Morning Coffee: The secretary who saw traders misbehaving after a few drinks. New path to the top in equity research

The judgement in the “witch’s hat” employment tribunal has been given, with a win for prime brokerage product manager, Stacey Macken.  After funding the court case from savings and a loan she had been asking for compensation of as much as £4m ($4.9m) (the amount of the settlement hasn’t been decided yet). It’s likely, therefore, that the staff of a large European investment bank are in the process of learning a couple of expensive lessons.

The first such lesson is “remember that the admin staff are watching”.  According to remarks made by the judge, the incident around Halloween when the famous hat was left on Ms Macken’s desk seems to have been quite important in supporting the case that discrimination had taken place (and therefore that the damages would not be capped).  And this incident was described in a witness statement from Georgina Chapman, one of the PAs to the department’s bosses. Chapman didn’t see the hat actually being placed, but did see a group of male employees being “loud and boisterous” and racing round the office at 8pm, after having come back from an afternoon in the pub.  It’s not clear whether it was a normal occurrence for the support staff to be working late while the revenue generators were out partying, but you don’t have to be a puritan to think that even if this hadn’t ended up as a costly legal case, it wouldn’t have been a great look.

The second one is “don’t assume it will stay in the office”.  One of Ms Macken’s colleagues was apparently in the habit of graphically describing his friends’ sexual role play, which will presumably make for a couple of awkward dinner parties now that it’s in the papers.  Another answered the phone with “Hi, sexy” (not too bad) and “Hi, F***face” (bad).  There were also a couple of running jokes about the way the boss treated Ms Mackem which fall into a category “could have seemed funny at the time, but are not at all funny when read out by a judge”.

Indeed, at times when reading the reports one has to remind oneself that this was actually a lawsuit about money – Ms Mackem was earning £120k while a man with similar experience was on £160k. Her combined bonuses over the period only totalled £33k while her male colleague's were £167k .  The abusive banter blew big holes in the bank’s attempt to make a case that this reflected performance and seniority rather than discrimination, as did the hat and the secretary's observation.

There is a lesson here.  It’s possible to banter without being crude or abusive, it’s possible to disagree with colleagues without belittling them and not only is this a good idea, it’s the law. There are two or three bankers who, as a result of this case, are presumably going to have a disappointing 2019 bonus and who will spend the rest of their career trying to manage the news story that’s now glued to their names.  It’s an old proverb for a reason – if you think it would look bad when your parents read it in the papers, don’t do it.

Elsewhere, a small number of sell side research analysts have found a way to monetise their industry knowledge even in a terrible market for cash equities.  They’re getting hired as strategic advisors to the banks they cover.  Kinner Lakhani, former financials analyst at Deutsche Bank has gone from being Head of European research there to a Group Strategy & Development job at Credit Suisse, reporting directly to Tidjane Thiam.  Huw van Steenis, best known for his years as star analyst at Morgan Stanley, is now head of investor relations and an advisor to executives at UBS on the future of finance.  Didier Valet left SocGen late last year, but before doing so he had worked his way up from the equity research team to the Deputy CEO post.

There’s some sense to this.  Sell side analysts spend about as much time as management consultants in thinking about the industry they cover, and are only less proficient when it comes to putting a fancy PowerPoint deck together.  They’re possibly a bit more expensive, but you can work them hard and they don’t charge by the hour.  It used to be the case that the most profitable way to engage all this expertise and brainpower was in trying to work out which shares would go up or down, but maybe we have computers to do that these days.

Meanwhile …

Guess who’s back? Yes, Edward Bramson still calls Barclays’ strategy “value destructive” and thinks that “Markets activities consume so much of the company’s assets and management attention that, without addressing them, Barclays will be unable to fix the profitability issues that plague the CIB and the group as a whole”.  But he's not mentioning Jes Staley by name (just alluding heavily to him) and he’s going to leave time for the new chairman Nigel Higgins to settle in before starting a new proxy campaign. (Bloomberg)

Michael Genender, of TMT boutique Raines Group, has a side-hustle in impersonating the styles of famous tennis players so that contestants in the US Open have a similar “hitting partner” to warm up with.  He’s a recent Stanford graduate who had a career high ATP ranking of 1866. (CNN)

HSBC is looking to unload its French retail subsidiary, which suggests that Noel Quinn might end up being CEO in the long term – “interim” appointments don’t usually get to make such large strategic decisions. (WSJ)

Trouble at Goldman Sach’s Bengaluru operation – a VP in the back-office subsidiary there got addicted to online poker and allegedly tried to make fraudulent bank transfers to fund his problem. (Economic Times)

“I’m quitting to pursue my dream of not working here any more” – how to master the art of going out at the top, rather than hanging on too long (FT)

Unusual uses of alt-data – UBS Evidence Lab have commissioned an interactive sculpture which lights up in different colours to show the levels of air pollution at 8000 locations around the world. (Finextra)

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