Wall Street has long been dominated by men, but while a wave of sexual harassment allegations has swept across news organizations, Hollywood, Silicon Valley and Washington, the financial services industry has stayed out of the glaring spotlight of the #MeToo movement for the most part.
However, last week a managing director at Bank of America Merrill Lynch in New York was forced to step down – before annual bonuses were handed out – after HR investigated a young female banker’s accusation of inappropriate sexual conduct, according to the New York Times.
38-year-old MD Omeed Malik helped to run BAML’s prime brokerage business that raises money for hedge funds and was an adviser to Jon Corzine, a former New Jersey governor, U.S. senator and founder of doomed broker-dealer MF Global, which specialized in trading commodities and derivatives. Malik, an ex-MF Global employee, who through “splashy parties” attended by celebrities, had been helping to promote Corzine’s hedge fund, which will launch this quarter.
After the young woman, an analyst at BofA Merrill, complained about Malik, HR officials interviewed at least 10 people who have worked with him. Other women alleged that Malik made unwanted advances toward female colleagues and engaged in relationships with female subordinates, according to the Wall Street Journal.
After he was fired, some Bank of America executives allegedly told employees to tell clients that Malik had left the bank to pursue other career opportunities, although it privately told some clients that more was behind the move.
Malik attended prominent hedge fund conferences and threw glitzy parties, but now the party appears to be over.
Two years ago, Bank of America reached a settlement with a female MD in its fixed-income group who had filed a lawsuit who claimed that the bank fostered a “bros’ club” culture, mistreated female employees and paid them less than men in comparable jobs.
That said, BAML is far from the only bank that has experienced such issues.
In November, Morgan Stanley MD Nigel Coe was encouraged to resign after a female colleague claimed he touched her inappropriately at a company event where alcohol was served.
Goldman Sachs quietly fired a VP-level trader last year after he drunkenly bragged at a firm event that he could unhook a bra over a woman’s shirt and tried to demonstrate the technique on a mortified female colleague.
Banks and hedge funds mostly act privately to handle allegations of sexual misconduct, in many cases letting the accused employees leave quietly.
Many victims complain that departing executives can continue careers elsewhere with their reputations intact, while the accused say the rapid-fire process doesn’t allow for all the facts to come to light, according to the WSJ.
Further, mandatory arbitration agreements require employees to waive their rights to bring claims in court as a condition of employment, preventing public class-action suits that roll together claims from various accusers and requiring nondisclosure agreements in individual settlements. That keeps victims of harassment and discrimination from speaking out publicly.
Separately, things are looking up at Credit Suisse, although its bankers shouldn’t set their bonus expectations too high.
Credit Suisse plans to increase its bonus pool at least by a low single-digit percentage from last year as the bank enters the final year of its three-year restructuring plan pivoting toward wealth management and investment-banking advisory, while reducing its reliance on trading. Others speculate that the bonus pool will probably increase by about 10%, according to Bloomberg.
CEO Tidjane Thiam agreed to a lower bonus for 2016, even though the bank’s overall bonus pool increased by 6% over 2015. He said in November that bankers shouldn’t expect a big raise for 2017, since Credit Suisse has been restructuring and cutting costs for two years.
Swiss rival UBS cut the bonus pool for 2016 by 17%, but for 2017, the amount will rise by a single-digit percentage.
Both UBS and Credit Suisse are struggling with historically low volatility and will be negatively affected by U.S. tax reforms, but at least their bankers’ 2017 bonuses will be slightly bigger than last year.
Meanwhile:
Morgan Stanley boosted CEO James Gorman’s compensation by 20% to $27m, the most pay he’s received since taking the helm eight years ago. (Bloomberg)
Firms fear disclosing their CEO-to-workers pay ratio. (Bloomberg)
The big five Wall Street banks reported an average trading revenue decline of 32% for the fourth quarter and 12% for the full year. As a result, traders’ bonuses could be 10%-20% lower than the prior year, and some could get nothing at all. (Reuters)
What’s decimating elite boutiques’ trading desks? (Financial News)
Digital disruption, which has changed the face of trading equities, currencies and some government debt, is arriving at the syndicate desk, where corporate bonds are priced and distributed. (Bloomberg)
There’s been no time to rest for weary stock traders. (Bloomberg)
Private equity firms haven’t rushed to completely cash out of companies that they’ve taken public, helping PE executives – who share in a percentage of the deal’s profits through carried interest – to get even richer. (Bloomberg)
The Republican tax overhaul has an unpleasant surprise for PE pros. (New York Times)
Talented overachievers once drawn to Wall Street or McKinsey are instead showing up in Silicon Vally with pitches about their start-up ideas, but many lack entrepreneurial hustle. (FT)
A Deloitte consultant wrote a cringe-worthy pop song and sent it to his bosses — now it’s being shared around the world. (Business Insider)
Brian “The Points Guy” Kelly, who quit his Wall Street job to travel and write about airline points programs, offers tips for sleeping on a plane. (BBC)
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