Lunchtime Links: The unpleasantness of being a trader; Citi's prop push

16 March 2010

2 minute read

Lunchtime Links: The unpleasantness of being a trader; Citi's prop push

The FSA's decision to ban former Merrill Lynch rates trader Alexis Stenfors from the City for five years for mismarking the value of his trades, won't come as particularly good news for the 39 year old.

Aged 44 he's frankly unlikely to get back into trading again. It also seems probable that he'll be asked to pay back the alleged $1m bonus he received for apparently claiming he made a profit of $120m in 2008, when he in fact made a loss of up to $456m.

In some ways, however, Stenfors may be relieved to be shut out of the City: it doesn't sound like he particularly enjoyed his time as a trader. Bloomberg cites an emailed statement, in which he states: "Life as a trader can be a very stressful one within, particularly in my case, where I found my working environment very unpleasant for a number of reasons." He earlier attempted (unsuccessfully) to defend his mismarks by claiming that he was "mentally exhausted" when he made them, due to an "enormous workload and a prolonged lack of holiday."

Separately, Bloomberg claims that Citigroup plans to fly in the face of the Volcker Rule by replacing "all or some" of the six portfolio managers and traders who've recently left its long-short prop trading unit.

Whether it will be able to attract external talent is open to question, however: Citi's said to be unwilling to provide permanent capital commitments to its prop traders due to the, "potential for changing market conditions." It apparently offered its departing prop traders oral assurances that everything would be ok, but they left anyway.

Prop trading, finally defined. (WSJ)

BarCap would have preferred UBS to Lehman. (Financial Times)

Lehman sacked its whistleblower shortly after he blew the whistle. (WSJ)

Deutsche paid $3bn in bonuses to its 'risk takers.' (Bloomberg)

Another senior Deutsche man leaving. (BusinessWeek)

Josef Ackermann earned more than anyone else in Germany. (Reuters)

HSBC is making 10 people redundant in Dublin. (Irish Times)

BofA hires another senior Goldman banker, as head of Asia Pac equity execution. (BusinessWeek)

'What's your daily run rate in M&A?' Well, a lot of days it's zero." (Financial Times)

Bob Diamond - sender of knackered horses to the glue factory. (Financial Times)

AUTHOReFinancialCareers UK

Insider Comment

sc
scolley
17 March 2010
I think you have both highlighted a career opportunity for Alexis. Most of the guys in the MO/BO havent a clue what the markets are doing, at least he may make a good "gatekeeper" in a less stressful role.
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Be
Berry Dingle
17 March 2010
A $1 million bonus for $120 million in (supposed) trading profits? He was robbed blind and beaten. Never mind that he was a rogue, he was a grossly underpaid rogue! I hate places like Citi. They always get into a new business like gangbusters, then overhire and have to fire most of the people they brought in as they exit the business with their tail between their legs. When I was in B-School they made a bunch of offers to my fellwo MBAs, who accepted the offers. These MBAs then stopped looking for a new job. In September when they were supposed to start work, Citi withdrew the offers, leaving these poor guys and gals high and dry. Boo!
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Eg
Egghead
16 March 2010
Unfortunately this sort of thing is pretty common, though the scale of this one is larger than most. For the trader it's a one-way bet: you'll get sacked anyway, so you might as well blag it and hope the position comes good. Challenging 'revenue generators' by support staff is not compatible with career development, so it doesn't happen as much as it ought to.
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Al
Ali
16 March 2010
"Aged 44 he's frankly unlikely to get back into trading again"
Sounds like he wasn't even trading aged 39 !
I am constantly amazed at how idiots like this Alexis person can get away with mismarking a book for such a long time. How someone can claim to make $120mm yet avoid having to explain how or with how much risk is beyond me. This just goes to show how rubbish Merrill was.
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