Morning Coffee: 32-year-old Goldman Sachs VP allegedly risked career for $146k. Power swings back from bankers to banks
If you were a vice president in an investment bank with a brilliant career on the buy-side ahead of you, would you risk everything for a fraction of your annual salary? Brijesh Goel says his name has been unfairly tarred, but the SEC is accusing him of insider trading.
Goel, who is now aged 37, worked for Goldman Sachs between the ages of 28 and 36. He wound up as a VP, a role that pays a salary alone in New York of up to $275k according to H1B visa data. Last year, Goel moved to Apollo Global Management as a principal in structured finance, and is likely to have earned more still - Apollo paid its first year associates $550k in 2021.
Today, however, Goel is on indefinite leave from Apollo pending an investigation into the insider trading accusations. The SEC claims that for two years he passed information about potential mergers to an old friend who was a trader at Barclays Capital, that the friend traded on this information, and that they split their winnings. The winnings were diminutive: the two men made $292k in total, and that was mostly from a single trade; others netted them nothing at all or just $600. The two men played squash together and are accused of using code language like “Did you book the court?” to refer to their allegedly nefarious activities.
A lawyer for Goel told the Financial Times that he looks forward to demonstrating his innocence: “Sadly, the government rushed to charge Brijesh on the apparent say-so of one person about something that supposedly happened years ago before Brijesh’s current job — without giving Brijesh the chance to speak with them, unfairly tarring his name . ."
Separately, after a year of high pay and bitter complaints about overwork to which banks have been obliged to pander, junior bankers may soon have to simply suck it up. As revenues in capital markets show no sign of recovery and M&A revenues join the slide, long time banking observers say the balance of power is shifting.
“The power has shifted from the employee to the employer,” Mike Mayo, a top banking analyst at Wells Fargo told the Financial Times. “What took place over the last couple of years with employees saying they’re working too long hours, and they want extra perks and this and that, was an exception . . . that was a moment [that has] come and gone.”
However, calibrating cuts isn't easy, Mayo added: "Cut too deep and you have to pay up after to get them back while you play catch-up. The other risk is you don’t take the needed moves and you’re stuck with bloated overhead.”
Junior bankers still want to work from home and people leaving the Big Four for big banks are coming back because they don't want to be in the office. “People don’t want to work like that anymore. We’ve had several people leave for investment banks over the past 12 months and come back. They said it was ridiculous the way they were expected to work.” (Financial News)
Goldman Sachs bankers called their work selling over £5bn worth of bonds and loans backing private equity firm Clayton, Dubilier & Rice’s £10bn takeover of grocer Morrisons "Project Magnum," but it hasn't been very sparkly. Sixteen underwriters working on the deal have already made a £200m loss and there's another £400m of losses when the debt is marked to market. “It’s just very un-Goldman. They’re usually ahead when the tide starts turning.” (Financial Times)
Drew Goldman, Deutsche Bank's global head of investment banking coverage and advisory is stepping down after 23 years. Dealogic says Deutsche's dealmaking fees are down 46% this year. (Financial News)
Drew Goldman is joining the Abu Dhabi Investment Authority as head of real estate investing. (Bloomberg)
Moelis & Co is setting up a new blockchain group under John Momtazee, its global head of media investment banking. “We love the timing. We think that to pile in on good days and say, ‘Here we are, ready to help,’ feels less genuine than when there’s a challenge. Any disruptive technology is going to have volatility.” (Bloomberg)
Bank of Montreal's asset management arm hired 13 equity portfolio managers in Toronto across health care, technology, industrials, financials and consumer stocks. (Bloomberg)
Julius Baer has made some big write-offs of its historic IT investments. (Inside Paradeplatz)
Julius Baer introduced a hiring freeze for non-relationship manager positions. (Financial Times)
Barclays will start buying back $17.6 billion of securities after it accidentally sold too many of them. The repurchases will take place between August 1st and September 12th. Barclays has already taken charges of $651m relating to the matter, and the costs are only like to rise. (Bloomberg)
Burnout comes from doing all the small jobs that you weren't really hired to do. (WSJ)
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