Morning Coffee: The undersexed traders with a personal life coach. JPMorgan bankers could get bonuses for missing deals
Although it’s one of the ubiquitous features of the industry, investment bankers are often reluctant to talk about the simple fact that people working together often sleep with one another. It’s not hard to understand why; things are easy to take out of context and remarks which seemed like harmless banter in the moment have a habit of showing up years later in litigation to the considerable embarrassment of everyone who has them read back in a deposition. But while the level of action portrayed in TV shows like “Billions” and “Industry” is probably a bit unrealistic, it is a thing, and it does happen.
Except apparently, as in high school, the ones that talk the most about it often turn out to be doing it the least. According to George Lerner, the performance coach at FTX Markets, the “polycule” of young and eccentric traders surrounding Sam Bankman-Fried were actually “undersexed, if anything”, and “mostly played chess and boardgames”. Sometimes you feel like the benefits of a massive penthouse in the Bahamas are wasted on those lucky few to whom they are given.
Of course, this is presuming that everyone at FTX was completely frank about their sex life to the coach employed by their company, and that the coach was himself completely frank to the New York Times reporter who he apparently phoned up out of the blue. Neither is completely certain. Although Dr Lerner was employed to play a role similar to the legendary Ari Kiev of SAC Capital, he also maintained his medical licence and practiced as a psychiatrist, with several FTX staff as his patients. As he notes in the interview, some of his relationships would be covered by medical confidentiality and others wouldn’t.
The disclosures get even more complicated when you take into account the fact that Dr Lerner wasn’t just helping traders work through their guilt issues about getting rich, or keep control of the emotions they felt about losing trades. He also had a prescription pad and gave ADHD medication to some of his patients. This might be why he has agreed to speak to the press; over the last few days there’s been an abundance of rumours on social media that he had acted as a sort of “Doctor Feelgood” for a firm where stimulants were routinely used, and he might have hoped to put the record straight.
High pressure situations make people behave irrationally – that’s why hedge funds have always employed coaches and why a lot more successful bankers have therapists than like to admit it. But the foundation of mental equilibrium is often a stable relationship; as Lerner says “It would have been healthier if they did have more healthy dating relationships”. Perhaps it would be a better industry for everyone if there was less of a taboo on discussing who got up to what last night.
Elsewhere, Jamie Dimon has been pointing out to analysts on a call that the deals you miss can be as important to your eventual P&L as the deals you get into. JPM hasn’t got quite the same relationships with the private equity industry as bulge bracket competitors like Goldman Sachs and Bank of America, and it’s been lucky enough to win advisory mandates on some of the biggest deals rather than having big market share in LBO lending.
As a result, JPM is hardly there in the worst league table of them all – the list of the biggest “hung” transactions where banks have been unable to syndicate the debt and are likely to be looking at big writedowns before the year end. We notice that Deutsche Bank is also notable by its absence, which might be considered surprising given the very public disagreements with its regulators over being aggressive in LBO business.
When some of the biggest banks on Wall Street set bonus pools at the end of this year, they’re likely to look at the cost of these problem transactions, and mentally subtract it from all the fees that the financial sponsors teams have generated during the boom. The result is unlikely to be great news for the bankers. At JPM and a few other firms, some senior LBO people may be thanking their luck and judgement and getting paid for the deals they kept out of.
Meanwhile …
Some of the reviews about FTX's Dr. Lerner are a bit off...
It is confirmed that the in-house psychiatrist for FTX was Dr. George Lerner, MD. We found some of the public reviews online interesting given the situation.https://t.co/PMytuNIXMl pic.twitter.com/aIjYyltYeF
— Autism Capital 🧩 (@AutismCapital) November 15, 2022
There are also unconfirmed suggestions that Sam Bankman Fried was taking a drug that causes 'hypersexuality', so. (Twitter)
The most comprehensive account of how FTX managed to burn through $15bn of profits, maybe more. Plus, the suggestion that Sam Bankman Fried is incompetent, erratic and "not all there." (Milky Eggs)
Goldman Sachs is said to have spent $12m to resolve a sexual discrimination complaint, and David Solomon is said to have said something inappropriate. Goldman Sachs denies this. (Bloomberg)
In a number of Chinese banks, particularly state-owned lenders, the compensation committee agenda will contain the words “common prosperity”. This is good news for juniors and bad news for seniors – in an overall environment of pay restraint, banks are being encouraged to reduce the gap between the top and bottom of their pay scales. (Bloomberg)
Chirantan Barua will be leaving the head of strategy job he’s held at HSBC since 2020, to run the Scottish Widows insurance business within Lloyds Banking Group. (FT)
Most banks would regard it as a disciplinary offence to talk about business on social media at all, let alone to publicly disagree with the boss, but Twitter has historically had a more permissive approach. That is no longer the case; several employees who talked back to Elon Musk have now been fired. (Bloomberg)
Every major corporate scandal tends to trigger a slightly shamefaced round of website deletions and removals of effusive LinkedIn posts, and the Davos World Economic Forum is having to do quite a job to get rid of embarrassing photos of world figures cuddling up to Sam Bankman-Fried. (NY Post)
The UK’s status as “divorce capital of the world” was partly a result of the policy of awarding bankers’ spouses a percentage of all future bonuses. If the bonus cap rules are being removed, could this become a thing again? It certainly seems to be worth keeping in mind if you’re married to a banker you don’t like anymore. (Wealth Briefing)
TCI, the activist hedge fund which formerly employed UK Prime Minister Rishi Sunak, is warming up for a battle with Alphabet over headcount and executive pay. (FT)
A handwritten thank you note only needs to have three sentences, and is apparently a great way to differentiate yourself in today’s less polite world. (NYT)
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