Morning Coffee: How to get a $100m bonus without doing any work. Goldman’s lifeline to balding bankers with weight issues

Although six figure bonuses are commonplace in the investment banking industry, and seven figures are earned by hundreds of people at every major firm, by the time you get up to eight, you’re really talking about a small and select crew of rainmakers.  Someone who ever saw a payday running to nine figures would be one of the genuine legends of the industry, in most cases.  But there is one way in which ordinary bankers can get themselves paid at that level, regardless of seniority.  All you have to do is be in the right place at the right time.

“The right place” in this context would be a firm that is doing something illegal, and “the right time” would be before anyone else has snitched.  Yesterday, the SEC announced the latest round of awards under its whistleblower program, and there is one absolute whale in there.  An anonymous tipster got $110m, taking the total paid out by the SEC alone over the billion mark.  In general, whistleblower settlements are between 10% and 30% of the total fines collected.  Given how lucrative the role of informant can be, it would be remiss of us not to pass on a few career tips.

The first such tip would be that like the banking industry, the snitching industry has a bulge bracket and a second tier.  The SEC program is one of the best; the $110m payday announced today is bigger than the total size of the CFTC whistleblower program, the limits on which have been causing problems for one LIBOR whistleblower who is in principle owed more than it can pay.  It can even help out its poor relations - only $40m of the big award came for information provided to the SEC itself, while $70m is for “a related authority”.

The second would be that, again like the banking industry, being able to originate transactions is what gets rewarded.  Looking at the press release, there’s another whistleblower who made their call “after the staff had opened an investigation and undertaken significant investigative steps”, and although it’s recognised that they “provided original information that led to the successful enforcement action”, they only got $4m.  Still a pretty good bonus, but they must have felt at least a bit jealous.

And finally, we’d advise you to get a lawyer, because one of the things about being a whistleblower is that you’re often blowing the whistle on illegal things which you were part of yourself.  Back in the late 00’s, Bradley Birkenfeld made the mistake of going to the US Treasury with evidence of Swiss bank tax evasion, and giving them all the information before asking what he might get in return.  Although he eventually got his money ($104m), he didn’t get immunity from prosecution and spent 40 months in federal prison.

It’s hard to recommend that anyone actively seeks out this sort of career – it’s more the sort of opportunity that falls into your lap.  But if it’s there, you might as well take it, rather than run the risk of being one of the unfortunates on whom the whistle is blown. And the best thing about it is that you don’t need to lift a finger. Other than the one you use to make the phone call.

Elsewhere, the David Solomon era at Goldman Sachs has seen, among other strategic initiatives, a program of “building a real banking platform of the future”.  The next step to “move us along in that journey”, apparently, is the acquisition of GreenSky, a company that provides loans for “big one time purchases”.  Looking at the website, these come in two kinds – “home improvements” and “healthcare”.  On the healthcare tab, as well as the normal dental, LASIK and veterinary products, we notice that they’re offering finance to providers of bariatric surgery (for the very overweight) and hair replacement.

Of course, these are treatments which bankers might often be able to finance with pocket change (in fact, apparently the back-to-office season is apparently triggering some awkward gossip in some firms about people who have returned with suspiciously more luxurious locks than they had before the pandemic).  But in the event of needing to buy now and pay later, rather than liquidate some of your bitcoin holdings, it might be nice to reflect that the interest charged is at least partly going into the Goldman bonus pool.

Elsewhere …

“I myself am a partner at a Big Four accounting firm, but my dad was a spot-welder”. Sounds like slightly embarrassing dinner party conversation, but it is actually the stated goal of KPMG UK to ensure that at least 29% of its partners and directors came from a working class background by 2030. PwC has also found that it pays its working class staff 12% less than those from professional families and wants to do something about it. The idea of firms of auditors having to audit each others’ stories of humble origins feels like it has comic potential. (Financial News)

“Boomerang recruitment” is becoming a lot more common as the banker shortage means that grudges against departed employees are an unaffordable luxury.  The latest example is Mark Filenbaum, returning to Credit Suisse to healthcare investment banking after four years at Centerview. (Bloomberg)

According to Jonathan Pruzan, Morgan Stanley is planning to staff up and increase its capabilities in debt capital markets, to bring its market share closer into line with its equity and advisory franchises. (Financial News)

Deutsche Bank’s independent macroeconomic think-tank appears to have crossed a line – while the argument that the “almost unprecedented loss of importance” of Germany’s financial sector is due to mistakes by the regulators is certainly defensible on the merits, it’s perhaps a bit spicy to say so in blunt terms.  The report has been withdrawn. (FT)

That isn’t to say that Deutsche wants analysts to shut up about regulatory affairs, however – Christian Sewing made the point on a panel discussion that nearly every equity analyst covering DWS seems to support it against the regulators over the greenwashing scandal. (Bloomberg)

An artificial intelligence trained on the collected speeches of Fed Governor Jerome Powell turns out to be a fan of the musical “Hamilton” and the TV series “Kung Fu”, a keen fly-fisher and somewhat more positive on cryptocurrency than the real thing. (Institutional Investor)

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