Morning Coffee: The Morgan Stanley banker suing to get her $450k bonus back. Goldman Sachs is planning to reward its stars
When Morgan Stanley announced its 3,000 global redundancies earlier in the year, the general view seemed to be that it was mainly cutting underperformers, junior bankers who could be replaced by the next graduate intake, and managing directors without direct revenue streams. However, in the months before those cuts it seems that Morgan Stanley also fired a high performing executive director on its London leveraged finance sales desk, and Taif Adams is calling shenanigans.
She’s saying that she had raised concerns about pricing to compliance in 2022, and that her dismissal is a “sham redundancy” to cover up retaliation. Morgan Stanley for its part is pointing out that it gave her a $350k bonus in January 2022, after she earned a $450k bonus year before, and that it made her co-head of leveraged finance sales when she came back from maternity leave.
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It’s hard to interpret this without a lot more detail – Adams’ case is that these sorts of performance bonuses are hard to square with being made redundant, while MS are saying that she stopped communicating and disengaged with the team. The case goes on, and it’s interesting to see that nobody’s claiming that she was discriminated against for having a baby; consequently, since UK employment awards are capped for non-discrimination cases, she’s asking to be given her job and its bonus potential back, rather than paid compensation. In an interim hearing last Friday, the court ruled that Morgan Stanley didn't need to submit to 'urgent interim measures,' including giving Adams her job back.
Elsewhere, the expectations management season is beginning, and we can expect divisional heads to be making analogies to “golf tournament structures”, where the top performers take nearly all the prize money. According to “five sources with knowledge of the situation” talking to Reuters, Goldman Sachs is already planning to make big payments to “standout performers”, particularly to people considered vulnerable to poaching by the likes of the ever-voracious Citadel Securities, and who were disappointed last year.
Paying up the big rainmakers has pretty significant implications for those who only did quite well, and suggests that Krispy Kreme will be delivering a lot of donuts to mediocre performers. Although it’s not so long since “$80k was the new zero” at Goldman, zero is arguably the new $80k.
There already appears to be a bit of a pity party going on among GS alumni, who don’t feel as special as they used to. Even perennial optimists like Goldman's current global banking co-head Dan Dees are saying “People are romantic for a time gone by which can’t exist any more”. It's a bitter pill, but there’s no good whining about it. In an environment where the really good people are all getting looked after and the mid-tier aren’t, who wants to be publicly announcing that they didn’t get a good number?
Meanwhile …
Google’s DeepMind AI is getting better and better at weather forecasting, and is now regularly beating benchmarks set by human forecasters. This actually might be quite interesting in the medium term for the finance industry, because a few years ago, some of the big multistrat hedge funds started to invest heavily in weather forecasting in order to build out commodities trading businesses; if that’s no longer going to be a source of alpha, there might be a shift in the overall balance of power in the industry. (WIRED)
Goldman Sachs’ “Marquee” platform, the other big investment project of the David Solomon era, is beginning to talk about how it intends to use the platform to gain market share and become the Amazon of trading. Part of the strategy, according to Marquee head Chris Churchman, is that clients will be able to make a mood board of favourite charts, and Goldman will compile an archive of regularly asked questions. (Business Insider)
Barclays is in all sorts of trouble in share price terms, but Venkat isn’t interested in calls to reduce the size of the investment banking business. “Rebuilding [it] took time, treasure and persistence … We are now at scale and it has helped diversify our returns, but it has grown to two-thirds of the bank, so we need to rebalance and grow the rest of the businesses outside it”, he says. (FT)
After having done the one thing you’re not meant to do as head of government relations at HSBC (offended China with remarks about its relationship with the UK), Sherard Cowper-Coles has been partially un-fired – he’s staying on as a consultant until 2024 (Bloomberg)
BNP Paribas is continuing to get more and more serious about its US investment bank, with head of debt underwriting Mark Lynagh moving to New York to join a number of recent local hires. (Financial News)
“One of the greatest financial-industry trade secret frauds in history” apparently – BTIG is claiming that when StoneX Group hired a bunch of its traders and software developers in 2020, they took a few bits of code with them. (Bloomberg)
Not all narcissists are equal – the ones who are constantly bragging about themselves often have higher testosterone levels, but the ones who are argumentative and demeaning don’t, according to a recent study. (BPS News)
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