Massachusetts Senator Elizabeth Warren and others in Washington have been rather vocal with their distaste over how Wall Street crimes are prosecuted. Historically, bankers break rules and/or commit crimes, investigations happen over a period of years, and eventually the bank settles for a multi-million-dollar fine that affects shareholders more than it does the bank’s management. Maybe a couple people get fired.
In effect, the system incentivizes bankers to commit immoral or illegal acts, as it’s usually the bank that takes it on the chin, not them. At least that’s the theory. But the problem with closing this loophole, as Warren sees it, is that it’s extremely difficult to catch people in the act. Authorities appear to be working on a remedy though: entrapment.
During its investigation into banks’ alleged manipulation of currency markets, U.S. authorities have reportedly “flipped” several employees who are still on the job, according to the Wall Street Journal. These informants have been feeding investigators information and even engaging in exchanges with suspects that are being recorded.
There is no word yet on which banks are harboring the suspects, but nearly every big name bank has been mentioned in the probe that has already swallowed up several traders through their electronic chat history. Now, authorities are being more proactive.
One recent example involves an investor relations executive who was just charged with insider trading. Investigators thought Michael Lucarelli may have been trading ahead of proprietary information, so they went to his office when he wasn’t there, opened up his briefcase, photographed some documents, then sat back and let him commit an actual crime. His bosses continued to employ him for roughly a month after knowing of the investigation so as not to tip him off. It worked beautifully.
Indeed, the old reactionary way of dealing with crimes on Wall Street appears to be ending.
Hiring Roundup (eFinancialCareers)
In the latest hiring roundup, Pimco eyes European push, Schroders needs new salespeople and a boutique investment bank plans a new office.
Are You an Underpaid Banker? (eFinancialCareers)
This is how much you should earn now as an investment banker in your early 20s.
J.P. Morgan Exec Launches Boutique (Bloomberg)
Former J.P. Morgan Chief Equity Strategist Thomas Lee has launched his own boutique research firm. Fundstrat Global Advisors already has seven employees.
Lazard Hits Houston With a Burst of Energy (Bloomberg)
Investment bank Lazard is expanding its presence in the energy sector. The firm just hired James Conniff and John Bresnahan as managing directors and is opening a Houston office.
Busy Day-One (Bloomberg)
Victor Dodig took over yesterday as the new CEO of Canadian Imperial Bank of Commerce. It was a busy first day. Dodig named two new co-heads of CIBC’s wholesale-banking unit and apparently pushed up COO Richard Nesbitt’s retirement date by a full year. That plus around 10 other major people moves.
Famed longtime NYSE trader Michael D. Robbins died last week. He was 80. Robbins was a successful independent floor trader before the concept even existed.
The Shoes Are Just a Bonus (Dealbreaker)
Here are some details on a rather sorted sexual harassment claim brought by an old UBS intern.
Buzz Around the Office
Pop Tart Cowboy (HuffPo)
A North Carolina man was arrested after selling an undercover cop drugs. Only they weren’t drugs. It was just a crushed up Pop-Tart that he said was cocaine. So he was charged with creating a counterfeit controlled substance, which apparently is a thing.
Quote of the Day: “The floor was like a tribal village -- that’s what I liked about it. It had a limited number of people: There were the insiders, there were the outsiders, there were those who knew the territory, there were those who knew the mores of it, and I wanted to be inside. And I got inside.” – Michael Robbins on his love of trading