor probe but is required to employ those who it believes were responsible for the actions. Must make for some awkward water cooler talk.
An issue of perception: If J.P. Morgan isn’t creating controversy, the bank often finds itself right at the heart of it. In September, a performance artist nicknamed “Reverend Billy” was arrested after staging a protest romp inside J.P. Morgan’s midtown headquarters, where the group sang songs about the bank’s affinity for financing fossil fuel investments. It lasted just 15 minutes.
Controversy began brewing after prosecutors charged Billy with rioting in the second degree, menacing in the third degree, unlawful assembly, and two counts of disorderly conduct, charges that could have put him behind bars for a full year. Perhaps one of the reasons police reacted so harshly was because some J.P. Morgan staffers thought the singing protestors, dressed as toads, were deranged bank robbers. The charges were later reduced after video of the incident was found.