snowJob

Free Vegas Trips, Cocaine And Hookers: A Peek At Real Banker Life

Think frontrunning clients, trading against recommendations, manipulating LIBOR, and slamming gold at the London fixing is all investment bankers do? Wrong. What really happens in banker life is far more exciting and enjoyable (at least for preferred banker clients) as the following story by the WSJ’s David Enrich shows.

In reality, the activities that bankers seem to spend the most time on, is treating their “preferred clients” with free gambling trips to Las Vegas, skiing in Chamonix, flying wives and girlfriends in helicopters, doing blow in industrial amounts, and, of course, cavorting with strippers and hookers. All paid for by some unwitting clients of course. It is this environment of utter and perfectly permitted, if not encouraged, debauchery that allowed scandals such as the Libor fixing “conspiracy” (first theory, then fact of course), to flourish, and which makes being a banker still the most desired job in the world (contrary to beliefs that it was all about the passion of crunching goalseeked DCFs at 2 am in the morning).

A quick summary of what really goes on behind the glass doors:

And a more detailed one:

Neil Danziger’s trades for Royal Bank of Scotland Group PLC generated rich commissions for the brokers who handled them. In return brokers at London’s Tullett Prebon PLC took Mr. Danziger to London strip clubs and spent long weekends with him in Las Vegas… Brokers at R.P. Martin Holdings Ltd., another London firm, gave him early access to lucrative trades, these people say.

[B]rokers routinely reward valued traders by returning a percentage of their commissions in the form of entertainment. Brokers have paid for traders to spend weekends in the Alps and Saint-Tropez, and on occasion, have even bought them cocaine or prostitutes, according to people who witnessed such activity.
….
The London brokers and traders interviewed by the Journal estimated that roughly 5% of the brokerage commissions a trader generates often come back to the trader in the form of various perks. It isn’t uncommon for a brokerage to spend $50,000 a year entertaining a single trader, they say.

While plenty of client entertainment takes place on Wall Street, traders and brokers say such activity is even more prevalent in London.

As recently as last summer, BGC Partners Inc., a New York-based brokerage, dispatched limousines to the homes of top traders at London banks. The limos ferried the traders’ wives and girlfriends to a helicopter, which flew them to the Royal Ascot—a marquee event on London’s social calendar—for a day of horse races, according to people familiar with the event.

ICAP has treated traders to ski weekends in Chamonix, France, according to a former bank trader who attended.

Several former brokers and bank traders said they witnessed brokers providing clients with cocaine or prostitutes.
Compliance departments at some brokerage firms cross-check brokers’ entertainment expenses against a “banned list” that includes a database of major strip clubs.

Brokers take traders to strip clubs anyway, according to former traders and brokers. When taking traders to strip clubs, Tullett brokers sometimes paid cash out of their own pockets, according to one trader who participated. The trader said the brokers told him they expected to be reimbursed after submitting inflated expenses for taxis.

In a separate incident, after one broker took a trader to Las Vegas, the trader sent a batch of orders to a rival brokerage, prompting the broker to send an angry missive to the trader demanding to know why, according to a person who read the note.

In one of the few cases brought, the Financial Services Authority in 2010 banned from the industry a broker at Tradition Financial Services, Fabio De Biase, for showering a hedge-fund trader with approximately £131,000 ($200,000) worth of cash, gift vouchers and gold bullion in exchange for higher commissions. The agency said Mr. De Biase violated an FSA guideline that requires finance-industry professionals to “act with integrity.”

While the FSA didn’t take any enforcement action, police in London are now investigating whether brokers provided illegal kickbacks, these people say. “There aren’t specific rules about whether you can send your clients to go see prostitutes,” an FSA spokesman said. “You have to pick what sort of things you look at as a regulator.” (Prostitution itself isn’t illegal in the U.K., but soliciting a prostitute in public is.)

Rest here…

~

4closureFraud.org