Just how vigilant have regulators become in recent years? Two Wall Street traders were fired and are now facing federal charges for committing a parking violation. At least that’s what a tongue-and-cheek headline would read. The actual story is as strange a case of fraud as you’ll hear.
The story begins with a trader named Thomas Gonnella, who was faced with a rather interesting predicament: stick with your current book of assets, with which he seemed rather content, or trade, seemingly, just for the sake of trading. Why would a person do such a thing? Gonnella’s former firm, which Bloomberg’s Matt Levine believes to be Barclays, had a policy in place that penalized traders if their book got stale. “You’re a trader, you should be trading,” goes the theory.
But Gonnella didn’t care to trade, for reasons unknown (although maybe he was just happy with his aged inventory?) Either way, Gonnella had a plan to keep his securities intact while avoiding the bonus hit that would occur with a lifeless trading book. Sell a bunch of securities to a trader at a rival firm, Ryan King, and then re-purchase the bonds, almost immediately, at a loss. It’s called a “parking scheme.” King’s firm would collect some profit; Gonnella would reset the holding period on his book and reap his full bonus. Roughly $174,000 changed firms during a few different “parking jobs.”
Unfortunately for the two, Gonnella’s supervisor caught wind of the scheme and the whole thing came crashing down. The moral of the story, I guess, is when in doubt, do what’s in your job title.
You are in the market for a Wall Street internship. How do you decide where to look? It’s all about doing your homework, identifying opportunities and sniffing out red flags.
Deutsche Bank has named Rich Herman global co-head of fixed income and currencies. He’ll be based in the U.S. and will be charged with rebuilding the German bank’s trading presence in the states. Hiring under Herman could certainly occur.
New York-based Brown Brothers and its former global AML compliance officer, Harold Crawford, were fined by FINRA for allegedly failing to comply with anti-money-laundering rules. The firm reportedly handled suspicious penny stock transactions without doing appropriate homework.
Citigroup’s foreign-exchange head Anil Prasad will leave the bank at the end of March. Prasad’s departure is not said to be related to the investigation into FX trading manipulation that encompasses nearly a dozen banks. Citigroup’s FICC revenue was down 7% last year.
Meanwhile, Steven Cho and Leland Lim, two Goldman Sachs partners who helped lead the firm’s currency-trading business, have left the bank. No word if the departures were related to the FX exchange probe. Three Deutsche bank currency exchange traders in New York have also reportedly been fired.
European investment bankers had the least productive January in roughly a decade. U.S. revenue totals were down 11% yet still dwarfed those accumulated by EU banks.
Just how competitive is the war over brilliant young talent? Banks, hedge funds and consulting firms now spend as much as $50,000 per recruit. Some are even paying students $100 to explain why they chose not to participate in their recruitment process.
Buzz Around the Office
New Jersey Representative Robert E. Andrews is resigning this month, though he claims it has nothing to do with his rather dubious legislative record. Over the past 23 years in office, Andrews has written 646 pieces of legislation. Not one of them became law.
Quote of the Day: “There are stories — legends, really — of the ‘steady job.’ Old-timers gather graduates around the flickering light of a computer monitor and tell stories of how the company used to be, back when a job was for life, not just for the business cycle. … The graduates snicker. ‘A steady job!’ They’ve never heard of such a thing.”
― Max Barry