Barely a fortnight into 2006 and three tremors have already shaken the banking world (see links below for relevant articles). While banks have strict ethical codes in place to ensure good behaviour, it's pretty clear that grey areas still lurk and where employees get it wrong, it's very damaging - and very expensive - for banks, however hard they've tried to maintain good practice.
I'll begin with the $1.4-billion-dollar claimants at Dresdner Kleinwort Wasserstein. Their claim that sexist behaviour and thwarted promotions at the investment bank represent systematic sex discrimination has created quite a furore on both sides of the Atlantic. Apart from finding the sums claimed to be nothing short of jaw-dropping, I'm rather surprised at how offended some of the claimants seem to be at encountering sexist comments and/or behaviour in the office.
It happens occasionally. It shouldn't, but it does, and if you want to get ahead as a female, you need to both ignore it and rise above it. You have to be ballsy to work in banking - sissies need most definitely not apply, whatever gender you are.
One woman banker I know was distressed when some of her more puerile male colleagues put porn magazines on her desk to embarrass her. Rather than making a formal complaint to her managers (one of whom was involved), she fought fire with fire by getting hold of some pretty hardcore gay porn, and retaliating in kind. The harassment stopped in its tracks. (I'm not advocating tit for tat behaviour in general - no pun intended - just making the point that females need to fight their corner deftly when dealing with overtly sexist antics).
Quite a few women employees choose not to get HR involved for fear of making matters worse or being labelled a troublemaker. Nearly all the successful female bankers I know have a great line in raised eyebrows and cutting remarks, which serves them well when dealing with the infantile end of the work spectrum. Yelling 'Discrimination!' isn't necessarily the best solution. (Although if the DrKW Six win it will have proved a supremely lucrative one).
Overt sexism and harassment should (and often do) provoke a zero tolerance response from employers, and women should certainly be paid equally for equal work, that's indisputable. But to claim billions in compensatory damages when it doesn't happen? Surely sums like that can't be morally acceptable in a world where people horribly injured or killed in terrorist incidents merit compensation of only a tiny fraction of the amounts claimed here?
Out of hours or out of order?
Morgan Stanley fired four employees foolhardy enough to visit a strip club with a client after hours. I'll leave the legal arguments aside as they are discussed extensively elsewhere (see our reader responses in the linked articles). My beef is not so much that the men visited a strip club, although I certainly wouldn't have wanted to join them, but that Morgan Stanley is perhaps acting like 'Big Brother' in banning what appear to be after-hours activities.
Lap dancing strip clubs and drinking marathons were an important part of the strategy in many a trade in the last couple of decades, however distasteful many now find that to be. One female former City banker told me she signed off her juniors' expenses claims from such places without a qualm when they visited them with clients because decent trades usually followed, to the entire team's benefit. Fair enough that such visits are now off limits in the pursuit of business, but after work and between friends? It will be interesting to see how the Strip Club Four fare if they bring actions as a result.
If banks are going to reprimand employees for off-duty behaviour, I'd rather they turned their attention to bankers throwing money around in vulgar splurges. In October 2005 a New York banker ran up a 36,000 bar bill in one evening at London member's club Aviva, celebrating 'an insane bonus' with ten male friends. They binged on Dom Perignon and Roederer Cristal champagnes. There are plenty of similar anecdotes online if you look on Google. The record for the most extravagant bill is 45,000, spent by six bankers at Gordon Ramsay's Petrus restaurant in 2001. That's one meal.
Yes, they can spend their money how they choose. No, it isn't wise or clever to indulge in grotesque sprees, which reinforce the public suspicion that bankers are overpaid at the expense of investors. It harms the industry's image when bankers indulge in orgies of conspicuous consumption.
Or maybe it's just sour grapes on my part...
Morgan Stanley hit the headlines again with a $10-million lawsuit filed by former employee Arthur Riel. Fired by the bank in September last year, Riel had responsibility for the bank's email policies.
Riel claims he alerted the firm to 'ongoing and unlawful destruction' of email data in connection with the bank's legal fight with billionaire Ronald Perelman. Because he refused to alter the facts and conceal wrongful conduct, Riel claims Morgan Stanley sacked him. The bank denies the claim, describing it as 'nonsense' and states that Riel lost his job as a result of inappropriate behaviour, properly investigated.
If Riel's assertions are true, it's very worrying. Spitzer and the SEC were supposed to have the banks neatly trussed in regulatory red tape to prevent data concealment and/or destruction from happening. If Riel loses, he will have caused immense damage to Morgan Stanley's reputation just by alleging data misconduct - mud like this has a tendency to stick. It could, and likely will, get horribly messy.
Back in the spotlight
It might be a new year, and a new beginning, but three major ethical upheavals have already hit the January headlines. The immediate fallout is likely to be negative for banks' reputations, whatever the outcomes in court.
And this just in... Claire Bright, head of asset and liability management in Treasury at HBOS who filed a sex discrimination claim Monday has slapped the bank with an unfair dismissal claim after not being allowed to return to work. Plus ça change...
In the meantime banks and their practices are once again firmly where they'd much rather not be: under intense scrutiny. Let us know what you think.
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