The Chapter 11 filing made Sunday comes with a C-suite shakeup. Wojcicki resigned from her role as CEO, though she will remain on the board. Chief Financial and Accounting Officer Joe Selsavage is taking on additional responsibility as interim CEO.

The main way 23andMe makes money is by selling genetic testing services to consumers. The company also strikes deals with pharmaceutical companies that use de-identified genetic data to aid their drug discovery work, but this offering never became a big part of the company’s business. For the nine months ended Dec. 31, 2024, 23andMe reported $144.7 million in total revenue, down nearly 7% compared to the same period in the prior financial year. In the fiscal year ended March 31, 2024, revenue was $219.6 million, down 27% from the prior fiscal year. In its financial reports, the company attributes the declining revenue to lower sales volume for its test kits.

When 23andMe went public in a 2021 SPAC merger, its stock traded at $10 per share. The company’s stock price has been on a downward slide in the past 12 months. The bankruptcy filing comes nearly a year after 23andMe announced Wojcicki was considering taking the company private by acquiring the shares of the company she does not already own.

The 23andMe board formed a special committee tasked with reviewing Wojcicki’s offer. The board, whose duty is to act in the best interest of all shareholders, rejected her offer of 40 cents per share. While it’s possible another company might have been willing to pay more, it would not matter. Wojcicki’s ownership of class B shares come with greater voting power than class A shares, and she could block such a deal. The board told Wojcicki her offer did not offer a premium to shareholders and lacked committed financing.

Last September, seven members of 23andMe’s board resigned due to differences with Wojcicki over the direction of the company, leaving her as the lone remaining board member. In October, the company appointed three new directors to regain compliance with a Nasdaq requirement that the majority of a company’s board be independent directors.

The three new directors, also newly appointed to the special committee, announced in late January the exploration of strategic alternatives. These alternatives include a possible sale of 23andMe, a business combination, or a sale of the company’s assets. This time, Wojcicki said she would not oppose a deal.

“Based on subsequent developments in the interim period since that statement, I am revising my statement to indicate my willingness to consider third party takeover proposals for the Company or other strategic alternatives that may be in the best interests of the Company,” she said in a regulatory filing.

Despite Wojcicki’s newfound openness to selling 23andMe to another company, her interest in acquiring it herself did not wane. On Feb. 20, Wojcicki and New Mountain Capital sent the special committee a non-binding proposal to buy all outstanding shares not owned by Wojcicki or her affiliates for $2.54 per share. New Mountain would fully finance this proposed transaction; the investment firm and Wojcicki were also willing to provide financing for 23andMe’s operation through the closing of a potential deal. The proposal was not subject to any financing contingency. But it soon fell apart.

On Feb. 28, New Mountain told Wojcicki that the firm was no longer interested in being part of a potential 23andMe acquisition, according to a regulatory filing. Wojcicki remained committed to buying the company and delivered another non-binding proposal, this time for 41 cents per share. This March 2 proposal would be fully financed by Wojcicki. She sent an amended proposal four days later, adding a $2.53 per share contingent value right, a cash payout triggered upon the achievement of revenue milestones in the next three fiscal years.

On March 10, Wojcicki further sweetened the offer by committing to provide 23andMe with an additional $20 million to fund its operations. But there were signs that minority shareholders were not on board with Wojcicki’s plan. Zentree Investments bought more 23andMe stock to boost its ownership stake to 13% of the company’s class A shares. In a March 17 regulatory filing related to this transaction, Zentree said it wants to ensure minority investors have a voice.

“We seek to prevent the sale of the company at an unreasonable price and advocate for more prudent management of the company’s costs,” the firm said in the filing associated with the stock purchase. “Additionally, we appeal that Class A and Class B shares be granted equal rights. We urge the management to act in the best interests of all shareholders and to address any conflicts of interest between management and investors.”

The bankruptcy, case number 25-40976, was filed in U.S. Bankruptcy Court for the Eastern District of Missouri. During bankruptcy proceedings, 23andMe said it will continue to run its business under the court’s supervision. The company said it has received a commitment from JMB Capital partners for debtor-in-possession financing of up to $35 million to support its business.

23andMe said it will ask the court to begin a process to sell substantially all of its assets under Chapter 11 of the bankruptcy code. With the court’s approval, the plan is to solicit qualified bids over the course of 45 days. If multiple qualified bids are received, 23andMe will hold an auction for those assets. 23andMe said any buyer will be required to comply with the law regarding the treatment of customer data. Transactions will still be subject to regulatory approvals.

Bankruptcy auctions typically result in fire sale prices for company assets. In 23andMe’s bankruptcy filing, the company states its assets are between $100 million and $500 million. It has an estimated $100 million and $500 million in liabilities. Creditors include National Genetics Institute, a Los Angeles-based subsidiary of Labcorp; marketing company Jellyfish; and Blue Shield of California.

In addition to the appointment of Selsavage as interim CEO, the board also appointed Matt Kvarda, a managing director at consulting firm Alvarez & Marsal, as chief restructuring officer. The board also added a new member. Thomas Walper, a former partner in the financial restructuring practice at Munger, Tolles & Olson, was appointed to the board and the special committee as an independent director.

23andMe’s stock price closed Monday at 73 cents, down 59.2% from Friday’s closing price.

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No, it wasn’t until Goldman got into bed with another formerly great icon of American capitalism that the true depths Solomon was willing to plumb became apparent. And now it, too, is gone.

The companies on Monday said Barclays will begin issuing GM’s credit cards starting next summer…. Goldman Chief Executive David Solomon last month said the bank expected to incur a roughly $400 million pretax hit from the sale of the GM credit-card business and a smaller, unrelated business….

Goldman paid a premium to buy the balances when it took over the program from Capital One…. Goldman has lost more than $6 billion on a pretax basis since the beginning of 2020 through the second quarter of this year on a big chunk of its consumer-lending businesses, including its credit cards.

Well, getting out of the businesses Solomon wanted to be in, and doubling back down on the ones he didn’t, is working a treat.

Goldman Sachs reported a 45% increase in its third-quarter profit, a sign that lower interest rates, a stable economy and the bank’s work refocusing on Wall Street are paying off…. Goldman’s profit rose to $2.99 billion and revenue rose 7% to $12.7 billion….

Goldman’s investment banking revenue was $1.87 billion, up 20% from a year ago, led by big increases in debt and equity underwriting revenue. This marks the third consecutive quarter of year-over-year growth in investment banking fees following two years of mostly declines.

As that report indicates, it’s not just the total dismantling of D-Sol’s Goldman-for-the-masses that’s behind the bank’s resurgence. Need more proof? Well, two other, much lesser banks are also doing quite (OK, relatively) well in the eternal sunshine of the soft landing.

Bank of America's third-quarter profit dropped as it paid more to customers to hold their deposits, but its earnings beat estimates, driven by investment banking and trading…. "That's going to set us up quite well" for 2025, [CFO Alistair] Borthwick said, as the bank reacted quickly to the Fed' rate cut.

Citigroup posted a smaller-than-expected drop in profit for the third quarter as debt underwriting propped up investment banking results…. Investment banking was a bright spot for the second straight quarter, as revenue jumped 31% to $934 million. Wall Street executives are optimistic the Federal Reserve's interest-rate cut last month will pave the way for more deals and initial public offerings.

Barclays to Replace Goldman Sachs as Issuer of GM Credit Cards [WSJ]
Wall Street Posts a Strong Quarter, Powering Goldman Sachs Profit [WSJ]
Profits Leap at Goldman Sachs as Banks See Steady Economy [NYT]
'Soft landing' optimism spurs broad Wall Street rebound at big banks [Yahoo!]
BofA profit beats estimates on investment banking, trading strength [Reuters via Yahoo!]
Citigroup profit beats estimates on investment banking surge [Reuters]

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And maybe that’s still the plan. Maybe Dimon and the JPMorgan board are simply testing her by throwing potential rivals in Lake’s way. Or maybe, just maybe, they’re planning one of the meanest rug-pulling acts in business history.

Jamie Dimon began dialing their numbers on a Saturday in January with a question: Could they run a Wall Street operation bigger than Goldman Sachs?

The “they” in that sentence, of course, are Lake’s former co-chief Jenn Piepszak and her new co-head of commercial and investment banking, Troy Rohrbaugh. It’s certainly the kind of challenge one might imagine handing to potential successors. And it has to be said that they’re sort of smashing it out of the park.

The division just posted a record $35.5 billion of revenue for the year’s first half…. This month, Piepszak and Rohrbaugh notched a market-share win, as JPMorgan’s M&A bankers reaped more fees than Goldman for the first time in over a decade. The haul followed months in which some competitors privately complained that JPMorgan was bidding more aggressively to win mandates….

[Piepsak and Rohrbaugh’s May investor day] presentation itself looked like a victory lap. Of 25 products, JPMorgan ranked itself first in 13 and second or third in 11.

Meanwhile, Lake is stuck at the retail bank, cleaning up a massive regulatory mess, delivering potentially empty threats to her customers and preparing for some lean times.

Lake said Chase is planning to pass on the costs of higher regulation and charge customers for a number of now-free services, including checking accounts and wealth-management tools…. “It is not practical for many of the services to be free if we won’t be able to draw from those profit pools,” Lake said….

“Most customers can access retail banking easily and seamlessly today,” [PwC consulting partner Dan] Goerlich said. “It might be disadvantageous to keep services at zero cost, but banks’ hands could be forced by other competitors who will offer customers low-cost services.”

Jamie Dimon’s Handpicked Wall Street Duo Hunts More Market Share [Bloomberg]

The thing about dreams, though, is they never have to come true. We can just keep having them. At least until the next major scandal/disastrous result that gets us fired.

[Former JPMorgan Chase head of North American investment banking Fernando] Rivas will run Wells Fargo’s corporate and investment bank alongside Jon Weiss, another JPMorgan veteran…. Wells Fargo has over the past few years attempted to expand its dealmaking and trading operation under Chief Executive Charlie Scharf, going after big-name hires. The bank in February said it tapped the veteran investment banker Doug Braunstein as vice chairman. Braunstein spent around two decades at JPMorgan, including as finance chief.

Wells Fargo Hires Ex-JPMorgan Investment-Bank Boss Fernando Rivas [WSJ]

It seems knowing what was coming, and that things hadn’t gotten appreciably better from a 2022 in which bonuses were something of a disgrace, hasn’t softened the blow at all. As expected, investment-banking bonuses are down by as much as a quarter—which isn’t too bad, given that revenue is down by half from the blockbuster 2021 that looks rather like a one-off—if you’ve gotten one at all.

“Flat is the new up, and that’s if you had a solid year,” said Genevieve Fraser, a partner at Maven Search, a recruiter for investment banks.

Which you did if you’re keeping the hedge funds happy.

“You still have to pay your traders,” said Michael Karp, whose Options Group is a recruiter to financial firms.

Johnson Associates estimates that some traders are up slightly, while many others are down 5% to 10%—in line with the firm’s November forecasts. Bonuses to investment managers are falling into a similar range.

And you know what else you’re not getting?

“There have been a lot of folks passed over for promotions who were told they were getting them,” [recruiter Meridith] Dennes said. “And they’re not getting promoted because promotions cost money.”

Still, before you quit and become a teacher or something, remember: Hope springs.

“I’m encouraged by capital-markets activity,” Goldman CEO David Solomon said during a conference call with analysts earlier this month. “I’m not going to say it’s running back to 10-year averages right away, but it has materially improved.”

Banker Bonuses Are Down Again—but It Stings This Time [WSJ]

Piepszak will become co-CEO of the company's merged commercial and investment bank alongside Troy Rohrbaugh, who previously led trading and securities services.

"The expansion of Jennifer Piepszak's role in commercial banking and investment banking gives her an edge in the succession planning," said Stephen Biggar, a banking analyst at Argus Research. The latest move gives her broader experience after she co-ran the consumer business, he said.

With Marianne Lake, who after having to smile through gritted teeth for three years and awkwardly collaborate with her chief rival on the integration of First Republic now gets to run the business herself, but at the cost of seeing her crown slowly slip away.

Piepszak has been with the bank for nearly three decades and was its chief financial officer from 2019 to 2021. She has held leadership roles in major units, serving as CEO of its card services and business banking divisions after spending 17 years climbing the ranks in investment banking.

Maybe Lake should have taken that call from Wells Fargo, after all.

Oh, also, a bunch of people who don’t matter in this conversation also got some new jobs. Or non-jobs, if you’re Jim Casey or Marc Badrichni.

Viswas Raghavan will become sole head of global investment banking, while his co-head Jim Casey will take on an unspecified new role at JPMorgan that will be announced soon.

Jason Sippel and Pranav Thakur will become co-heads of trading.

Marc Badrichani, co-head of markets and securities services, will leave the bank.

JPMorgan shuffles top bosses as Wall Street focuses on Dimon succession [Reuters via Yahoo!]

As it turns out, their concerns were not misplaced. The good news is, as discussed, bonuses for the Elect will be an absolute disgrace this year, finally putting those lazy snowflakes in their place. The bad news is that the bonuses will have little or nothing to do with performance.

Goldman Sachs is considering shrinking the bonus pool for its more than 3,000 investment bankers by at least 40 per cent this year…. This year’s cuts at Goldman are set to be deeper than at peers, despite the bank navigating rising interest rates and a slowing economy better than many rivals….

“Compensation at Goldman Sachs is determined by the performance of the entire bank, not within each business area. The compensation process is not yet completed so any discussion or forecast on specific numbers is premature,” said a spokesperson for the bank, which globally employs about 49,000 staff.

Perhaps those bankers will be happy to make due with some Schadenfreude instead of stacks of cash?

Bonuses for Goldman’s roughly 400 partners may be cut by even more than at the investment bank, perhaps by as much as half, as senior bankers bear the brunt…. A person close to some of the most productive partners said many top bankers have already started looking for opportunities in private equity and alternative asset managers as they are concerned the cuts will continue.

So that’s a “no,” then?

Goldman Sachs weighs bonus cut of at least 40% at investment bank [FT]

Unless you’re Jamie Dimon, that is.

JPMorgan Chase & Co. has avoided most of 2022’s so-called hung deals that have cost competitors billions of dollars in paper losses. Whether by luck or by design, the biggest U.S. bank didn’t make loans backing takeovers of companies such as Twitter Inc., Citrix Systems Inc. and Nielsen Holdings PLC, which fell in value as markets turned choppy…. “There are no real leveraged loan write-downs this quarter and that market isn’t yet cleared,” Mr. Dimon said on an October conference call with Wall Street analysts. “Our share of it is very small, so we’re very comfortable….”

JPMorgan dialed back its appetite for buyout loans in the autumn of 2021, people familiar with the matter said. [Global head of corporate debt Kevin] Foley and his team thought the price inflation then cropping up in the U.S. would last for years because of supply disruptions and wage inequality, the people said. They also thought that risk was climbing in buyout deals as rising valuations were forcing buyers to borrow excessively to make winning bids, the people said.

So, how are you enjoying hurricane season, Mr. Moynihan?

JPMorgan’s record contrasts with that of Bank of America Corp., which made large loans for buyers of Twitter, Citrix, Nielsen and others. Bank of America Chief Executive Brian Moynihan has consistently sounded an optimistic note about the U.S. economy, clashing with JPMorgan head Jamie Dimon’s gloomier warnings…. The strategy backfired this year for firms such as Bank of America, Barclays PLC, Goldman Sachs Group Inc. and Morgan Stanley, which committed in the winter and early spring to bankroll large takeovers. Interest rates subsequently rose, turning debt investors cautious and sending the price of leveraged loans tumbling. Now the banks must choose between liquidating the loans at a loss or keeping them on their balance sheets at marked-down prices.

JPMorgan Dodges a Buyout-Loan Bullet [WSJ]

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Among the smaller revolutions wrought by Solomon has been some token nods towards diversity, especially in terms of gender. Half of all newbies (and somewhat fewer, but still more than in the past, partners) were to be women. And they’d be enjoying an improved maternity leave and benefits program, to boot. Don’t have a skirt sitting around your boardroom table? Don’t call us. And when the time comes for Solomon to retire to a life of spinning obvious beats for the rich and oblivious, there may just be a woman sitting in his seat, following a trip to the barbers, of course.

Obviously, change is hard for any organization. Guess which particular change is proving particularly galling to the Olde Gods in these tougher times?

Some C-suite sourpusses say that the company under the leadership of CEO David Solomon is too focused on flashy executives with “personal brands,” rather than knuckling down to the good old-fashioned hard work of making rich people richer with very little effort…. There’s much grumbling about Solomon’s soft spot for rock star bankers — for example, Kim Posnett, who has rocketed through the ranks in recent years, and is often to be seen speaking on panels, attending galas and sitting for interviews, while, the (ahem, male, ahem) insiders claim, many of her actual deals have fallen flat….

I mean, just look at the disgraceful record of this penis-less parvenu.

The investment division where Posnett works — though, we hasten to add, not just Posnett works — was responsible for much of the downturn, earning 41% less in that time than the previous year. (We would be remiss if we didn’t note that Goldman Sachs’ executive team is reportedly around 80% male, so you’d think the number-crunching know-it-alls over there would figure out that if something’s amiss, the raw data suggests it’s overwhelmingly likely to be the guys’ fault.)

Some insiders have even been making a racket because Posnett spent much of last week in a suite at the US Open as the company was preparing to announce the layoffs, rather than, say, at her desk trying to make the balance sheet look a little more rosy next quarter.

Anyway, let’s focus on what really matters: How all of this will impact New Jersey, the governing of which is the preferred post-banking career hobby for Goldman execs.

New Jersey Governor Phil Murphy said Goldman Sachs Group Inc.’s plan to cut hundreds of jobs is a sign of impending economic strains that may force his state to set aside “a very sizable slug” from its budget surplus…. “You’re going to see contraction,” he said. “You’re seeing it in Silicon Valley and technology firms. I’m sure you’ll see it in financial services.”

Tumult among flashy Goldman execs and DJ CEO is already getting nasty [Page Six]
New Jersey’s Murphy Says Goldman Job-Cut Plan Signals Stress for State [Bloomberg]

Goldman Sachs is preparing for a round of layoffs that could come as soon as next week…. Goldman typically revisits its head count every year, letting go of employees based on performance and to match the bank’s needs. It had paused that program during the pandemic, which also coincided with a record period for deal-making, when bankers complained of overwork. The program typically lays off 1 to 5 percent of workers; this round of layoffs is likely to be at the lower end of that range, a person familiar with the matter said.

The cuts are said to be coming company-wide. But as elsewhere on the Street, they’ll be coming more to some parts of the company than others. One part in particular, actually.

Revenue from Goldman’s investment banking division fell 41 percent from the same period in 2021. The firm said its backlog of deals fell, but did not say by how much. At the time, the bank said hiring for the rest of the year would slow…. “They just don’t need as many bodies as they have,” said Chris Connors, a vice president at Johnson Associates, a compensation consulting firm. “Production has fallen off a cliff.”

Goldman Sachs Prepares for Layoffs as Deal-Making Slows [NYT]

At an investors’ session Tuesday, the bank’s new head of technology and operations, Joanne Hannaford, said centralizing costs in her area was shaving around $210 million from her $3.75 billion 2022 budget that would come through in full next year. She said there was room for further annual reductions of another $210 million for a couple more years after that…. The bank’s new wealth head, Francesco De Ferrari, said Tuesday that Credit Suisse would continue to seek ultrarich customers to boost revenue. That is in contrast to UBS, which serves the wealthiest, but is also wooing the not-as-rich through digital platforms such as Wealthfront, which it bought this year.

Also: No questions about the avalanche of shit forcing employees to wade through neck-deep excrement on the Paradeplatz.

There was no update Tuesday on Credit Suisse’s investment-banking business. The slate of legal cases the bank is working through largely stem from that unit and Credit Suisse has been shrinking it over time.

Credit Suisse Eyes Cost Cuts to Stabilize Embattled Bank [WSJ]

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And, Jim Gorman standing astride history yelling “stop” notwithstanding, it is indeed changing. It’s just doing so very, very slowly.

At a time when many are still working from home, Wall Street dealmakers are not only back at their offices, they are traveling a lot again, to woo clients and to negotiate mergers and sales…. "Even during the pandemic, if your clients were in Texas, if you didn't go down and see them, they knew you were a wimp," says Jonathan Knee, a senior adviser at the investment firm Evercore. "And they didn't want wimps working for them."

We’re sure that was exactly the word they used, too. Anyway, in further developments not likely to make Gorman & co. happy, but which may encourage a few changes of major in business school:

PwC announced today it will allow all U.S. employees who can telework the ability to work virtually from anywhere in the continental U.S. moving forward.

The new policy will impact nearly 40,000 employees who work in client services, including consultants, auditors and tax professionals. The company says it is the first professional services firm to offer workers a permanent work-from-anywhere option.

Only 'wimps' phone it in: Why Wall Street bankers are hitting the road again [NPR]
PwC announces nearly 40,000 U.S. employees can work remote from anywhere in the country [CNBC]

JPMorgan Chase also declined to sign the statement despite a personal request from senior Black business leaders to the chief executive, Jamie Dimon, according to people briefed on the matter. Mr. Dimon has publicly declared that he supports Black Lives Matter and made a statement on voting rights before many other companies, saying, “We believe voting must be accessible and equitable.”

On Tuesday, a spokesman for the bank said, “We publicly made our own strong statement last month about the critical importance of every citizen being able to exercise their fundamental right to vote.”

You know what he does want to talk about? Four hundred percent jumps in quarterly profits and all of the good times we’ve got ahead of us.

The gains came from JPMorgan releasing more than $5 billion it had set aside to cover potential coronavirus loan losses that have not materialized, as well as a continued boom in capital-markets activity….

“The consumer has so much money to pay down their credit card loan, which is good,” he said on a call with journalists, noting that consumers have $2 trillion more in their checking accounts than they did pre-pandemic. “Their balance sheet is in excellent, outstanding shape. Coiled, ready to go, and they are starting to spend money. That’s not the same as loan demand when the economy is weak.”

Goldman Sachs (which did sign the aforementioned voting rights pledge) also had quite the quarter—a “stunning” one, sayeth analyst Chris Kotowski—on the back of its investment bank. Given, however, how he feels about said I-bank, D.J. D-Sol is just gonna let the numbers do the talking.

An unprecedented boom in private firms merging with listed shell companies to go public helped Goldman earn handsome fees from such deals, resulting in a 73% jump in revenue from investment banking to $3.77 billion…. Goldman’s trading performance was equally impressive. Revenue from the segment jumped 47% to its highest since 2010 and was in line with the broader gains for trading desks across Wall Street.

And, you know, Solomon’s babies did pretty well for themselves, too. Not as well or as impactfully as the brothers Solomon can’t wait to kick out of the house, but gold star all the same.

Consumer banking revenue rose 32% in the quarter. The business is tiny compared to other large revenue generators at the firm, with consumer and wealth management representing just 10% of the total in the first quarter.

JPMorgan profits on capital markets in a cash-flush economy [Reuters]
Goldman Sachs profit soars on global deals frenzy, trading boom [Reuters]
Hundreds of Companies Unite to Oppose Voting Limits, but others Abstain [NYT]

Bonuses at HSBC’s investment bank and trading division were down 15% for 2020, according to the company’s annual report. This was in line with those in asset management and private banking, and less severe than in other parts of the bank where cuts topped 20%.... More junior staff were generally less affected by the cut, HSBC said, with those lower down in the bank receiving bonuses more in line with their performance than senior employees.

Of course, many of their announced bonuses may prove theoretical, because HSBC still has 24,000 layoffs to implement, and if that call comes before the check, well, the check’s not going to come.

Among those set to lose out on their bonus are staff facing redundancy in some jurisdictions. Under its pay policy, employees are no longer eligible for a share of the bank’s bonus pool once they have been informed they are being cut even if they are still employed by the company on or beyond the date when the payments are made.

This all has a very perverse potential impact on HSBC’s key revenue generator, such as it is: On the one hand, you’ve told your very best employees that they’ll have to take their talents elsewhere if they wish to be appropriately compensated, while on the other making clear to the rest of them that they might not want to work too hard, since there’s a one-in-seven chance they won’t be rewarded for it anyway.

It's easy to see why you might feel a bit disincentivized as a result. - The bank still has 24,000 of its 35,000 job cuts still to go. Why work hard all year for the prospect of a reduced bonus irrespective of performance, or no bonus at all if the bank decides to chop you the day before it hits your bank account?

HSBC Bosses Try to Quell Banker Anger Over Cuts to Bonuses [Bloomberg]
Morning Coffee: HSBC’s horrible bonuses have come back to haunt it. Hedge fund manager’s long-suffering wife [eFinancial Careers]

So one might imagine a tremendous sense of relief—even vindication—on CS’s trading floors when, in spite of the turnaround he engineered, Thiam got the ax. Perhaps new CEO Thomas Gottstein, unlike Thiam and his immediate predecessors a proper Swiss, would understand them, nurture them, love them and make them feel like valuable parts of the team again—as valuable, many even more so, than those dullards and failures in wealth management who get all the good jobs these days.

In a word: Nope. In slightly more precise, Swiss words, a trader is still half a man at Credit Suisse.

Chief Executive Thomas Gottstein, who took over the bank earlier this year after a spying scandal rocked its executive ranks, said the bank would allocate two-thirds of its capital to wealth management and one-third to investment banking. The split between its two main businesses continues the strategy set out by his predecessor, Tidjane Thiam…. The wealth-management business, with clients ranging from technology entrepreneurs to large family offices, made around 4 billion Swiss francs in pretax profit in the 12 months to Sept. 30, equivalent to $4.5 billion. Mr. Gottstein said the aim now is to raise its annual pretax profit in wealth management to between 5 billion francs and 5.5 billion francs in 2023. Most new capital will be earmarked for the business, the bank said.

No word as to how much will be secretly allocated to the CSIA.

Credit Suisse Bets Future on Managing More Rich People’s Money [WSJ]

Goldman named 60 new partners on Thursday…. The latest group includes 32 white men, giving them a 53 per cent share of the promotions, the demographic’s smallest representation on record…. Women make up 27 per cent of the new class, surpassing the previous record mark of 26 per cent in 2018. The bank said 17 per cent of the new partners were Asian, 7 per cent were black and 5 per cent were Hispanic or Latino.

I mean, check out this little bit of Wokeness from the Elect:

Among those who got an early-morning congratulatory phone call from Mr. Solomon or Goldman’s president, John Waldron, who divvied up the list between them, are… Anne-Victoire Auriault, a 32-year-old trader who is one of the youngest women to make partner at Goldman and got the call while on maternity leave.

But try as he might, Solomon is still having trouble bringing the part of his bank he hates most to heel, probably on account of the stubborn fact that it makes all the money.

Two-thirds of the class are traders or investment bankers. In one surprise, none of them work in the consumer bank, Marcus, which is at the heart of the firm’s high-stakes pivot.

Who’s not giving the little guy the credit he deserves now, D-Sol? Still, thanks to the combination of the pandemic, optics and the fact that they haven’t just yet begun swimming in their profit shares, you won’t be seeing the sort of celebrating that once characterized this most special of biennial days on Wall Street.

Jen Roth, a bond saleswoman… was sitting at her desk on Goldman’s trading floor—she is among roughly 20% of staff rotating back through the office weekly—when her phone rang. “I look down and see David Solomon’s name pop up, and David Solomon’s name doesn’t usually pop up on my phone,” she said. She relayed the news to her husband and three children; her daughter announced the news to her Zoom schoolroom.

“You’ve been working toward this your entire career,” said Ms. Roth, 39 years old, who plans a quiet dinner at home on account of the pandemic.

Almost half Goldman Sachs’ new partners are women or minorities [FT]
Goldman Sachs’s 60 New Partners Are the Happiest People on Wall Street Today [WSJ]

Deutsche Bank on Wednesday reported a net profit of 182 million euros ($214 million) for the third quarter…. his surpassed expectations of a 114 million euro loss and marked a sharp improvement from the 77 million euro net loss attributable to shareholders in the previous quarter….

The bank benefited in particular from strong performance in its investment bank, where net revenues were up 43% year-on-year to 2.4 billion euros, driven by 47% growth in the Fixed Income & Currencies (FIC) division.

That kind of survival deserves a celebration, and that means a fröhliche Weihnachten indeed for those i-bankers.

“A company like ours needs to be able to pay for competitive performance,” Chief Financial Officer James Von Moltke said in a Bloomberg Television interview on Wednesday. “It is sensible to be able to protect the franchise by being able to compensate our employees in line with our performance….”

The bank may keep the overall bonus pool little changed from last year’s 1.9 billion euros ($2.2 billion), according to people with knowledge of the matter. Lower headcount compared with a year earlier will allow it to compensate top performers…. The final decision on the bonus pool will also depend on performance in the fourth quarter and any estimated impact on the bank from the worsening pandemic situation, the people said. Deutsche Bank typically decides on bonuses in December and January and pays them in March.

Deutsche Bank swings back to profit in third quarter, beats expectations [CNBC]
Deutsche Bank Plans Higher Bonus for Top Investment Bankers [Bloomberg]

So far, the returns on this evolution have been, uh, let’s say mixed. But the third quarter proved to be an absolute disaster for Solomon and his new-look bank. Sure: Goldman posted its best earnings in a decade, with profit nearly doubling on record earnings per share. One analyst called the results “simply stunning.” There’s just one problem if you’re David Solomon.

Goldman’s $4.6 billion in quarterly trading revenue included gains across fixed income and equity markets, and a bigger increase than other Wall Street banks. The business accounted for 42% of Goldman’s overall revenue, while consumer and wealth management represented 14%.

The bank set aside $278 million to cover loans that go bad, bringing its year-to-date total credit provisions to $2.8 billion. By comparison, traditional rivals JPMorgan, Bank of America Corp and Citigroup Inc have set aside anywhere from $10 billion-20 billion this year.

Goldman’s investment banking business also benefited from several high-profile IPOs including Snowflake, Rocket Companies and Dun & Bradstreet during the quarter.

That’s right: When Goldman really shines in the Solomon era, it’s the Olde Gods—the traders he has so assiduously worked to drive out and deemphasize—reliving their glory days, and not those bedraggled retail bankers Solomon prefers to spend his time with. And what of those other banks that already look like Solomon wants Goldman to look?

Revenue from trading rose 3.6% to $3.34 billion, falling short of the $3.5 billion that analysts had forecast…. Bank of America’s small increase wasn’t enough to boost overall revenue as the bank’s consumer unit saw a 17% slide…. Investment banking was a bright spot, delivering the second-best quarter in the company’s history, with a 15% jump in fees to $1.8 billion.

Wells Fargo & Co. said Wednesday that its third-quarter profit fell 56%, though the bank signaled it was prepared for a wave of soured loans…. “As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of Covid continues and further fiscal stimulus is uncertain,” Chief Executive Charles Scharf said in a statement.

Goldman’s trading business returns to former glory during pandemic stress [Reuters]
BofA Traders Fall Short of Rivals as Revenue Forecast Missed [Bloomberg]
Wells Fargo Earnings Drop 56% Despite Pandemic Hit Subsiding [WSJ]

Barclays’ first-quarter results, unveiled Wednesday, gave Mr. Staley some ammunition to defend the so-called universal-banking model. The company’s corporate and investment bank delivered a 44% increase in profit from a year earlier as companies rushed to adjust hedges and raise finance. Meanwhile, income from the domestic and U.S. lending businesses fell. Overall returns of 5.1% on tangible equity weren’t stellar but included a £2 billion ($2.49 billion) provision for mostly Covid-19 and oil-related credit losses, which is in line with European peers.

While Staley’s oracle conveniently still sees a future for banks like Staley’s, to say nothing of bankers like Staley, it does forecasts some significant changes to the way said bank will do things in the post-COVID-19 world.

About 70,000 of Barclays' staff worldwide are working from home due to coronavirus lockdown measures…. Mr Staley said his bank was re-evaluating how much office space it needed, as it was now being run by staff working "from their kitchens".

He added that in the future retail branches could be used by investment banking and call centre workers, hinting at an end to long commutes for some workers.

"There will be a long-term adjustment to our location strategy," Mr Staley told reporters. "The notion of putting 7,000 people in the building may be a thing of the past."

Do enjoy the charms of Chelmsford, Barclays bankers.

Barclays Makes Case for Unloved Universal Banking [WSJ]
Barclays boss: Big offices ‘may be a thing of the past’ [BBC News]

In the first half of 2019, Barclays cut the amount it set aside for bonuses by almost a quarter to the lowest level since 2016. It was part of a push by Mr Staley to stay on track to generate a 9 per cent annual return on tangible equity for the overall group….

“We are not asking people to get slaughtered, but it will be noticeable,” one of the people said. “We underpaid in 2017 and made up a lot of that ground in 2018 under Tim Throsby, and now we are obviously asking for some of that back….”

Last year, the bonus pool grew for the first time since 2013, rising 9 per cent to £1.65bn…. Barclays put £456m towards bonuses in the first six months of 2019 versus £593m in 2018, a 23 per cent decline.

Barclays investment bankers face double-digit cuts to bonus pool [FT]

A drop in income the firm receives based on the performance of the investments it exits—which fell 29% to $307.5 million in the quarter—and lower fee revenue for KKR’s capital markets segment—which dropped 55% to $84 million—were the primary reasons for the decline in distributable earnings.

Let us know who gets fired.

KKR’s Earnings Fall as Revenue, Investment Income Decline [WSJ]

Yet, in an interview with Bloomberg, we found a litany of moments in which Sergio Ermotti sounded less like a chief executive and more like UBS Sucks Guy himself. Here are the best moments of Ermotti clowning on his bank:

On future cuts:

“It’s not just an investment bank issue, it’s across the board,” Ermotti, 59, said in the interview at UBS’s New York offices. “Nothing is really untouchable.”

On costs:

“We can do better, and we’re going to do even more to respond to the market conditions,” the CEO said. “We are obsessed about” costs.

On potential desperate mergers:

“Everything is up for discussion all the time,” he said. “We can’t rule out anything.”

On the performance of his investment bank:

“When I look at the first nine months of the year, I am not pleased,” Ermotti said. “If market conditions don’t improve, we need to be at the forefront of putting the bar higher in changing how we do investment banking.”

On begging to be free of the existential yoke that is his job:

“I’m not obsessed about succession,” he said. “This discussion about succession has been going on since the year after my fifth anniversary, since I surpassed the average life of a CEO at UBS.”

Hey, Sergio, see you in the comments, homie!

Ermotti Says UBS ‘Obsessed’ With Costs as He Weighs Next Steps [Bloomberg]

So, let’s check in on some of their plans.

Boston Red Sox, 2018 world champions, missed this year’s playoffs: Looking to cut payroll by about 13 percent.

Los Angeles Dodgers, 2017 and 2018 National League champions, bounced in this year’s division series: Ready to bring back the president of baseball operations who has overseen several years of not quite ending a title drought that now stands at 31 years, though he has reduced payroll by 38 percent since 2015!

Chicago Cubs, 2016 world champions, missed this year’s playoffs after last winter’s biggest addition was utility infielder Daniel Descalso: Theo Epstein is open to making some big moves, saying, “I don’t believe in untouchables” regarding the possibility of trading Javier Baez or Kris Bryant, the in-their-prime superstars who happen to be due big pay raises in arbitration this winter and are two seasons away from free agency.

These are not the actions of teams trying to do everything they can to win. It is clear through their words and actions that their primary goal is to make as much money as possible. Fielding a competitive team is useful in that regard, because it keeps the stadium full, the merchandise moving, and the television ratings high. But the actual results for the team on the field are secondary.

The Cubs, for instance, knew all last offseason that they needed bullpen help. Craig Kimbrel, one of the best closers in baseball, was right there waiting to be signed. And waiting. And waiting. The Cubs finally did get Kimbrel, but did not sign him until June, when they no longer needed to give up a draft pick to do it, and at which point his price had come down to being available for a three-year, $43 million contract.

Without having had a proper spring training, Kimbrel rushed to Chicago within three weeks after signing, then proceeded to put up a 6.53 ERA in 23 appearances, including three blown saves. The Cubs, who had 15 bullpen loses and a 4.20 relief ERA in the first half of the season, suffered both from not having Kimbrel early, and from having a version of Kimbrel that was out of whack late. They missed the playoffs by five games, but had a fourth consecutive season in which attendance at Wrigley Field topped 3 million, so who’s to say whether the season was a bust?

The Red Sox, Dodgers, and Cubs are, together, worth about $10 billion. Had they spent just a few more million to shore up some deficiencies on their rosters, each might still be playing right now. But that, very clearly, is not what is important to the people running those organizations. Maximum profits win the day over a higher quality product with slightly less than maximum profits.

Bloomberg broke the news this week that “Major League Baseball is now allowing investment funds to take minority stakes in multiple clubs, a move that lets the league capitalize on sky-high team valuations.” It was met, in baseball circles, with disgust at the prospect of the same kind of profit-happy goons who have gutted institutions from Sports Illustrated to Toys R Us might do the same to baseball.

But really, how would you even notice?

Per Bloomberg:

The firm took a $267 million hit in the period on public equity investments such as ride-hailing company Uber Technologies Inc., Avantor Inc. and Tradeweb Markets Inc. The bank probably took a writedown on its stake in WeWork after plans for an initial public offering collapsed. The losses fueled the worst performance in more than three years for the bank’s equity wagers in public and private companies.

Sure, Goldman only narrowly missed on EPS and even managed to nail down a narrow beat on revenue, but more than a quarter of a billion dollars would have been really helpful for Goldman to massage the edges of both those results:

Goldman’s investment bankers also logged a much bigger decline in fees than analysts had predicted, down 15% from last year’s third quarter. They delivered their worst showing in David Solomon’s tenure as chief executive officer amid choppy markets and marquee deals that had to be pulled.

See? Every dollar that Uber and WeWork and the fintech boys simply burned could have come in handy to John Waldron as he papered over the fee-related holes in the walls at 200 West St, and show investors that Goldman Sachs is a better investment bank now that pretty much only investment bankers are in charge again:

That performance was softened by an improved showing from traders amid signs of a revival in Goldman’s biggest unit. Trading revenue rose 6% from a year earlier to $3.29 billion, the New York-based bank said Tuesday in a statement. That beat the $3.17 billion average estimate of analysts in a Bloomberg survey. Earlier in the day, JPMorgan Chase & Co. reported results that beat Wall Street estimates, driven by stronger than expected revenue from its fixed-income traders.

At least someone at Goldman was driving enough profit to put some lipstick on this pig...that Goldman i-bankers are likely roasting in the backyard of their Greenpoint townhouse. The fact that the traders who survived the fall of the House of Lloyd saved the bank's ass this quarter might be the magic needed to stop the current regime from indiscriminately stabbing and throwing its Bloomberg Terminal jockeys into the river like so many Huguenots.

But if those i-bankers are throwing garden parties for their bougie Brooklyn friends who likely also got fleeced putting family office dollars into Uber and WeWork, they could at least try to sell them on some high-yield Marcus CDs while pouring a few glasses of skin contact wine.

After all, it looks like it's a team effort at Goldman again. 

Goldman’s Third Quarter Haunted by Uber, Other Investments [Bloomberg]

Robinhood is giving banking another shot.

Ten months after the failed launch of a checking and savings account, the free stock-trading start-up announced a cash management account with a 2.05% interest rate. The APY is more than twenty times higher than the national average for savings accounts, according to Bankrate.com.

In December, Robinhood said it would offer zero-fee checking and savings accounts with a 3% interest rate alongside its brokerage accounts. The move was seen as a shot across the bow of traditional banks. But the product saw swift pushback from regulators who questioned the SIPC insurance it was promising, which is meant for brokerage accounts — not for savings products. A day later, Robinhood said they would re-brand and re-name the product after the “confusion.”

Oh yes, the perils of actually having to reckon with regulation when you're holding people's money in a high-yield account. A much different animal than letting them use anonymous platform tech to turn Etheruem into shares of Tilray, isn't it? But as much as we want to continue mocking Robinhood for essentially being itself, we simply cannot overlook that Robinhood has achieved its goal of fully disrupting the online trading game. By forcing the big boys to get rid of fees, Robinhood has proven that at the very least, it's not to be ignored.

Which brings us back to the point we made last December about Robinhhood's original and hamfisted attempt to do saving accounts: It's an existential threat to Goldman Sachs and Marcus.

Our argument from ten months ago stands but with one major edit. In December 2018, we were unclear about how important Marcus was to the new regime at Goldman. In October 2019 we can state with some certainty that it's a very high priority, which sucks for DJ D-Sol and his Krazy Krew because retail banking does not come naturally to 200 West Street. In fact, retail anything is not what Goldman Sachs does best, and it seems loathe to take the obvious route and do a major multi-platform ad buy with the slogan "Why Not Give Us Your Money Voluntarily Before We Get It Anyway?" or "It's A Goldman Sachs Bank Account. You're Fucking Welcome."

If Robinhood comes even halfway close to doing what it did to the platform trading industry, Goldman needs to size it up immediately for a [little-C] cash and [big-S] stock acquisition. Robinhood has a rabid consumer base that Goldman does not reach, knows exactly how to market itself and does not make a profit, so DJ D-Sol would find it easy in this environment to lop about 30% off Robinhood's current private valuation and call it even. What Goldman does would do with the trading platform is unclear in this very simplistic vision of ours, but we are not averse to the idea of extorting Chuck Schwab to pay for shutting it down.

Essentially, we remain annoyingly impressed by the actual disruption that Robinhood has achieved so far, but its second attempt at doing adult banking on an app is nothing but a way to make fun of old dad banks trying to wear skinny jeans. Goldman Sachs is suddenly the poster child for Wall Street trying to engage with the kids, so instead of dodging Robinhood's shot across its bow, Goldman should buy the cannon now and turn it on the next logical target: The Big Four Banks.

Clarification: While we understand that Goldman will benefit from Robinhood's new cash management accounts via a rather wonderfully explained deposit sweep program [the SIPC insurance on deposits being swept bit is especially entertaining], it will be sharing in essentially non-invested excess brokerage money with five other banks, 3 of which are Goldman's major competitors on Marcus. Our argument here is that Goldman should buy the cow instead of sharing the milk for 1.9% APY.

Robinhood makes second attempt at launching a high-yield account similar to banks [CNBC]

Deutsche Bank AG finalized a deal transferring its business with hedge fund clients to BNP Paribas SA as part of the German lender’s historic retreat from investment banking.

About 1,000 Deutsche Bank employees will move to the French rival through 2021, according to people with knowledge of the matter. Ashley Wilson, one of two executives at the German bank overseeing the disposal of unwanted assets, will head the business during this period and may eventually leave to run the combined unit at BNP, the people said, asking not to be identified as the matter is private.

You're not only getting out of Deutsche Bank [a place that now has executives charged with "overseeing the disposal of unwanted assets"], you lucky SOBs, you're also going to Paris!

The volume of assets BNP will ultimately add remains uncertain because Deutsche Bank’s client balances slumped by about half to $80 billion since it announced its intention to transfer the business. The lenders expect clients to come back now that there’s more certainty, the people said.

It's gonna be great! And everyone loves it!

Shares of both lenders fell Monday along with the broader market. Deutsche Bank declined 3.5% at 12:52 p.m. in Frankfurt, curbing gains this year to 1.3%. BNP lost 2.8% in Paris and is up 11% in 2019.

Well, Deutsche Bank is still getting out of the hedge fund business, and with some flair!

Deutsche Bank Shifts Prime Brokerage to BNP With 1,000 Jobs [Bloomberg]

Well...

WeWork’s parent is eyeing a valuation for its initial public offering that could fall below $20 billion as some existing investors push the workspace company to shelve the planned offering, people familiar with the matter said.

That's an even steeper discount on the real estate arbitrage play trussed up as a tech unicorn going to public to disrupt our consciousness. And while that sentence did not make any grammatical sense, it does if you know WeWork, which is all you really need to know about WeWork.

Well, there is one more thing you should know today:

A valuation below the $20 billion level that people familiar with the matter last week said the company was considering would be an even steeper drop from the $47 billion mark where We last raised private capital this year. The startup faces skepticism among potential public investors over its governance, business model and ability to turn a profit while continuing to grow. 

That's right, kids, despite having never turned a profit and not promising to ever turn a profit, Adam Neumann isn't going to get out of bed [a bed presumably owned by WeWork but in his bedroom nonetheless], for less than a $20 billion public valuation. Which is ironic, because...

Potential investors have been unnerved by co-founder and Chief Executive Adam Neumann ’s sales of hundreds of millions of dollars of his stock and loans of more than $740 million tied to his shares in the company, according to Wall Street Journal reports and regulatory filings. Mr. Neumann also controls a majority of the voting rights of the company and recently doubled the potency of his supervoting shares.

And while Neumann's rather obtuse sense of how money works [and to whom it belongs] has been a real problem for WeWork's IPO process thus far, he does have a fairly perfect partner in his journey into the hallucinatory frontier of financial logic:

The company is continuing to talk to its biggest investor, SoftBank Group Corp., about whether the Japanese technology giant would put in additional capital through the IPO by buying a significant portion of the shares on offer or invest a chunk of money that would allow We to delay its IPO until 2020.

There is no guarantee SoftBank will ultimately choose to put more money into We. Some of the conglomerate’s key investors have previously balked at doing so, people familiar with the matter have said. But SoftBank CEO Masayoshi Son has said he expects to keep backing the company in the future.

But the world's greatest living financial performance artist isn't WeWork's only friend in this grand IPO caper, there are two others:

A number of banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. have committed to arranging $6 billion of debt for We when it goes public, contingent on the offering raising $3 billion.

And that's where things get fun. Jamie and DJ D-Sol are also working on the IPO itself and would likely prefer that this thing just happen so they can get their fees and throw them in earnings reports as the magic of their buybacks fully dissipate. The lines of credit would be a nice plus, but the whole notion that WeWork backs out of an IPO now and then gets the big banks back in line once it gets its shit together in a year or two is harder to fathom now that the bloom is coming entirely off the rose and JPMorgan just landed the ARAMCO offering, making Adam Neumann and his problems a mini distraction.

Or WeWork could just make up a new accounting standard, pretend it's profitable and just list this fucker tomorrow.

Who cares, nothing really matters!

WeWork Parent Weighs Further Valuation Cut [WSJ]

Martin Chavez is retiring from Goldman Sachs Group Inc. where he was the face of a new breed of engineers ruling Wall Street and one of its most senior openly gay executives.

Mr. Chavez, who had once been considered a potential chief executive of the company and has been a co-head of its trading arm for the past 10 months, will retire at the end of the year, according to an internal memo.

Marty Chavez was "The Prince That Was Promised" at Goldman Sachs, a gay Latino who understood the future and a well-known favorite of the last king, Lloyd Blankfein, who promoted him all the way up to CFO. In fact, Marty was so key to Lloyd's reign that this isn't the first time he has retired. The last time he tried to leave Goldman, Chavez tried to hide out at a monastery in New Mexico but was pulled back into the DeathStar by the famed subtlety of Gary Cohn.

Since then, Marty has been charged with making Goldman Sachs tech-friendly. That's involved everything from being a Silicon Valley diplomat to turning Goldman's trading operations into a seamless, borderline inhuman machine.

But the halo of promise that perpetually hangs around Chavez has been nothing but threatening to the new regime of David Solomon and John Waldron. Marty is the last glowing vestige of the Blankfein days, and his usefulness in using code to cull traders has clearly been outlived. DJ D-Sol has moved swiftly to remove all threats to his sovereignty with Marty Chavez being the last and trickiest one of all. 

Solomon and Waldron have made it pretty clear to Marty that his future within 200 West Street was rather..."limited," and they're not even trying to hide the truth that they wanted Marty replaced with someone loyal to the new administration:

Mr. Chavez will be succeeded by Marc Nachmann, who is currently a London-based investment-banking executive. Mr. Nachmann came up designing derivatives for Goldman’s own traders and commodities clients and is known as a wonky insider. 

Investment bankers are the new ruling class within 200 West Street, which did not bode well for a senior exec like Marty who belonged firmly to the sect of traders and once told Gary Cohn that he didn't even know what i-bankers, like did.

What Marty does next will be the fruit of rumor for months, but we're pretty certain [without any evidence or real knowledge, obviously] that he won't be taking the big job at Wells Fargo or any other job in bulge-bracket finance. We see Marty investing in tech, sitting on boards and not doing much. But by simply being out there in the world, we like to fantasize that he remains an existential threat to the corner suites in Battery Park.

Martin Chavez, Goldman Sachs’s Coder-in-Chief, to Retire [WSJ]

As WeWork prepares for an initial public offering next month, Dimon’s bank is helping Neumann’s company line up its most ambitious fundraising yet: a $6 billion package of debt financing that depends upon the IPO raising at least $3 billion. Behind the scenes, JPMorgan has indicated it will contribute $800 million of the loans, more than any other lender. The bank also is expected to take the coveted first -- or lead left -- position in WeWork’s syndicate for the IPO, giving the firm bragging rights and a hefty chunk of the fees.

JPMorgan has apparently been working its's octagonal ass off to be the first bank in line to be disappointed by the WeWork IPO. That's...interesting. But in Jamie & Co.'s defense, they have clearly figured out how to best appeal to WeWork's interests:

JPMorgan’s ties to WeWork CEO Neumann and his company are varied. The bank led an offering earlier this year of commercial mortgages including one for a building where WeWork is completing an 11-floor build-out of a boutique office within walking distance of two of Neumann’s Manhattan apartments. JPMorgan also issued him mortgages so he could buy one of those homes and one in Westchester County, according to public filings. And a savings plan for JPMorgan’s own employees has put roughly $800,000 into WeWork’s junk-rated debt.

The thin, extremely blurred line between the company WeWork and the finances of its co-founder and CEO is a very rich vein to plumb, and Jamie hath apparently gotten all up in there. However, in what is the best part of this Bloomberg piece --and maybe a top-five anecdote for 2019 so far-- Jamie was not the first bold-face CEO to try to seduce Neumann directly:

Goldman’s efforts were publicly visible in December, when the firm’s former CEO, Lloyd Blankfein, palled around with the entrepreneur at a charity event. Taking the podium, Neumann told an audience packed with Wall Street leaders about getting to know Blankfein, marveling at his ability to hold court on any topic.

“We have been having so much fun,” Neumann said, gesturing to the banker. One time, over dinner, “Lloyd said, ‘Ask me anything,’ and I said, ‘Spanish Inquisition -- go!’ And you said so many names and so many things I didn’t even know existed. It was amazing.”

We're not sure what gives us more joy from this little tale; Neumann's spoiled little princeling routine of making Lloyd dance for him, or Blankfein's decision to just make up a bunch of bullshit about the Spanish Inquisition right there on the spot, knowing full well that Neumann didn't know anything about the Spanish Inquisition but would never admit to it.

Nevertheless, it encapsulates perfectly why any bank tying itself to the rocket that is the WeWork IPO is destined to realize that they are really just handcuffed to a stick of millennial bullshit dynamite.

But congrats to Jamie on the big deal...we hope you build a motherfucker of a greenshoe.

JPMorgan’s WeWork IPO Pursuit Was Many Years and Loans in the Making [Bloomberg]

"We never expect to get much love. But things got a hell of a lot worse for us after the whole Wells Fargo receipt gate debacle. 

Wells Fargo, in its normal moronic fashion, made a change to company policy so that everyone at the firm must use Grubhub for OT meals."

Well, you do the crime...

"Charlotte, being the old school anti tech place it is, only has fast food on Grubhub. So now Wells Fargo expects their analysts and associates 100 hours a week on nothing but a diet of McDonalds and Popeyes Chicken. "

Oh...

"Bathrooms are ripe as fuck after hours and everyone’s getting fat as shit."

Wells Fargo has The McShits.

A note from Deutsche Bank CEO Christian Sewing to his staff:

Dear Colleagues,

At the Annual General Meeting in May I said that we would speed-up the transformation of our bank significantly, that we would have to take faster and more radical action. Since then, many of you have asked me when we would announce concrete next steps.

Today is that day: After further stabilising our bank last year, we are now entering the next phase – and that means nothing less than a fundamental transformation of our bank.

And that transformation will be brutal. Deutsche is finally killing off its global equities group, building that "bad bank" it has flirted with for months, and also laying off about 18,000 people. That last number -- even for us -- is a holy shit moment.

Here's Sewing's version of that:

• Going forward, we will have four businesses that will be entirely focused on our clients.
• We are focusing our Investment Bank, we will be less dependent on Sales & Trading and are shrinking our balance sheet.
• We are creating a Corporate Bank which will be at the centre of our bank.
• We aim to reduce our adjusted costs by over a quarter and to simultaneously invest 13 billion euros in technology by 2022.
• And we are not asking our shareholders to pay for this transformation but instead plan to return capital to them.

We're not getting a lot of whispers from inside Deutsche [most of our sources are likely getting laid off] but one tipster inside the NYC office did take the moment to let us know that "They sent an email this morning. Layoffs going down in bulk," adding Everyone doing comps on severance. Hardest work I've seen in weeks."

Deutsche's stock price plummeted at the open but is bouncing back a bit as the street digests what kind of survival odds DB has as an old-school investment bank. But we think that things would be even more bullish if Sewing and Paul Achleitner [who has to fire himself now] just embraced the reality of turning Deutsche Bank into a credit union for Frankfurters looking to refi their condos.

If you're a newly-freed Deutsche Banker, hit us up: tips@dealbreker.com

Slack just went public at $38.50 a share, well over its $26 reference price. That result values Slack at around $25 billion, making it rain on the professional communication startup... and also set fire to what's left of the argument for traditional IPOs. 

As you might have heard from the exhaustive amount of discussion that proceeded it, Slack is going public via a direct listing. By eschewing the investment banks, the roadshows and the self-harm that lockup periods have become, Slack will become the poster child for going to market in what we'll soon be calling the "Post-IPO Era." Slack is a pretty niche investment play wrapped inside a Silicon Valley Cervantes vainglory bullshit mission of "Killing Email." It doesn't do anything sexy, doesn't market a future marketing platform or publicly mull over getting into the electric scooter rental business. Slack is, of course, not profitable [this is still 2019], but Slack is what it is, has a plan to be profitable relatively soon, and it's the platonic ideal of why direct listings are the future.

If you're a 60-something broker at a bulge bracket, you probably don't use Slack, have vaguely heard of it and no Goldman Sachs roadshow will really help you fully grasp the enterprise tech value of it all. It's kind of like the opposite of the buttfumble that was the SNAP IPO. Paying all those i-banking fees when it lost almost $150 million last year is a bad look, especially when no one is really going to learn anything.

Then there's the lockup period thing. Why? If underwriters are doing naked shorts on their own IPOs to protect a greenshoe that it appears certain to need, why not just let the market have its say from the first bell of the first trade? Not to mention the sometimes vast amount of value that i-banks often give away to large institutional clients by underpricing the IPO by a little too much. It also allows Slack employees to be fully invested in the company share price immediately, providing what Slack's own founder/CEO sees as a psy-ops edge on companies that did conventional IPOs and made workers watch impotently as the stock moves in parabolic shifts.

Slack will also avoid the conflicts of being covered by its own underwriters, living up to the hype of a manipulated entrance into public market life, and forge its own path with a stock price that's objectively pretty cheap by today's standards.

Or Slack will crash and burn within months because it doesn't make plant-based meat products. Who knows? Logic is dead and this market is batshit.

Yeah? Cool.

And how did you feel about "Girls?" 

We don't understand that sound you're making...it's too high-pitched to be a groan...

Well, according to The Hollywood Reporter, you lot are in for a treat!:

Girls creator Lena Dunham is returning to HBO.

The actress and prolific producer is teaming with newcomers Konrad Kay and Mickey Down for Industry, an eight-episode drama series set in the world of international finance. (It's unclear if Dunham will have an on-screen role.)

Clearly you want to hear more about this:

The series is based on Kay and Down's personal experience. It explores the world of international finance through the eyes of ambitious 20-somethings struggling to secure their futures. Industry follows a group of young graduates competing for a limited set of permanent positions at a top investment bank in London — but the boundaries between colleague, friend, lover and enemy soon blur as they immerse themselves in a company culture defined as much by sex, drugs and ego as it is by deals and dividends. As members of the group rise and fall, they must decide whether life is about more than the bottom line. 

Work-life balance? junior finance workers with friends? "A top investment bank in London"? Seems like we've already found some plot holes.

We will watch this progress with a lot of..."interest." We hear that Ichabod Munch is ding some consulting work on it.

Lena Dunham Returns to HBO With International Finance Drama Series [THR]

Former Chicago mayor and longtime Democratic operative Rahm Emanuel will join boutique investment bank Centerview Partners LLC, bringing a Rolodex built over a 30-year political career.

Mr. Emanuel, who left office last month, will open a Chicago office for Centerview and advise clients on merger deals and other matters, he said in a joint interview Wednesday with Centerview co-founders Blair Effron and Robert Pruzan.

Well, that's fun. And we assume that everyone is totally cool with this?

Not all Democrats are the same. https://t.co/C6Uj8KrcqW

— Alexandria Ocasio-Cortez (@AOC) June 5, 2019

Oh, BURN.

But come on, AOC, he's going to Centerview, he's hardly selling out as hard as he could...

Mr. Emanuel, who will start at Centerview in July, also weighed job offers from Blackstone Group LP and Evercore Partners Inc., people familiar with the matter said.  

See? He's punishing himself a little.

Rahm Emanuel, Ex-Chicago Mayor, Is Going to Wall Street [WSJ]

Deutsche Bank AG executives have discussed the potential departure of investment-banking chief Garth Ritchie, who has come under fire from investors for dismal results since he became the highest-paid senior executive at the embattled lender last year, according to people familiar with the matter.

Well, no schiesse. Putting aside any analysis of Ritchie as an executive or a man [we're incapable of either] one just has to look at the current state of Deutsche Bank's i-banking operation and realize that no chief executive should survive such a smoldering hellscape.

Leadership uncertainty and potential business closures have added to employees’ unease stemming from a record-low share price, regulatory investigations and strategic doubts. The lender relies on its investment bank for more than half of its revenues, but many of the unit’s businesses struggle to cover their costs.

Things are so bad that it's difficult to imagine why Ritchie is even still at Deutsche Bank right now, we can't even fathom what's going over there...

Mr. Ritchie, a former equities trader who also is co-president of the bank, is five months into a new five-year contract ending December 2023. He has told colleagues he wants a payout if he is pressed to leave, some of the people say. That complicates the internal discussions, especially for Chairman Paul Achleitner, who also oversees executive compensation. If the bank fires Mr. Ritchie, he would be eligible for two additional years of his base salary, which last year was €3 million ($3.36 million), plus bonus.

So, essentially, Paul Achleitner has created a situation in which he feels that he can't afford to fire the chief of his failing investment banking unit.

This the Deutsche Bankiest thing we have ever seen.

Deutsche Bank Investment-Banking Chief Ritchie Could Depart as ‘Tough Cutbacks’ Look Set to Bite [WSJ]

Deutsche Bank’s chief executive Christian Sewing is preparing a radical overhaul of its ailing corporate and investment bank, telling shareholders that the German lender is prepared “to make tough cutbacks”.

So you know what that means!...

Speaking to investors at the bank’s annual meeting in Frankfurt’s Messe festival hall, Mr Sewing did not name operations that would be shrunk, or outline a timeframe.

In a terse memo sent to employees on Thursday morning, Deutsche’s investment banking boss Garth Ritchie said that “we should be prepared to make further adjustments to improve profitability”, adding that he “recognise[d] the challenges and uncertainty this may bring.”

"We will accelerate transformation by rigorously focusing our bank on profitable and growing businesses which are particularly relevant for our clients,” said Mr Sewing, adding that “this is my pledge, and you can be sure of that”.

If you're still an i-banker at Deutsche, ask yourself one question: "Why?"

A person briefed on the plans said “this will be the most radical reorganisation since Bankers Trust”, referring to the 1999 acquisition of the US investment bank that marked the start of Deutsche’s ambition to become a global investment banking rival to Goldman Sachs and JPMorgan.

Seriously...why?

Deutsche Bank chief prepares shareholders for ‘tough cutbacks’ [FT]

After spectacularly bumblefucking the Uber IPO, the House of Gorman is moving on to new things, like publishing a note from former Tesla acolyte Adam Jonas that says this:

Morgan Stanley analyst Adam Jonas, previously a major Tesla bull, said rising debt and geopolitical exposure, including the risk that Chinese demand for the company’s cars could suffer, had led him to cut his worse-case scenario to $10 from $97.

“Tesla has grown too big relative to near-term demand, putting great strain on the fundamentals,” wrote Jonas, rated a five-star analyst by Refinitiv for the accuracy of his forecasting on the company.

“The departure of key executives, price discounting, and extraordinary cost-cutting efforts add to the narrative of a company facing real potential stress.”

Considering that Jonas was once notorious for effectively projecting  Tesla's long term valuation as "All of the money," it's very telling that he foresees a situation in which Elon's car company could lose about 95% of its value. And it's also fun to see Jonas' [rabid grizzly] bear case on Morgan Stanley letterhead this soon after the Uber IPO.

Life is funny.

Morgan Stanley piles pressure on Tesla with $10 worst case call [Reuters]

Deutsche Bank investors are renewing calls for it to scale back its investment bank division ahead of what promises to be a challenging annual shareholder meeting next week.

So, pretty much the same then?

The future of Deutsche Bank’s investment banking operations has returned to the fore after the collapse of merger talks with smaller rival Commerzbank.

One major investor is trying to extract a pledge from the bank for cuts to the unit before committing to back management in a symbolic vote of confidence at the meeting, a person with knowledge of the matter said on condition of anonymity.

Judging from the thirst of these institutional investor types, you'd think that Deutsche's investment banking business is rotting appendage that is simultaneously making it hideously unattractive to potential merger partners and slowly poisoning it to death. 

Oh, that's exactly what's happening? Right right right. Well, this sounds like a good plan then, we're sure Paul Achleitner and Christian Sewing are on board?

The bank’s chairman, Paul Achleitner, and top executives are speaking to investors to quell concerns of large shareholders, a common practice in the run-up to the annual meeting on May 23, said another person familiar with the matter.

But the bank is unlikely to announce any changes to its investment banking operations in the coming days, executives said. 

And the beat rolls on...

Investors renew calls for Deutsche Bank to trim investment bank [Reuters]

"Fairly substantial cuts at BMO Capital Markets. Rumored to be 5% of headcount. Across all product groups and industry verticals."

This might not be a very good day to be a Quebecois investment banker...

Per CNBC:

Uber’s underwriters, led by Morgan Stanley, were so worried the company’s initial public offering had run into trouble, they deployed a nuclear option ahead of the deal last week, so they could provide extra support for the stock, four people with knowledge of the move said.

This level of support, known as a “naked short,” is a technique that goes above and beyond the traditional help a new offering can get.

This is almost too much for us.

Not only are we giggling at the balls it takes for Morgan Stanley to pull a move like this mere days before an IPO that was aiming for a valuation outside the logical parameters of space and time, we are physically laughing at the bagholders who gladly accepted their bags from MS with an apparent understanding that the bank was actively shitting its pants in the eleventh hour:

Some of the bankers tried to console market participants prior to the opening of trading by telling them that there would be additional support from the naked short, said one of the people, who asked not to be named discussing private conversations. The exact size of the naked short could not be learned, but it is expected to have been “fairly small,” two of the other people said.

Morgan Stanley does not look great here, but their clients look literally insane. 

Somehow it's still totally fine and legal for an underwriter to deploy a naked short on one of its own IPOs, which is weirdly almost logical, but not even a regulatory change could obfuscate the stark reality that an underwriter naked shorting one of its own IPOs is a tacit admission that it has definitely overvalued the company it's selling to investors. 

And, sure, we get the premise that the long-term appeal is buying back some Uber stock at a discount, but we would also argue that what the fuck kind of thinking is that in terms of this IPO? Uber loses $3 billion a year! Where does the discount kick in? Summer 2027? 

Uber's appeal as a public company at this stage of its life has always been a mystery to us, yet even we are a little shocked that the bankers taking it to market were so sure it was priced to drop that they went through the trouble of building a naked short into the IPO and then sold that decision to investors as what we can only define as "Dipshit Insurance."

It always felt like the post-mortem on the Uber IPO was going to yield some fun revelations, but this is deliciously ridiculous.

Uber underwriters worried about the IPO deployed unusual ‘naked short’ tactic to support the stock [CNBC]

Societe Generale SA said it plans to cut about 1,600 jobs after a slump in trading revenue pushed Chief Executive Officer Frederic Oudea to intensify efforts to boost profit at the investment-banking unit.

The reductions include close to 1,200 positions at the global banking and investor solutions division, which houses its trading activities, a trade union representing SocGen’s French employees said earlier, citing a briefing by the bank. About 750 jobs will disappear in France, SocGen said, without giving further details on where it plans to make the cuts…. SocGen plans to cut about 700 jobs in Paris and eliminate hundreds more positions in London and New York after a difficult first quarter in investment banking

While this will certainly help pay the bill with which Donald Trump plans to make a down payment on his Mexican border wall, some are a little uncertain about the whole firing people are a strategy to increase profits thing.

“This isn’t really convincing,” said Lutz Roehmeyer, who helps manage 700 million euros ($790 million) at Capitulum Asset Management in Berlin, including SocGen shares. In trading, the bank is “reducing capacity and that’s going to make it harder to grow market share.”

SocGen Cutting 1,600 Jobs in Blow to Investment Bank [Bloomberg]
Deutsche Bank Last in JPMorgan’s Investment Bank ‘Pecking Order’ [Bloomberg]

After Etsy, and Blue Apron, we had assumed that most people had stepped into the light. But it looks like the darkness will always be with us...

Pinterest Inc. has confidentially filed paperwork with the Securities and Exchange Commission for an initial public offering that is expected to value the company, which operates a platform for online-image searches, at $12 billion or more as it joins a parade of hot tech startups planning share debuts in 2019.

Well, this is disheartening. 

Let's just get the usual quasi-disclaimer out of the way here: Pinterest seems like a perfectly fine company. We don't use it or have any inside information about its financial structure, but we do know this thanks to the WSJ:

The company generates revenue from ads scattered across its site and notched more than $700 million in 2018, up 50% from the prior year, according to a person familiar with the matter.

So unless Pinterest can push revenue up another statistically amazing amount this year, it looks like Pinterest is going public with a valuation of around 17X revenue. That's...ballsy.

But we think we might know why Pinterest is feeling so financially optimistic. It appears that the online vision board social media company has something(s) else in common with its tragic predecessors:

Pinterest and its underwriters, led by Goldman Sachs Group Inc. and JPMorgan Chase & Co., are eyeing a late-June listing, according to people close to the deal. They warned that, as always with IPOs and unpredictable markets, the timing or valuation could shift. 

The private money has pushed Pinterest into the idea that it's worth $12 billion, but that's the same kind of money that had everyone believing Snap was going to beat Facebook, and WeWork was worth $42 billion. We'll see what people think about Pinterest once they're holding shares and revenue doesn't keep growing at ludicrous speed.

This is a broken record, but presenting all these tech babies to rich adults desperate to understand them and slapping a huge price tag on them is great sales, but it's not working out long-term.

So of course we look forward to seeing more of this in 2019.

Pinterest Files Confidentially for IPO [WSJ]

We wonder if anyone will say something crazy...

Suntrust and BBT! WOW,, I thought consolidation was over. $GS and $C should merge b/c of tangible book value discount. https://t.co/fn9MyEmr98 club names.

— Jim Cramer (@jimcramer) February 7, 2019

That sound you hear is every single investment banker at Citi grabbing some kind of blunt weapon off their desk and ordering an Uber to Englewood Cliffs.

Quick recap: A scorpion asks a frog for a ride across a river, the frog hesitates because it's dealing with a scorpion, the scorpion makes promises, a deal is struck, then the scorpion stabs the frog midstream and as they drown, the frog asks "But why, bro?" and the scorpion is all "Cuz I'm a fucking scorpion."

Or if you'd like a different telling, try this:

Goldman Sachs Group Inc. put its own interests ahead of that of a corporate client in advising on a wholesale-food company acquisition last year, a new lawsuit alleges.

The suit, filed by United Natural Foods Inc., accuses Goldman of improperly extracting more than $200 million in advising the Providence, R.I., food distributor on its $3 billion acquisition of grocery chain Supervalu Inc.

Well, to be fair, in this version the scorpion survives.

At issue is a roughly $2 billion financing loan Goldman arranged for United Natural Foods on the deal. The company alleges that Goldman arranged the financing in a way that hurt United Natural Foods but benefited the financial firm and its hedge-fund clients that had placed bets in the credit-default swap market against Supervalu. The company also accuses Goldman of taking advantage of the deal’s provisions to extract more money from United Natural Foods.

Ok, the scorpion thrives...

The suit against Goldman also alleges that the firm used its control over the financing to extract more money from United Natural Foods. A person familiar with Goldman’s thinking said that structuring the financing as it did was necessary to get lenders’ participation. Under the financing provisions, Goldman could hike the loan’s interest rate by 1.25 percentage points to make it more attractive to investors.

Another provision allowed Goldman to claim an additional $40.5 million from United Natural Foods if it didn’t have a full 15 days to fund the loan and was unsuccessful in raising the money.

But at the heart of this lawsuit is a complaint that we can't help but read as "your honor, we were just trying to give a mutually advantageous ride to this scorpion..."

In the suit, United Natural Foods alleged that Goldman “consolidated its command over all aspects of the transaction, enabling it to ensure its own profits to the detriment” of United Natural Foods and its shareholders.

United Natural Foods expected Goldman “to provide ethical counsel and unbiased support“ of the deal, said Mr. Spinner, “not leverage their positions to pursue larger profits for themselves and other clients at our expense and ongoing damage.”

BRB, we're off to sue Wells Fargo for being a little cagey about how many savings accounts we have.

Goldman Feasts at Expense of Food-Company Client, Suit Claims [WSJ]

Remember when everyone was worried about Goldman Sachs? 

The Death Star of Wall Street was bleeding from the trading floor, old habits were dying hard and costing money, there was the small matter of Malaysia alleging that Goldman Sachs had - like - conned Malaysia into a financial crisis. Suffice it to say, things at 200 West Street looked so bleak as to be almost unrecognizable, especially since Goldman staff looked around for their familiar daddy figures only to realize that they were all gone, replaced by a smaller team of new daddies who felt more like distant uncles. But the thing about these new guys was that they felt different because they are; the age of traders died with Lloyd and Gary. David Solomon and John Waldron are investment bankers, dealmakers, a reality that made traders seem even more uneasy when they weren't distracted by losing so much money. 

But it turns out that the new daddies might have had a plan all along:

Goldman Sachs Group Inc., owner of one of Wall Street’s top deal-making franchises, leaned on that business last quarter to overcome an industrywide downturn in fixed-income trading.

Merger-advisory fees jumped 56 percent to the highest in more than a decade, lifting the investment-banking division above analysts’ estimates even as companies tempered their stock and bond issuance. The gains helped offset a dismal quarter for the bank’s fixed-income traders, who turned in the worst performance since before the financial crisis.

Like any self-respecting EDM DJ, David Solomon likes a little cosplay. Be it a tank top or a hat or a mouse head helmet, putting a little costume stank on your performative hang low is a prove trick of the trade. So you've got to hand it to DJ D-Sol, after Ned Stark-ing Harvey Schwartz and elevating loyal i-bankers into roles held by traders loyal to Lloyd, Solomon essentially dressed Goldman Sachs up as a 90's investment bank. And it's working: Goldman stock surged 5% after the bell today.

But the best part of this illusion is that Goldman didn't even see stronger results in i-banking. It was simply just not as shitty as the street anticipated.

Fourth-quarter investment-banking revenue fell 5 percent to $2.04 billion, beating the average estimate of $1.93 billion, the New York-based company said Wednesday in a statement. Goldman earned $1.2 billion from its advisory unit. Wall Street analysts were split over how that business would perform, with estimates ranging from about $700 million to $1.3 billion.

Merger strength helped mask the slowdown in fundraising activity for companies as choppy markets weighed on capital markets. Revenue from Goldman’s underwriting business plunged 38 percent to $843 million, a decline the firm blamed on lower leveraged-finance activity and a drop in secondary equity offerings.

DJ D-Sol and "Johnny Fresh" Waldron used another shitty quarter for trading revenue to get back to basics, subtly lower guidance without lowering guidance and remind the street that Goldman Sachs is still Goldman Sachs: an overtly powerful dealmaking machine that just needed some oiling and dusting to kick back into gear. What we're seeing in early response to this quarter is not a recognition that everything is fixed at Goldman Sachs, it's an acknowledgment that the i-bankers are back in charge at 200 West Street, and everyone remembering what that can look like if these guys can get it even half-right going forward into their new regime.

As the old finance adage goes: They always rebuild the Death Star, bro.

Goldman Sachs Dealmakers’ Surging Fees Help Offset Trading Misery [Bloomberg]

From a tipster:

VP1 yr in an IB coverage group at RBC (non-NY US based) coming out with $450 all-in. $250 VP1 base. Meaningful increase in % bonus deferred, now starting at (30% of) >$100 vs yr ago, starting at >$150. So I got a bit dinged there but overall, the Royal Canadian didn't upset despite the street's lackluster reaction to a good yr.

True enough. And that feels almosts cravenly braggadocio for Canadians.

Send your bonus tips to tips@dealbreaker.com and keep your bosses honest this year...

Basically, DJ D-Sol's elbows appear much sharper than we thought they would be, and he seems to be clearly laying down a body rocking bass beat on what he intends to be a long set in the CEO booth at 200 West Street. And it now seems like he's done hiding it because Goldman Sachs is due to name its newest crop of partners, and the early news is that there aren't going to be very many...

The Wall Street firm is set to name its smallest class of new partners in years this week, according to people familiar with the matter. It’s the first crop of promotions under Chief Executive David Solomon, who aims to keep Goldman’s upper ranks exclusive and compensate for a recent influx of outside hires.
Fewer than 65 people are likely to get the nod, the people said. That would be the smallest class since 1998, when Goldman was still a private company, and fewer than the 84 promoted two years ago.

Hey, we get it. DJ D-Sol has already eliminated many of the larger threats to his throne, why add a flotilla of newer, younger, hungrier ones before he even gets the "& Chairman" added to his title at the end of the year? The guy has a company to run between cullings of potentially disloyal usurpers. This is just solid management of a newly-minted oligarchy...

Candidates are vetted by a group of top executives—a process known internally as “cross-ruffing,” a term borrowed from bridge—but aren’t interviewed themselves. If selected, they can expect to hear the news personally from Goldman’s CEO.
Mr. Solomon told managers to be extra selective this year, people close to the process said. Fewer people were considered and there has been less of the last-minute lobbying that has padded the final list in past years, the people said.

See? Letting the ranks of potential challengers swell on purpose is what happens when you let traders run the place. When I-Bankers like D-Sol play the game of thrones, they start off by immediately eliminating half the competition and then locking all the entrances.

Welcome to your new life, Goldman serfs.

Fewer Stars to Rise at Goldman Sachs as Partnership Class Shrinks [WSJ]

Ichabod Munch is a busy young man indeed.

The Morgan Stanley first-year M&A analyst is fresh out of one of those small New England liberal arts colleges, and trying to make it on the bright lights of Wall Street. He previously interned at Credit Suisse where he was told to never speak of what he saw there, and has for some reason never thought about jobs outside the finance sector.

He recently shared a usual day in his life with Dealbreaker...for some reason.

Ichabod wakes up at 3 am most days.

He meets consciousness gripped in the cold panic of existential dread, realizing that he just fell asleep 45 minutes ago and will soon be working another 18 hour day.

"I don't always beg for death in the pre-dawn darkness," he said. "But it's not outside the realm of my morning routine."

At 5 am, Ichabod stumbles out into the streets of his Manhattan neighborhood, Murray Hill. 

Holding a hot bagel and somehow already stale coffee outside his corner deli, Ichabod squints into the streetlights at the corner of 35th St. and 1st Ave.

"It's a neighborhood full of real assholes," brags Ichabod. "I really think the people here are devoid of basic humanity. Have you been to Tonic on a Sunday afternoon?" The bagel goes into his weathered Under Armour backpack. Ichabod has lost all pleasure in the act of eating.

At 5:30 am, Ichabod starts his commute.

He often pauses at the entrance of the uptown 6 train to make sure that the subway is not flooded or on fire, as he needs to make 2 transfers to go roughly 20 blocks.

"I grew up in a small devout Methodist enclave in rural New Hampshire," said Ichabod. "The New York City subway terrifies me. But it's almost never really working so I often walk up and over through Times Square. That way I get to see the worst of humanity bathed in the light of dawn."

Ichabod often arrives at work around 6:15 am. 

Ichabod lives in constant fear that his group might ever see he's not in the office when they are, so he gets in early.

At his cubicle, with no one around, he sometimes checks his Bumble account. He never has messages.

At 7 am, Ichabod starts getting emails. 

Early in the day, most of his correspondence is from associates asking about all the growth models he is working on, wondering why they're not done yet and asking him if he is a "fucking donkey."

"These guys love to kid around," Ichabod said, his eyes moist and his voice quivering beneath a forced smile. "They love the salty talk."

Around 9 am, his group meets for a meeting. 

With his group VP presiding, Ichabod sits off to the side and no one looks at him. According to Ichabod, "It's cool to be in the room!" He said it as a chunk of soggy melon hit him right in the ear. Everyone laughed.

The VP made him leave to clean up. Upon returning, the conference room door has been locked and Ichabod goes back to his desk to "get some things done" as three associates smile and give him the finger through the glass wall.

"Just a regular day," Ichabod said with a heartbreaking grin.

1 pm is Ichabod's lunchtime. 

He often goes on down to one of the mega-delis with "Metro" in the name to order a disappointing $11 turkey sandwich and two Powerades.

"The cafeteria is a little stressful for me," Ichabod explained. "Plus, I like to get out and get some fresh air, it's nice to--" We can't hear what Ichabod said next because there was a man in a dirty knockoff Elmo costume right behind him screaming racial epithets at a family of Belgian tourists.

Back at his desk, Ichabod loses track of the hours.

The concept of time is relative to Ichabod most days. His mind and body are really at their natural limits and he would say something if he thought that anyone truly cared.

He screws up on an overdue model and is told that he really is "a fucking donkey."

At 7 pm, Ichabod sneaks off to the gym. 

Ichabod can usually squeeze in 45 minutes on the elliptical. If he has the emotional energy, he watches "Jeopardy" on the tiny screen on his machine.

"My college roommate and I used to meet here for workouts," Ichabod said. "But he got a job with some tech startup and moved to Oakland. Sometimes he FaceTimes me from a beach just to catch up...I fucking hate it."

Back at the office, Ichabod orders dinner on Seamless at around 9 pm.

"I get Pad Thai or Pho a lot because everyone else does," Ichabod said. "I hate them both, but I eat them anyway. I need to fit in...and survive."

At around 10:30 pm, Ichabod heads home.

He does a lot of his crying during the elevator ride to the lobby. "I don't want my roommate to see that I've been sobbing," he explained. "He got fired from Deutsche Bank like a month ago and now he claims that he's doing stand-up. He's always home. I'm worried his parents will find out. I can't afford my terible apartment on my own."

Once Ichabod walks into his narrow front door and past his rooommates bike taking up the narrow entryway, the two sit far apart on their couch and watch TV until Ichabod's roommate, Doug, says that he has "a set" and leaves.

1 am and it's time for sleep.

In his small bedroom with the blackout curtains drawn, Ichabod contemplates getting out his laptop to watch porn, but instinctually knows that he has neither the energy nor the optimism for such activity. Instead, he lies there in the darkness staring at the mysterious stain on the ceiling, thinking about his college roommate out in the Bay Area and what a terrible asshole he has become.

He falls asleep with bitterness and inchoate rage churning in his stomach.

It appears that Credit Suisse has moved with Swiss speed to at least partially clean up its sticky summer intern mess.

As we reported exclusively a few weeks back, an MD in the bank's M&A group allegedly got quite lit at a company outing and proceeded to lick, massage, grab and lock away some Credit Suisse summer banking interns. It was also apparently not the first time that said senior I-Banker had gotten inebriated and crossed some behavioral lines. We can now confirm that the banker in question is named Paul Dexter and that he is no longer with Credit Suisse.

A spokeswoman for the bank told us that Dexter is longer an employee of the bank and offered this statement:

“We have robust escalation policies and channels in place through which complaints about conduct can be reported by employees, and we encourage all employees to do so. Where complaints arise, they are thoroughly investigated and, where called for, consequences are appropriately handled.”

Dexter's apparent dismissal and the language in the above statement are clearly aimed to appease the Millennial workforce within Credit Suisse, a force that has been emboldened by the #MeToo movement and was growing increasingly restless that Dexter wasn't fired immediately after he started licking people. Whether these moves will ultimately appease them remains very murky, and we have already heard from more than one source inside 11 Madison Avenue that some people want the head of the female senior MD who was perceived to have been protecting Dexter. Credit Suisse confirmed to us that the MD remains employed at the bank.

What we conclusively have here is Credit Suisse's first scalp offered up to the #MeToo movement, and the bank will hope it's enough for now. Every other bank on Wall Street would be wise to watch and see if it works.

Federal prosecutors on Thursday accused a Goldman Sachs investment banker in San Francisco of insider trading, alleging that Woojae Jung used confidential information to trade in a dozen stocks over three years.
Prosecutors said he earned illicit profits of just over $130,000.

Yeah, we couldn't believe it either.

Somehow, a guy that managed to make VP at Goldman Sachs only managed to pull down $130K in three years while trading on his own M&A deals. And not only that, according to his LinkedIn page, Jung also worked at McKinsey and has an MBA from Wharton.

$130K?! For three years of cheating?!

We are embarrassed for everyone involved.

Goldman Sachs Banker Charged With Fraud in Insider Trading Case [NYT]