VersaillesinNY Posted November 2, 2014 Share Posted November 2, 2014 An explosive story... ‘Wolf of Wall St.’-like banker on leave after clients flee amid sleazy scandal http://www.dailymail.co.uk/news/article-2816875/Wall-Street-firm-tests-entire-department-drugs-7m-year-investment-banker-stands-accused-forcing-wife-binge-cocaine-sex-potential-client-foursome-Ritz.html Warning: The affidavit is nasty... http://nypost.com/2014/10/30/wolf-of-wall-st-banker-on-leave-after-clients-flee-sleazy-drug-sex-claims/ Jefferies' memo related to the scandal http://www.jefferies.com/culture-and-character/Special/Pages/844 Lose money for the firm and I will be understanding. Lose a shred of reputation and I will be ruthless. Warren Buffett Link to comment Share on other sites More sharing options...
thepupil Posted November 3, 2014 Share Posted November 3, 2014 the affidavit is a must read, pure gold (although sad for the guy's kids) Link to comment Share on other sites More sharing options...
peter1234 Posted November 3, 2014 Share Posted November 3, 2014 Regardless of the outcome, this is bad PR. Link to comment Share on other sites More sharing options...
Grenville Posted November 3, 2014 Share Posted November 3, 2014 Thomas Mara is retiring at the end of the year. http://www.sec.gov/Archives/edgar/data/96223/000119312514392091/d814006d8k.htm Link to comment Share on other sites More sharing options...
thepupil Posted November 3, 2014 Share Posted November 3, 2014 Regardless of the outcome, this is bad PR. the only potentially bad thing is the Aegerion CEO wife swap, right? that is the only thing related to Jefferies' actual business. Is it really fundamental changing (or surprising) news that a banker does too much blow and has terrible family life? Link to comment Share on other sites More sharing options...
bookie71 Posted November 3, 2014 Share Posted November 3, 2014 Is it really fundamental changing (or surprising) news that a banker does too much blow and has terrible family life? . . No, but it indicates the culture that might be in place. Link to comment Share on other sites More sharing options...
scorpioncapital Posted November 3, 2014 Share Posted November 3, 2014 Is a 'wife swap' similar to a 'credit default swap'? Link to comment Share on other sites More sharing options...
compoundinglife Posted November 3, 2014 Share Posted November 3, 2014 Is a 'wife swap' similar to a 'credit default swap'? Coffee just shot out my nose. Link to comment Share on other sites More sharing options...
Guest wellmont Posted November 3, 2014 Share Posted November 3, 2014 turning luk over to the JEF guys just proves nobody is safe from losing their marbles. Link to comment Share on other sites More sharing options...
benhacker Posted November 3, 2014 Share Posted November 3, 2014 Handler has definitely pissed off some competitors over the years by stealing their bankers I think. The continued small little anti-JEF stories in the news is clearly a PR campaign of some kind. Most of this stuff *if* it were true, wouldn't even be newsworthy, but somehow a bank most folks have never heard of gets media stores covering it's bankers??? Yeah, call me skeptical. Chance to buy cheaper. Link to comment Share on other sites More sharing options...
Fat Pitch Posted November 4, 2014 Share Posted November 4, 2014 Handler has definitely pissed off some competitors over the years by stealing their bankers I think. The continued small little anti-JEF stories in the news is clearly a PR campaign of some kind. Most of this stuff *if* it were true, wouldn't even be newsworthy, but somehow a bank most folks have never heard of gets media stores covering it's bankers??? Yeah, call me skeptical. Chance to buy cheaper. Or are they just getting the bottom of the barrel type deals/people? This is an industry where if you aren't 1st then don’t bother. Link to comment Share on other sites More sharing options...
merkhet Posted November 4, 2014 Share Posted November 4, 2014 Why do you think that it's an industry where being first matters? Link to comment Share on other sites More sharing options...
scorpioncapital Posted November 4, 2014 Share Posted November 4, 2014 I've always suspected the argument advanced about paying a large comp ratio upfront and even ongoing to retain high talent should be viewed with skepticism - especially on Wall Street, in an overcrowded industry where everyone is doing the same thing. Great people don't "need" the highest amount of money to work with you, they just need a decent amount. If Goldman can get by with 40% comp ratio why does Jefferies need 60%, is there something 20% more brilliant about their people? Link to comment Share on other sites More sharing options...
mcliu Posted November 4, 2014 Share Posted November 4, 2014 I've always suspected the argument advanced about paying a large comp ratio upfront and even ongoing to retain high talent should be viewed with skepticism - especially on Wall Street, in an overcrowded industry where everyone is doing the same thing. Great people don't "need" the highest amount of money to work with you, they just need a decent amount. If Goldman can get by with 40% comp ratio why does Jefferies need 60%, is there something 20% more brilliant about their people? There's a big ego factor on the street so the best needs to be paid more. Bankers seem to care a lot about their relative comps. Link to comment Share on other sites More sharing options...
Fat Pitch Posted November 4, 2014 Share Posted November 4, 2014 Why do you think that it's an industry where being first matters? Read up on Solomon Brothers and their clientele such as the "Bouncing Czech". If you are a Fortune 500 company and you need an ibanker you go to Goldman. These guys get first dibs on all the best deals and pass on anything that looks suspect. Guess who gets the sloppy seconds? Link to comment Share on other sites More sharing options...
benhacker Posted November 4, 2014 Share Posted November 4, 2014 For those of you who think their comp & ben expense is out of line, I think you may just be not comparing them properly. GS is not a good comp (it's 15x the size with different business composition). LAZ, GHL, EVR are all better comps, will similar (slightly higher) comp ratios (in the 55-65% ranges). Also, to those who think JEF has 2nd rate MDs / teams, I'd love to see any serious data / insight you have on that. It hasn't been my findings from research I've done. Also, just qualitatively, JEF did a lot of poaching of their teams (and yes, paid top dollar) from '07-'11 from other big IB's as they were hampered with lawsuits, bad press, additional regulation, etc, and I really don't think they were in the weaker position in those transactions (and I do believe a lot of the bad press and bear raiding is a direct result of Handler sticking it to the likes of UBS et al by taking their best employees). In the end, I agree that comp is too high in IB land, but I focus on end ROE. I feel quite similarly about exec comp overall in corporate America / World. But unless there is a culture of corruption, I don't see the absolute level of comp at any company as being the most important metric, and it certainly doesn't stand on it's own. I've studied a lot of JEF's history, and I really don't see them being at the bottom of the barrel for talent or ethics, it's quite the opposite actually (again, IMO). I think aside from GS, no IB firm has better ROE for the last 15-20 years. *if* you adjust for risk / leverage and perhaps some "luck" GS got during the crisis (AIG contracts), perhaps JEF is better both absolute and risk adjusted. Just my 2 cents. This is a really hated industry (for a lot of good reasons), so I understand why many aren't interested. Link to comment Share on other sites More sharing options...
thepupil Posted November 4, 2014 Share Posted November 4, 2014 Why do you think that it's an industry where being first matters? Read up on Solomon Brothers and their clientele such as the "Bouncing Czech". If you are a Fortune 500 company and you need an ibanker you go to Goldman. These guys get first dibs on all the best deals and pass on anything that looks suspect. Guess who gets the sloppy seconds? Interesting, I didn't realize the Goldman Sachs was number 1 in all league tables and had 100% market share amongst large issuers...I guess my salary, bonus and dividends were funded with something else when I worked for another bank. Sloppy seconds seemed to work pretty well for JEF from 1990 to its acquisition by LUK over which time the stock returned 28X and 16% CAGR. Sloppy seconds is sending a more modest, but still decent relative to its $3.6B tangible common equity, $500-$600MM pretax to mother Leucadia. JEF pays high cash bonuses and is not as regulated/scrutinized as the big boys. It should continue to grow and take share. Wife swaps and blow for everyone! Link to comment Share on other sites More sharing options...
jay21 Posted November 4, 2014 Share Posted November 4, 2014 Why do you think that it's an industry where being first matters? Read up on Solomon Brothers and their clientele such as the "Bouncing Czech". If you are a Fortune 500 company and you need an ibanker you go to Goldman. These guys get first dibs on all the best deals and pass on anything that looks suspect. Guess who gets the sloppy seconds? Imo, one thing you should focus on is what can JEF do that GS and the other i-banks can't? That list has grown since the financial crisis due to regulations. Tbh, I should spend more time on it because I think that's going to be a measurable competitive advantage. Link to comment Share on other sites More sharing options...
scorpioncapital Posted November 4, 2014 Share Posted November 4, 2014 "In the end, I agree that comp is too high in IB land, but I focus on end ROE" There is some truth to this - no I-bank has had >10% ROE since the crisis. It's been a long time getting back to normal but I feel the tide is turning slowly and over the next 2-3 years will improve. Obviously compensation is a lever you can control to fiddle with your ROE, trying to balance growth vs profitability. But if the mandate in the latest Jefferies memo about being better not bigger is to be the case, I would imagine profitability plays a key role there. (I would also add FBRC as another example of a small ibank with 50%+ comp ratio). Link to comment Share on other sites More sharing options...
Guest ajc Posted November 5, 2014 Share Posted November 5, 2014 Don’t Blame The Messenger, Jefferies http://blogs.reuters.com/breakingviews/2014/11/03/dont-blame-the-messenger-jefferies/ Link to comment Share on other sites More sharing options...
benhacker Posted November 5, 2014 Share Posted November 5, 2014 Don’t Blame The Messenger, Jefferies http://blogs.reuters.com/breakingviews/2014/11/03/dont-blame-the-messenger-jefferies/ Such noteworthy and information filled reporting. Compare Jefferies to Lehman brothers, and Handler to Fuld. Make no points whatsoever, but imply that Jefferies should just lay back and take it. This article, just after the Sage Kelley news made the headline piece in Andrew Ross Sorkin's Dealbook. Lol... Honestly, I'm heartened that JEF's competitors are threatened enough by their existence that they feel the need to pay for this negative PR. Ben Link to comment Share on other sites More sharing options...
saltybit Posted November 6, 2014 Share Posted November 6, 2014 Will this affect their ability to retain and acquire new clients? Link to comment Share on other sites More sharing options...
NeverLoseMoney Posted November 8, 2014 Share Posted November 8, 2014 Barron's is more positive: 'A Mini-Berkshire at a Bargain Price': http://online.barrons.com/articles/a-mini-berkshire-at-a-bargain-price-1415433072 Link to comment Share on other sites More sharing options...
no_free_lunch Posted November 9, 2014 Share Posted November 9, 2014 I don't have a subscription to Barron's. Can you give a summary? Link to comment Share on other sites More sharing options...
gfp Posted November 9, 2014 Share Posted November 9, 2014 Ironically, no_free_lunch, most dow jones articles are available without a subscription simply by searching for the article title on google news: https://www.google.com/search?q=a+mini+berkshire+at+a+bargain+price&client=firefox-a&hs=z69&rls=org.mozilla:en-US:official&source=lnms&tbm=nws&sa=X&ei=sHFfVJn7MIOaigLFjYH4AQ&ved=0CAoQ_AUoAw&biw=1364&bih=725 I don't have a subscription to Barron's. Can you give a summary? Link to comment Share on other sites More sharing options...
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