Daily Archives: October 5, 2015

Investment banker’s suicide highlights pressures industry brings

Since January 2014, HousingWire has reported on what appears to be a tragic trend of suicides and mysterious deaths of financial executives and bankers.

Here is just a little of our past coverage.

Third prominent banker found dead in six days

More details emerge about three bankers who died in six days

Fourth suicide for finance executive under investigation

JPMorgan global program trading exec, dead at 37

Fifth financial executive with ties to JPMorgan found dead

London authorities open investigation into banker deaths

Death of banker under mysterious circumstances makes 36 in 2014

Now, the New York Times profiles a young investment banker who tragically took his own life, and the circumstances that may have contributed to it.

In retrospect, it was around Easter that John Hughes began to think something unusual was going on with his middle son, Thomas, a 29-year-old investment banker.

John’s former wife, Marypat, had arranged for brunch at the Yale Club, in Manhattan, with her three sons: Thomas, who worked at the Wall Street advisory firm Moelis & Company; John III, a young lawyer at Sullivan & Cromwell; and Joseph, an undergraduate at Fordham. The Yale Club, near Grand Central Terminal, was an easy enough trip on the train from her home in Westchester County, and an even easier one for her sons. But Thomas couldn’t make it. “There’s some big deal cooking at Moelis or whatever,” John recalls his son telling him. “He had to work through that whole stretch.”

Generally understanding of the long hours Wall Street banks expect of their youngest employees — after all, the pay was as high as the hours were long — Thomas’s parents could not fathom why he was not permitted a two-hour break on Easter Sunday. Ms. Hughes was miffed. “She just didn’t understand how this possibly could be on this particular day,” John says.

Less than two months later, on the morning of May 28, a Thursday, Mr. Hughes stepped onto the stone windowsill of his 24th-floor rental apartment on the southern tip of Manhattan and jumped to his death. He had been up all night, on an alcohol- and cocaine-filled binge, as best as can be determined by the police, whose report indicated that Mr. Hughes appeared to have been drinking heavily and that there were signs of cocaine use. The medical examiner has not yet released his toxicology report, but the police ruled the death a suicide.

Read the full story here.

Source: NY Times

An Arrest, a Suicide, a Year Later: The Lasting Tragedy of Kalief Browder

Almost one year ago today, The New Yorkerpublished the story of a young man named Kalief Browder, who spent three years on Rikers Island without being convicted of a crime. Accused of stealing a backpack in 2010 at the age of 16, he was held on Rikers for more than 1,000 days waiting for a trial that never happened. His brutal detention included, among other abuses, two years in solitary confinement and beatings by officers and inmates. This tragedy of criminal justice was further compounded last June when, two years after his case was dismissed for lack of evidence, Browder, 22, committed suicide.

On this week’s podcast, New Yorker staff writer Jennifer Gonnerman – who brought Browder’s story to light and has been reporting on the criminal justice system for nearly two decades – joins ProPublica senior editor Joe Sexton. Here they talk about how she came to tell this story, its aftermath and why, even with the world of hurt that inhabits the criminal justice system, she remains driven to report on it.

Read on.

DEUTSCHE BANK: A wave of defaults may be just around the corner

The credit markets have been showing signs of contagion, as Chinese growth concerns and slumping commodity prices lead to widespread selling.

That has Deutsche Bank wondering if there is likely to be a wave of companies failing to pay interest on their bonds.

It said in a note Friday: “With the recent back-up in both IG [investment grade] and HY [high-yield] spreads to their respective 3.5-year wides, a discussion has emerged about whether the market is sensing the next default cycle around the corner or is simply “overreacting” to some exogenous but ultimately irrelevant events. At 570bp ex-energy spreads, the market is well ahead of what would normally be considered sufficient compensation for defaults that are still tracking sub-2% in this segment of our markets.”

Strategists Oleg Melentyev and Daniel Sorid looked at six leading indicators to judge whether the credit market has over-reacted, and found that two are flashing red – meaning they are “at levels consistent with where previous credit cycles have started.”

Read on.

Did the Supreme Court Just Rewrite Preet Bharara’s Legacy on Wall Street Crime?

The Supreme Court made a handful of hedge fund traders very happy today by declining to review an insider trading decision that dealt a blow to Preet Bharara’s campaign to crack down on Wall Street.

Todd Newman, formerly a portfolio manager at Diamondback Capital, and Anthony Chiasson, of Level Global Investors, were convicted in 2012 of trading on confidential information they had received second hand. An appeals court overturned their convictions in 2014 and made it harder to prosecute insider trading in the process. The court said that a trader must know that information he receives about a company was leaked in return for some benefit of consequence for trading on it to be a crime.

By refusing to hear the case, the Supreme Court has liberated Newman and Chiasson from any threat that their case might get revived. “We are thrilled,” said Stephen Fishbein, Newman’s lawyer, in a statement. A third trader, Michael Steinberg, formerly of SAC Capital, was convicted in 2014 and is likely to see his conviction overturned, too.

One person who isn’t pleased with the decision? Manhattan U.S. Attorney Bharara, whose crackdown on hedge fund insider trading became one of the signature campaigns of his tenure. Over the past few years, after painstaking work by the SEC and the FBI, his office racked up more than 80 convictions or guilty pleas. Now defense lawyers will be fighting to have their clients’ cases revisited or guilty pleas undone. It’s likely to be a major procedural headache as well as a bruise to Bharara’s moral sensibility.

Read on.

SEC charges Home Loan Servicing Solutions over relationship with Ocwen

The Securities and Exchange Commission announced Monday that it charged Home Loan Servicing Solutionsfor making “material misstatements” about its relationship with Ocwen Financial (OCN) as well as misstating its net income on several occasions.

According to the SEC, Home Loan Servicing Solutions, which was purchased by New Residential Investment (NRZ) in April, misstated how it handled transactions involving Ocwen.

In Aug. 2014, Ocwen disclosed that it received a subpoena from the SEC over its relationship with several of its affiliated companies, including Altisource Residential (RESI), Altisource Asset Management Corp (AAMC), Altisource Portfolio Solutions (ASPS), and Home Loan Servicing Solutions.

At issue in that SEC investigation was the fact that Ocwen founder William Erbey served as chairman of the board of Ocwen, Altisource Residential, Altisource Asset Management, Altisource Portfolio Solutions and Home Loan Servicing Solutions, and whether conflicts of interest subsequently existed.

Read on.

Billionaire hedge fund manager buying up all the places

Here is the next housing crisis problem: Hedge funds!

Billionaire hedge fund manager Kenneth Griffin, CEO of investment firm Citadel, has spent close to $300 million on residential real estate, setting record-high sales prices in three major metros.

The New York Times has the story:

The buying binge includes the purchase last year of two full floors of the Waldorf Astoria hotel in Chicago, the city where Citadel is based and where Mr. Griffin, 46, has his main residence. He paid $13.3 million for the 37th floor and $16 million for the 46th floor, totaling just under $30 million. If combined, the deal would be the most expensive real estate purchase in Chicago.

In New York this year, Mr. Griffin agreed to purchase three full floors — totaling over 18,000 square feet — at 220 Central Park South, the condo tower under construction in Midtown. According to people familiar with the deal, the purchase includes a main residence as well as several other apartments that could be used for staff or guests. Mr. Griffin paid around $200 million for the space — a price that brokers say is a record in New York.

Mr. Griffin is also making waves in Miami. According to people familiar with the deal, Mr. Griffin closed last month on the penthouse of Faena House in Miami Beach for $60 million — a record for Miami and $10 million over the original asking price. Faena House, a luxury condo tower on Collins Avenue, has an in-house spa, a fitness center, a private club, a concierge service and a round-the-clock doorman.

The penthouse is more than 12,500 square feet and has a media room, great room and dressing room, as well as a 70-foot-long infinity pool on its 9,900-square-foot terrace. The unit went into contract more than a year ago, when the building was still under construction, but just closed in September.

Mr. Griffin already owns homes in Aspen, Colo., and Hawaii.

Why is Mr. Griffin spending so much on real estate?

Read the full story here.

Caught On Tape: Furious French Workers Attack Air France Executives, Rip Their Clothes Off

 

Earlier today amid the general gloom of Europe’s sliding non-manufacturing PMIs, the one place that stood out like a sore thumb bucking the deteriorating trend, was France which not only posted an increase from August but also beat expectations.

We strongly doubt this metric has any basis in reality because among numerous other contrary-specific factors, Bloomberg reported that as part of Air France’s long-running spat with workers over cost cuts, violence erupted earlier today as protesters stormed a meeting where managers were presenting plans for 2,900 jobs cuts, causing executives to flee with their clothes in tatters.

According to the report, human resources chief Xavier Broseta and Pierre Plissonnier, the head of long-haul flights, scaled an eight-foot high fence to escape, shielded by security guards, with Broseta emerging shirtless and Plissonnier with his suit shredded.

Casting some serious doubt on the service PMI “recovery” is that the attacks happened Monday as Air France told its works council that after the failure of productivity talks with pilots last week some 300 cockpit crew, 900 flight attendants and 1,700 ground staff might have to go. The cuts could include the first forced dismissals since the 1990s, according to the carrier, which subsequently postponed the meeting.

The company, unhappy with the terrible publicity that the photos and video clips presented below will unveil about the corporate culture at Air France, promptly tried to downplay the incident, saying in a statement that “these attacks were made by isolated and particularly violent individuals as the demonstration by personnel on strike was going on calmly,” adding that a complaint had been filed for aggravated violence. We expect many more complains will be filed before the latest surge in anger at the upcoming layoffs dissipates.

Read on.

And roll the tape: