Sayeth Chaz: Read more »
Charlie Gasparino: Gary Cohn’s Envy Of Morgan Stanley Might Suggest Changes Afoot, Actually Means NothingBy Bess Levin
Half of today’s financial news stories are about how some government enforcement agency is looking into something you already knew about. This is very boring for me! Remember when Goldman lost a bunch of money by fat-fingering some options trades?1 That still happened. Remember how JPMorgan did some naughty things with California electricity markets? Those historical circumstances continue to obtain. Remember the Whale? Still a thing.
You could wonder about the substance of some of these investigations. JPMorgan’s electric boogaloo, while intensely naughty, also seems pretty clearly to have followed FERC/ISO rules to the letter, so it’s hard to imagine charging anyone with a crime, as the FBI is apparently contemplating.2 And while I don’t know much about the SEC rules re: electronic options trading, the actual thing that Goldman did was sell options really cheaply, and it would be pretty weird if there were a rule against that, so I don’t know where the SEC is going with its enforcement investigation.3 (The Whale, I’ll give you, that stuff seems bad.) But basically, yeah, sure: bad things happened, rules might have been violated, market safeguards were shown to be less robust than had previously been thought, it is altogether fitting and proper that someone look into it. Or a lot of someones I guess.
Still the stories carry a whiff of looking for the keys under the lamppost: Read more »
Charlie Gasparino: Gary Cohn Sick Of Watching Lloyd Blankfein Appear On A-1 Of The WSJ, While He’s Relegated To A Sidebar On Page 12 Of This Month’s Cat FancyBy Bess Levin
It’s just not fair! Read more »
UBS is selling its over-the-counter commodity derivatives portfolio to JPMorgan, prompting John Carney to say this:
Here’s a good rule of thumb. When one bank buys a business from another bank, it’s almost always a case of regulatory arbitrage. It’s never really because of synergies or managerial talent or whatever other hokum the media relations churn out to their willing dupes in the press. It’s just about one bank being better able to take advantage of the rules.
So even though the rationale for JPMorgan Chase buying the over-the-counter commodities derivatives business of UBS remains mysterious, you can safely surmise this is regulatory arbitrage. Most likely, it’s got to do with capital requirements.
Umm maybe? I don’t know, this question seems a little over-determined; the thing is that pretty much everyone thinks that (1) JPMorgan is pretty good at running an investment bank, the occasional hiccup aside, and that (2) UBS is pretty crap at doing so. So are US regulators relatively more comfortable with JPM managing this portfolio than Swiss regulators are with UBS doing so? Sure, probably, but probably so are the respective shareholders, and counterparties, and senior managements, and anyone else you might ask. Really moving any portfolio of anything from UBS to JPMorgan is probably Pareto optimal.
Jurors In Tourre Case Approached Deliberations With Razor Sharp Intensity, Ideas For Production Team Casting The Banker And The EmoticonBy Bess Levin
To help inject humor into what was an otherwise intense process, Ms. Rhett said she and other jurors compared the lawyers’ likenesses to actors. “I’m only going to say that there was someone who looked like Dan Aykroyd, someone who looked like Kevin Spacey and someone who looked like a cross between Patrick Stewart and Stanley Tucci,” she said. But when it came time to consider the seven claims against Mr. Tourre, they moved methodically and efficiently. The group chose 52-year-old Steven Zucker, a former retail broker on Wall Street who is now co-dean for art and history at the Khan Academy, a nonprofit educational organization, to be foreman. The jurors devised rules, and Mr. Zucker would call on people to speak. The jurors strove to begin on time every morning and worked through lunch, which consisted of sandwiches of grilled chicken and ham and cheese, in addition to soda and leftover muffins from the morning. [WSJ, earlier]