How times have changed. It wasn’t so long ago that the SEC stood accused of letting Morgan Stanley chief executive John Mack’s reportedly close connection to the Bush Administration block an investigation into insider trading. Now Mack has endorsed Hillary Clinton.
Business Week reports:
One of Wall Street’s big-time Republican fund-raisers, Morgan Stanley (MS) CEO John Mack, has told BusinessWeek that he and his wife, Christy, are endorsing Democratic Presidential candidate Hillary Clinton, whom they supported for re-election as senator.
Mack previously reached Ranger status in Republican campaign finance circles by raising at least $200,000 for President George W. Bush’s reelection in 2004. (Former Goldman Sachs (GS) CEO Hank Paulson, now U.S. Treasury Secretary, raised a Pioneer-worthy $100,000.) Mack, who says he’ll stay a registered Republican, was also considered a possible candidate for various Bush Administration posts over the years.
It’s too early to tell who the other major bank chiefs will back. But Mack’s switch could tip the balance of power toward the Democrats. According to nonpartisan contribution tracker PoliticalMoneyLine, three of the other top six bank CEOs (Goldman’s Lloyd Blankfein, Lehman’s (LEH) Richard Fuld Jr., and JPMorgan Chase’s (JPM) Jamie Dimon) have favored Democrats in their political giving patterns over the past few years. Bear Stearns (BSC) CEO Jimmy Cayne is strongly Republican. Citigroup’s (C) Charles Prince and Merrill Lynch (MER) CEO Stan O’Neal have bipartisan donation habits.
John Mack Backs Clinton [Business Week]
On Wednesday, Morgan Stanley settled a civil suit with eight of its former female employees who alleged that the bank discriminates against women in terms of how they are trained, paid, and promoted. This was at least the second time since 2004 that the bank has found itself involved in a fracas with the ladies. Following the verdict, we sat down with Jan Tyler, one of the plaintiffs.
DealBreaker: So. Were you happy with your portion of the $46 million settlement?
Jan Tyler: I’m not allowed to say whether I was happy or not, according to Cyrus Mehri [one of the lawyers who represented the eight plaintiffs], who I hate.
DB: Can you blink me an answer?
JT: No. I will tell you this—I’m writing a book. Based on my experience.
DB: Interesting—a memoir?
JT: It’s going to be like a James Frey book [, A Million Little Pieces].
DB: So you’re going to make stuff up?
Read more »
An eighteen-month law suit against Morgan Stanley by eight of its former female employees was settled today. While no hanky-panky (the best kind of hanky) took place, the women felt that they had been discriminated against in terms of how they were trained, promoted and paid. The bank settled for a minimum of $46 million; Morgan’s 2,700 female brokers will see a pay increase of around $16 million, and the bank promised that it will “overhaul the way accounts are distributed in the firm’s retail branches — a practice that determined [the women’s] opportunities for pay and advancement,” favoring the men in the brokerage business.
We don’t want to make the generalization that men lie, and make promises they never keep (although Carney did swear he’d bring me beer today and yet, here I am, no beer!) but perhaps we’ll make the sweeping generalization that the men who run Morgan Stanley might. Back in 2004, the bank paid $54 million to settle a case by Allison Schieffelin for: discrimination against women, vis-à-vis pay and promotions.
Jan Tyler, one of the women named in the suit, spoke with us today, and while she wasn’t allowed to say whether or not she was happy with her part of the settlement (or blink us an answer), she did offer that she will be writing a book based on the experience. She holds no grudges against Morgan Stanley, and wishes them all the best. And John Mack is my biological father.*
Wall St. Firm Will Settle Sex Bias Suit [NYT]
*More on Jan later. James Frey is all we can say for now and we’ve already said too much.
Former Duke University lacrosse captain David Evans has landed a job at Morgan Stanley, Deal Journal reports. Evans was one of the Duke lacrosse players victimized by false accusations of a rape that never happened.*
From Deal Journal:
Now Evans has gained the trust of Morgan Stanley Chief Executive John Mack, a Duke alum and trustee (class of ‘68) who went to bat for Evans after serious questions were raised about the case against he and his two former teammates.
Evans now has landed one of the most prestigious jobs on Wall Street, Deal Journal has learned. Morgan Stanley has hired Evans, who graduated in May 2006, as part of its analyst program. Landing a plum job — which is paying well into the six-figure range these days — has to be a satisfying end to a bitter sequence of events for Evans since the rape allegations surfaced in March 2006.
The 24-year-old Maryland native had a job lined up at J.P. Morgan Chase’s investment bank that was rescinded in the wake of his May 2006 indictment, with the bank telling him it probably wasn’t the best time to be starting a new job. After he was cleared recently, J.P. Morgan came back to Evans and made a new offer, which he declined.
Also: a self-serving district attorney who will likely be disbarred for his conduct in the case, a gullible media, faculty and university administration all too eager to believe a story about privileged whites abusing a poor African American woman and a public culture too willing to accept verdict first trial by publicity.
Accused Former Duke Lax Player Lands Morgan Stanley Job [Deal Journal]
While Citi was busy preparing for today’s bloodletting, Morgan Stanley’s vice chairman of investment banking, Robert Kindler, threw a small get-together for Dana Vachon’s Mergers and Acquisitions. But we didn’t get many photos because Bobby told us that we should forget what we saw or we’d get his claw. Down tiger!
The last time we checked, the only reason to be envious of Lloyd Blankfein’s henchmen was because some of them were getting upwards of $100 mm in bonuses (and because B-fein had carried on a tradition instituted during the Paulson era wherein on Tuesdays and every first and third Friday of the month, the girls are on Goldman).
According to the WSJ, however, there’s a new motivation for keying doctored league tables into the Goldies’ cars: trading floor envy. The Masters of the Universe are in the midst of erecting a “gleaming new building in lower Manhattan that will feature six gigantic state-of-the-art hangar-size trading floors (72,000 square feet each, with room for more than 900 traders on each floor)” and a Jamba Juice. If you’re the sort of person who’s made jealous by that sort of thing, you’re not alone—the top BB-banks are going to great—desperate, sad, whatever—lengths to keep up with the Goldmans. Let’s take a look at the competition.
Lehman Brothers Holdings:
Mulling over a deal with Vornado to build a HQ and trading floors where the Hotel Pennsylvania on Seventh Avenue still stands, i.e. Penn Station/MSG adjacent. Good for those commuting into the city on the Midtown Direct already/can’t resist Auntie Anne’s. Bad for anyone under 40/more importantly, those with an aversion to the types of people who ride the LIRR (read: anyone who doesn’t ride the LIRR and even some of those who do. Self-loathing. You know how it is).
Merrill Lynch & Co.:
Also considering the Hotel Pennsylvania site, in addition to the new WTC area currently under construction. Lease is up in 2013. The clock is ticking.
J.P. Morgan Chase & Co.:
Talks with the Port Authority are “progressing but not a done deal yet.” The only thing we know about the Port Authority is that it’s a good place to pick up hookers…and with our analyst and associate attrition…you do the math.
Has “talked with several landlords about spaces large enough for improved trading facilities, though its plans are unclear.” A spokesperson for Morgan declined to comment though we’ve heard that Robert Kindler will only entertain the possibility of venues large enough to host the Mergers and Acquisitions book party.
Wall Street Firms Vie To Expand Trading Floors [WSJ]
Fewer transactions but bigger numbers in the US mergers and acquisitions market means the battle for league table placement in the quarter just ending was especially hard fought.
Goldman Sachswas the top adviser for US mergers, according to the research firm Dealogic, boosted by its role in the huge TXU buyout offer. It was followed by Morgan Stanley and JP Morgan Chase. While Dealogic’s tallies aren’t viewed as important as those assembled by Thompson Financial, you can bet there is some back patting and grinning over at Goldman this morning.
And maybe, just maybe, Lloyd Blankfein put a little extra sugar in his Styrofoam coffee cup this morning.*
*This whole Lloyd loves the Styrofoam thing was, as far as we can tell, made up by Bess Levin. Factual accounts of how Bankfein takes his coffee—if at all—are always welcome. Goldman could not immediately comment on this matter when contacted this morning.
Merger market unfazed by market volatility [Reuters]
Bloomberg tries its hand at our old “imagine you are inside the head of John Mack” trick. And they find the same thing in there that we did: a bright neon side flashing “Goldman Sachs was here.”
Ten years ago, John Mack tried to turn Morgan Stanley into Merrill Lynch & Co. Now the firm’s chairman and chief executive officer is chasing Goldman Sachs Group Inc.
Mack was president of Morgan Stanley in 1997 when he and then-CEO Richard Fisher sold it to Dean Witter, Discover & Co., seeking to blend their investment banking prowess with Dean Witter’s herd of stockbrokers. At the time, New York-based Merrill Lynch, the biggest brokerage, was the top U.S. securities firm.
Today’s Wall Street titan is Goldman Sachs, which last year produced a record $9.54 billion in profit through bigger trading bets and by building divisions in private equity and hedge fund investing. Mack, 62, drove a 70 percent jump in first-quarter earnings by increasing trading risks, profiting from investments and adding hedge funds of his own.
“He’s trying to copy Goldman, but that’s what he knows and what he does best,” said Jon Fisher, who helps manage $22 billion, including Morgan Stanley shares, at Fifth Third Asset Management in Minneapolis. “If Goldman is putting up the best numbers, then if you’re a competitor why wouldn’t you do what they’re doing?”
Poor Mack. Doesn’t he know trying to be Goldman is the old Blackstone?
Mack’s Morgan Stanley, With Record Profit, Still Chases Goldman [Bloomberg]
JK! If John Mack’s been Googling himself much today—which his administrative assistant tells us he mostly certainly is*—, he’s got to be pretty pleased with the results. First, he beats Goldman and now Ron Perelman? We’d say it’s time for Mack to call it a day—something about quitting while you’re ahead and today’s episode of Oprah being one you “don’t want to miss.”
Reuters reports the bank’s major victory today over billionaire and former husband of the lovely Ellen Barkin, when a Florida state appeals court threw out a $1.58 billion award previously bestowed upon Perelman over the 1998 sale of Coleman Co. to Sunbeam Corp. In May 2005 a jury had ruled in his favor, when he alleged that Morgan Stanley had helped Sunbeam “hide its shaky finances” while working on the purchase of Coleman.
Coleman had received 14.1 million Sunbeam shares in the transaction. The stock became worthless after Sunbeam fired chief executive Al Dunlap and admitted it had inflated sales to prop up earnings. Sunbeam went bankrupt in February, 2001.
In a 2-1 decision [today], Florida’s Fourth District Court of Appeal in West Palm Beach said Perelman failed to show he was damaged because he did not demonstrate what Sunbeam shares would have been worth had there been no fraud.
A spokeswoman for Perelman called today’s ruling a “temporary setback” and that Big P “plans to seek a rehearing,” just as soon as he deals with the arduous task of assigning himself a fifth wife.
Morgan Stanley Wins Reversal of $1.58 Bln Award [Reuters]
*You get what I’m doing here.
The Wall Street Journal this morning tells the story of how a Chicago-born money manager based in London became the public nemesis of the chairman of the New York Times. It all started with something as simple as a phone call. Morgan Stanley’s Hassan Elmasry called Arthur O. Sulzberger, Jr. and Arthur O., well, he doesn’t answer phone calls from just anybody. And holders of five percent of the company’s stocks were, apparently, exactly that: just anybody. As one of our friends likes to put it, “Sucking on a silver spoon is so much less taxing than talking to vulgar people.”
And thus began the painful process whereby a man named Sulzberger learned that these days just because you may not have heard of someone–and indeed, that person may never have been invited to the same dinner as you even as a courtesy–doesn’t mean that person is a nobody. And it certainly doesn’t mean that person cannot publicly humiliate you.
How a Money Manager Battled New York Times [Wall Street Journal]
And previously on SuperMogul: Sulzberger vs. Elmasry – Round 3 and And this time, it’s personal.
Morgan Stanley posted net revenue gains of 29% this morning. Or, as everyone keeps saying, “They matched Goldman’s numbers.” But really you should stop doing that. Do you have any idea what this kind of constant comparison is doing to poor John Mack?
Picture it. The office is still dark. John Mack’s understated tie is slightly askew. He is fiddling around with a small object in his pocket, perhaps a pill that long-ago fell out of its pil bottle and is now so covered with pocket lint that it is unidentifiable. He gazes out the window but it does no good. He still sees the stories blazing out across the brilliant blue sky above New York this morning. He still here’s the voices in the silence. They keep saying, “Goldman Sachs. Goldman Sachs.”
He turns suddenly. Where is that spike he used to smash phones with when he was on the trading floor? His eyes dart to his desk drawers. He knows exactly where it is. If he were the kind of person who muttered he would mutter, “We make record numbers, my boys on the trading floors clean-up and all everyone can do is talk about Goldman, Goldman, Goldman!” But John doesn’t mutter. Instead he smiles.
He has spent many of the past years being underestimated. This is a form of underestimation, he tells himself. Slowly the chattering voices silence. The comparative headlines fade from the rooftops. He breathes deep and turns to his desk. His feet drag a bit as he walks. He’s smiling now.
“I,” is the first word that comes to his head. And the second word. “I,” he thinks,”I am John Mack.”
Morgan Stanley Net Rises to Record on Trading Gains [Bloomberg]