Republicans and Democrats alike tore into big banks during the primaries, but the Wall Street whipping boy wasn’t as prominent during the latter stages of the presidential campaign. However, as Election Day approaches, Wells Fargo’s continuing succession of regulatory and legal woes couldn’t have come at a worse time for the bank – or the financial services industry as a whole, which suffers from guilt by association whenever such a major scandal breaks.
When it rains it pours. Now the Securities and Exchange Commission is investigating Wells Fargo’s sales practices and investor disclosures, and the bank has had to set aside significantly more money – $1.7bn – to deal with its mounting legal problems.
That is completely separate from the fake account opening scandal. Last month, Wells Fargo agreed to pay regulators $185m in a settlement of that case. Past employees have said that many senior executives didn’t do anything to stop misconduct despite ample signs it was running rampant below them for years as they were promoted up the ranks.
The hit to Wells Fargo’s reputation has been far more damaging that any amount of fines or settlement fees, and that has had ripple effects, with candidates at local, state and federal levels renewing their attacks on big banks and public sentiment toward financiers souring anew.
Despite efforts by some senators to block former bankers from serving in the cabinet, others believe that Washington needs Wall Street, and not just to fund politicians’ campaigns – to serve in government and lend their expertise to managing the economy.
Separately, in an effort to appease shareholders and lift Credit Suisse’s stock price, CEO Tidjane Thiam has stuck to the plan: cutting jobs, selling assets and reducing operating expenses.
Facing various issues like tougher capital requirements, negative interest rates and a sluggish economic recovery, Credit Suisse has cut 5,400 jobs this year and will cut at least 600 more. Thiam was able to reduce quarterly adjusted non-compensation expenses by 12% year-over-year.
How did investors reward his diligent efforts to turn around Credit Suisse? The stock price sank by 5%. What gives? Well, trading revenue was down and profit margins in the wealth management business are stagnant despite the fact that Thiam is prioritizing that business, so the bank’s outlook could be better at the moment.
The head of Morgan Stanley's highly-rated equity research division in Europe has resigned. (Financial News)
A gay asset manager is suing the hedge fund that fired him, saying he was “subjected to unrelenting abuse based on his sexual orientation by his colleagues, within an environment suffused with homophobia.” (Evening Standard)
To compete for and retain top talent, banks should embrace generous parental-leave policies even though they’re not mandated in the U.S. (American Banker)
A Manhattan investment banker has gone to court in an attempt to un-adopt his adopted son so he doesn’t have to pay his estranged wife, the boy’s biological mother, child support. (New York Post)
Goldman Sachs found a new way to compete with hedge funds, which are clients of its prime brokerage division. (Business Insider)
New York has been promoting itself as a destination for tech startups, and venture capital firms invested about $9.4bn across 1,240 startup deals in 2015. (WSJ)
Top Asian students prefer to join high-frequency trading firms rather than Wall Street banks. (Bloomberg)
What does the U.K. high court’s decision to require parliamentary approval for triggering Article 50 mean for the Brexit timeline? (WSJ)
For one, it clouds the horizon for financial services companies. (WSJ)
Paris is turning on the charm to woo British bankers. (Reuters)
Guyana-born fund manager and former model Gina Miller is none too popular among Brexiteers. (The Sun)
Many British bankers and asset managers have cancelled their annual lavish ski trips to the Alps thanks to Brexit’s impact on the pound. (Bloomberg)
Have you been feeling sorry for native UK investment banks? Don’t. There’s really no need. (FT)
The family behind Louis Dreyfus, one of the world’s largest commodities traders, is embroiled in a bitter feud. (WSJ)
English people who are racist, including those in the media (*cough* Daily Mail), seem to think they have won the Brexit referendum and that now it is open season. (The Guardian)
These are the 20 most common types of wankers that you’ll encounter in London. (GQ)
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