True Story: Yesterday at around 5pm at Ulysses on Stone Street…Ian Roncoroni, an energy otc options broker for Power Merchants Group…ate 244 Oysters in 1 hour. He also collected $3500 bucks for his efforts.
Brokers
The Gaunlet Has Been Thrown Down. Who Will Pick It Up? We’re Looking At You Leon Cooperman. Stevie-boy. L-TRAIN.
By Bess LevinThe Bear Stearns deal is getting messier. Wall Street rivals are poaching the best talent, forcing JP Morgan to promise lots of compensation money to keep them in place or face acquiring Bear with only the losers left. Unfortunately for the best laid plans of the Fed and JP Morgan, the uncertainty over the deal is leading many Bear employees to figure they’d be better off taking offers from competitors.
So now Bear is fighting back, asking a New York State court to issue restraining orders against departed brokers who Bear claims are soliciting the firm’s clients to do move their business to the new company, Kate Kelly and Robin Sidel of the Wall Street Journal are reporting. These solicitation lawsuits are nothing new on Wall Street but they come at a very awkward time for Bear and JP Morgan. Morale is already low. The lawsuit puts a spotlight on the fact that many of the best employees and customers may have already left the firm, and doesn’t exactly reassure worried employees that Bear is friendly toward its cubs.
One Bear recently departed Bear employee we spoke with this morning wondered how hard any former Bear employee would have to try to solicit clients away from the company.
“If you’ve read the papers, you know no-one wants to do business with Bear. They don’t hate their own contacts, though. So if you hear your broker, or the desk you dealt with, has moved over to, say, Morgan Stanley, why wouldn’t you move? Keep your business in a failing firm with people you don’t know or join the pack and stick with who you know. Not a hard choice,” he said.
Bear Seeks Restraints On Departed Brokers [Wall Street Journal]
Yesterday we pointed out that the freeze-up in auction-rate securities could lower demand for equities as many individual investors found their investment assets essentially locked into these suddenly illiquid bonds. But it’s not just the clients of brokerages who are facing a cash squeeze—the brokers and executives at investment banks are facing the squeeze as well
After the major accounting firms ruled that auction-rate securities were not cash-equivalents, many corporate investors began to reduce the use of these instruments for cash management purposes. But executives at banks such as Citi, Merrill Lynch and Goldman Sachs continued to use the auction-rate securities. For many, the extra two-dozen or so basis points they could earn by holding the securities rather than a true cash-equivalent made them irresistible. For the men and women who manage money and put together complex financial transactions for a living, achieving maximum returns in every part of their portfolio is often a point of pride.
Now that many of the auctions have begun to fail, they find themselves without access to their assets. Ironically, this pain for the professionals may wind up helping their clients. If the auction failures continue, executives on Wall Street may pressure the banks to take action to revive the market. It’s one thing if the clients cannot buy fuel for their yachts. It’s quite another if the broker cannot.
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
