Morning Coffee: JPMorgan and the mysterious possible bonus clawback. Overworked 35-year-olds discover nature and board games
It’s like hearing that a hit TV series that you never really liked has been cancelled, leaving an unresolved cliffhanger. The JPMorgan / Virgin Islands / Jes Staley litigation over who did what when with Jeffrey Epstein’s human trafficking operation, has been settled out of court. With no admissions of liability, JPM will pay a total of $75m to a combination of the US Virgin Islands law enforcement, anti-trafficking charities and mental health care for Epstein’s victims. Since the settlement includes some legal fees, it appears to be quite a bit smaller than the $190m that the USVI had originally been asking for.
There has also been a settlement in the related litigation between JPM and Staley, in which the bank was suing its former employee for an indemnity on any judgement made to the Virgin Islands, plus a clawback of $80m of compensation.
No details at all seem to be forthcoming with respect to the Staley settlement, but that’s not necessarily surprising. What was surprising was the amount of information that came out in the first place – for months, the whole industry was absolutely puzzled at why either side was letting this case come anywhere near a court. Almost any amount of money would have been worth it to settle for either side; you simply can’t put a price on the bad publicity generated by week after week of excruciating revelations.
So we won’t know for sure whether the compensation was clawed back. We would guess that it probably wasn’t, because if estimates of Staley’s net worth were in the right ballpark, it’s unlikely that he would have been able to afford it, but estimates of net worth are often wrong. If both sides have just agreed to pay their lawyers and forget about the case, then the record for banking bonus clawbacks is still held by Christian Bittar, the former head of Deutsche Bank’s money markets and rates derivatives group, who handed back $53m when he was fired over Euribor fixing.
JPMorgan will presumably be hoping that it can now put the past behind it (it settled another Epstein-related suit for $290m earlier this year). Jes Staley, though, might find it harder to move on and adopt a lower profile. He has significant unvested share awards “frozen” at Barclays from his time as CEO there; these will be worth a bit less as the Barclays share price has fallen, but they’re not the kind of money you can just walk away from.
It was confirmed earlier this year that the unvested shares are still frozen, pending a regulatory investigation (which, it should be remembered, was into the extent to which he had disclosed details of the case to the Barclays board – not into any involvement in Epstein’s crimes, which Staley vehemently denies). That investigation apparently concluded a while ago, but the Financial Conduct Authority hasn’t issued a “decision notice” yet. That is likely to mean a further legal battle going on behind the scenes. Every senior banker in the world ought to look at this case and reflect that “know your customer” isn’t just the law – it’s a really good idea.
Elsewhere, young people are not so much “quiet quitting” as “firmly refusing to do more work than they’re paid for”. Or at least, a sufficient number of young professionals to make a trend piece have said that they are setting boundaries, switching their phones to airplane mode and prioritising time with their families, going on walks and keeping up with their hobbies.
This isn’t something you could do in banking; as well as working a normal number of hours in a week, all these people have bosses who are prepared to tolerate not getting their “pls fix” emails responded to within ten minutes at 3 o'clock in the morning. But many of their points will not be unfamiliar to bankers – they don’t believe they’re appreciated, they don’t think they’re making any positive change in the world.
At least bankers, unlike the people interviewed, can tell themselves that they’re building financial security. But if that’s not there, or if the money no longer dulls the pain, the only alternative might be to get out of banking and into a career that lets you set limits.
It’s to do with his previous job at ICBC (whose chairman is under investigation) rather than his current role as chairman of China investment banking at Nomura. And Charles Wang Zhonghe can go where he likes in Hong Kong or the mainland. He’s just been told the equivalent of “we trust you, but don’t leave town”, by the Chinese authorities. (WSJ)
Slawomir Krupa of SocGen got roasted by former rogue trader Jerome Kerviel, who tweeted that he was willing to come back, during an investor day in which the share price was falling rapidly. (FT)
Randel Freeman, formerly of Centaurus Capital, now won’t be the CEO of GAM. Although his last minute withdrawal is apparently due to “unforeseen family reasons”, it’s hard to shake the impression that there’s something ill-fated about this job. (Financial News)
It’s not always the ones you least expect. Jan Marsalek used to live next door to the Russian consulate, partied with Russian spies, did an investor relations tour on which he claimed to have the chemical formula for Novichok and then disappeared to Belarus. He’s now being accused of having spied for Russia. (FT)
Ken Griffin isn’t pleased with his portrayal in the GameStop movie, “Dumb Money” and has got lawyers involved. (Dexerto)
Not all sleep problems of middle-aged bankers can be cured (clients who forget what time zone it is, analysts who need to be checked up on), but here’s a guide to giving yourself the best chance of dropping off quickly after your last “pls fix”. (WSJ)
That’s got to leave a mark – Santander are not just terminating the engagement of EY as financial crime (reduction) consultants, they have demanded millions of pounds worth of refunds because they weren’t happy with the quality of work. They are still apparently working for Santander on other projects, which must make for some awkward lunches. (FT)
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