There’s a harsh new reality facing Morgan Stanley’s bond-trading desks; a bright, glaring sun dawning over their Bloomberg terminals, promising to disinfect whatever squalid little joys jobs thereon bring. That new reality is they are under the thumb of the hedge funds, and indeed all of their other clients, no longer powerful independent operators and partners of the aforementioned, but mere errand boys.
Take young Patrick Brennan, a 2011 B.C. grad and a bond trader in the House of Gorman. As bond traders are wont to do, Brennan did a little bit of trading. This trading had an adverse effect on one of his clients, Hutchin Hill Capital, but the hedge fund otherwise had nothing to do with the trade. That did not stop it from getting angry, and asking Brennan whether he might be the one screwing them over. And even though, again, Hutchin Hill had no direct link to Brennan’s trade, Brennan told them he had nothing to do with it. And that made them even angrier.
It’s unclear what transpired next but after Hutchin Hill complained to his supervisors, Brennan and Morgan Stanley executives agreed to correct the record with the hedge fund, acknowledging the firm’s involvement, one of the people said. Brennan was soon discussing his exit with Morgan Stanley, negotiations that continued as recently as two weeks ago.
Wall Street banks have become sensitive to any communications that appear dishonest in the wake of criminal prosecutions where traders have been accused of taking advantage of the bond market’s opaque nature for their own gain….
That’s been a shock for many traders, who always operated on the idea that bluffing was everyday business on the street. Having an information edge is critical to outdoing rivals, especially in the distressed debt market….
At least four market participants, who asked not to be identified, said they were surprised by the kerfuffle with Hutchin Hill in a market where traders have been known to do much worse.
Luckily for Brennan, one needn’t be a choirboy to work at other bond desks.
Brennan has already been hired by rival investment bank Jefferies Group LLC…