Pick any Wall Street scandal that has made front-page news over the last five years and there is a decent chance that the key piece of incriminating information was harbored in the searchable history of an online chat room. So finally – frankly mercifully – banks are considering emptying the chamber and banning the use of instant messaging.
The Wall Street Journal is reporting that J.P. Morgan and Credit Suisse have had internal discussions over whether to ban online chat tools. Other banks, including Royal Bank of Scotland, Barclays, UBS and Citigroup, are considering implementing standards for chat room use that would include monitoring.
On the surface, the move seems prudent and overdue. Details surrounding the Libor scandal and, most recently, the foreign exchange rate manipulation investigation were each unearthed in chat room histories. Moreover, instant messaging was the tool used to carry out most of the alleged collusion.
But for those traders who play by the rules, the elimination of IM as a communication tool would be a difficult blow. As much as banks want traders to communicate over the phone, it’s often the busy clients who prefer online chatting. One sell-side trader told us that he inks most all of his deals through IM – and it’s also where he does most of his daily chit-chatting to keep things light and personable.
Text messaging is a replacement option, but not a very efficient one. Instant messaging apps for personal smartphones may eventually fill the gap, but that could open up another can of worms.
Headhunters and the internal recruitment staff of large banks don’t always see eye-to-eye. With banks planning to pay higher salaries to compensate for impending bonus rules, it could get even worse.
J.P. Morgan and HSBC are now the only two banks that will face the strictest capital rules, set to be implemented in 2016. The Financial Stability Board this week lowered surcharges for Deutsche Bank and Citigroup, meaning they won’t need to retain the same level of earnings as the aforementioned two. Strict capital requirements have a nasty habit of affecting hiring and compensation plans.
Generally speaking, fund managers who cater to the super rich don’t spend much time worrying about wage inequality. The times may be changing though. Wealth gaps may now be threatening the economy’s ability to expand, and money managers are noticing.
Deutsche Bank has hired former Credit Suisse exec Marcelo Saad to expand its business in Brazil. The timing is rather interesting considering the German bank recently made cuts to its Brazilian investment-banking and research units.
Traders, bankers and hedge fund execs are all worried about when the Fed will begin tapering stimulus. But not Bridgewater Associates’ Ray Dalio. “We’re not worried about whether the Fed is going to hit or release the gas pedal, we’re worried about whether there’s much gas left in the tank and what will happen if there isn’t.” Sounds scary.
In a surprise move, a Manhattan judge delayed approving SAC Capital’s insider trading settlement with regulators, noting that she wants to see pre-sentencing reports before green-lighting the deal. It seems this saga just won’t end.
With hedge fund returns down, firms are turning to coaches, psychiatrists and self-help programs known as “mindware” to improve the performance of their employees.
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Quote of the Day: “Never argue with stupid people, they will drag you down to their level and then beat you with experience.” – Mark Twain