Tag Archives: bloomberg

McKinsey Clients Shrugged at Scandals, Ignored Greed

McKinsey & Co. is the global fix-it firm of choice, whether you’re a company looking for an outsider to justify laying off thousands of employees or a government looking to get its managerial act together. A new book by Duff McDonald, a contributing editor at Fortune and The New York Observer, provides a good history of the firm but can’t seem to decide whether McKinsey is a valuable advisor or a waste of money.

I reviewed “The Firm: The Story of McKinsey and Its Secret Influence on American Business,” for Bloomberg Muse today. You can read it here.

When markets come undone from crisis fraud, regulators investigate something else

The public was pretty peeved about the financial crisis in 2008, and regulators felt the pressure to produce a few scalps in response. So what did the regulators do? They investigated something that had nothing to do with the crisis.

I reviewed Charles Gasparino’s new book “Circle of Friends: The Massive Federal Crackdown on Insider Trading — And Why the Markets Always Work Against the Little Guy” for Bloomberg Muse this week.

Gasparino tells the story of the all-out war on insider trading that began in 2008, and he questions the regulators’ priorities in pursuing inside traders when there were people who’d just about brought down the economy roaming free.

The book has some problems, but Gasparino is right that our regulators are chasing all the wrong people. Here’s the review.

Amaranth hit death spiral as sycophants, fools cavorted

The Greenwich, Connecticut hedge fund Amaranth Advisors LLC collapsed in September 2006 after losing more than $6 billion in the natural-gas futures market. I reviewed the new book about the debacle, “Hedge Hogs: The Cowboy Traders Behind Wall Street’s Largest Hedge Fund Disaster,” for Bloomberg Muse today. You can read it here.

How banks keep the lid on sex discrimination cases (and thus avoid having to change)

In my Bloomberg View column earlier this week, I wrote about the disconnect between image and reality when it comes to Deutsche Bank’s record on diversity. The Frankfurt-based global bank wins all those warm-and-fuzzy prizes for “Best Company” for working mothers, for example, but is the target of lawsuits brought by women who say are treated with nasty little barbs at work such as “Maybe I should get pregnant so I can work from home.”

Those same women say they endured more than Neanderthal-style comments from the guys: They say lost their jobs when they became mothers, too. Deutsche Bank dodged a bullet big-time when two women who were considering a class-action pregnancy discrimination suit settled with the bank earlier this year. In a court filing, the bank denied one of the pregnancy claims against it, and its spokeswoman Michele Allison declined to comment on the others.

Discrimination against women on Wall Street is a persistent problem that hasn’t been fixed despite an assortment of programs that purport to address it. Deutsche Bank, in fact, takes a deep bow for its programs around the world for women in finance. The bank says that 5,000 women from Deutsche and other firms attended their conferences for women last year alone.

Despite all the woman programs, diversity training and new “heads of diversity” jobs at financial firms, the lawsuits and internal investigations around gender discrimination just keep on coming.

Deutsche Bank is far from the only problematic bank out there — they all are. But  it does have some history that illustrates how hard financial firms work to keep the public from knowing how bad things are for their female employees. In a splashy lawsuit filed more than a decade ago, Virginia Gambale, a partner in Deutsche Bank’s Capital partners unit, said she was passed over for a promotion because of gender discrimination and that the bank’s work environment was hostile to women. She would wind up with a “multi-million dollar settlement,” according to a transcript of a court conference in her case.

Gambale’s lawsuit described a September 1999 business meeting she was required to attend in Cannes, France where approximately 100 men and 5 women had to walk past “a welcoming committee of ‘sex goddesses’ who were wearing revealing clothing that was highly inappropriate for a business meeting.” The complaint said that entertainment at the meeting included “a scantily clad Marilyn Monroe look-alike, who publicly fondled several male executives.”

The most interesting part of her lawsuit, though, were the lengths Deutsche Bank went to to avoid having information about the gender breakdown of salary and promotion at the bank become public. In an August 2, 2004 ruling by the U.S. Court of Appeals for the second circuit, Judge Robert D. Sack described some of the history around efforts by the bank to lock up documents.

During discovery, Deutsche Bank had produced compensation planning charts “and four pages of an internal Bank study of diversity at the Bank, which contained information about the gender composition of the Bank’s employees,” Sack wrote. The judge added that the bank had said the settlement was “motivated significantly by its desire to avoid public disclosure at trial of the temporarily sealed documents.”

Sack wrote that Harold Baer, the district judge in the case had “wondered aloud why the public should not know about discrimination at a major banking institution.” Baer told the bank that he’d disclose the contents of the settlement agreement unless Deutsche Bank agreed to hire a third party to do a global gender review and provide the results to the court. No way, said the bank, cooking up a stipulation of dismissal with Gambale to get the case out of Baer’s jurisdiction.

Over the years, I’ve spoken to a number of women who’ve taken settlements after years of emotional and expensive litigation. They get worn out, and often wind up feeling guilty that they didn’t fight to the bitter end in court so that the ugly details of gender differences in pay and promotion would be exposed. Those who can’t sue in court because of mandatory arbitration agreements don’t even get satisfaction when they win: Men who lose a discrimination or harassment case do not have to reveal that in their public “BrokerCheck” records. Is there any wonder the problems go on and on?

What we really need is a system that forces employers to report how many internal complaints they’re getting that allege discrimination, and how much men and women are being paid for doing similar jobs. We’ve got an Equal Employment Opportunity Commission, after all, and it’s time that agency’s mandate was expanded to demand those statistics. The way things work now, there are too many ways for banks and brokers to keep evidence of their discrimination under lock and key.

A bit of welcome news in all this: It turns out that six years after Gambale’s 2003 settlement, some of those Deutsche Bank documents were unsealed. They are not available electronically, but I’ve put in a request with a document service to get them. Look for another post when I’ve got them in hand.

JPMorgan’s Teflon CEO Glides Past Reputation Hits

What does it take for investors and other supporters of a popular public company to finally decide the firm has gone too far in breaking the rules?

If you’re JPMorgan Chase & Co., it apparently takes more than a $6.2 billion trading blunder, a really embarrassing hearing before a Senate investigations committee, and a report that 8 federal agencies are circling you with probes.

In my column today for Bloomberg View, I write about the stunning ability of “The World’s Most-Admired Bank” to wallow in credit for all its good news, but slip by when the bad stuff happens.

“Steel City Re, a Pittsburgh-based firm that measures corporate reputations, ranks the bank in the 90th percentile among 50 financial conglomerates…Little wonder, I suppose, that earlier this year, JPMorgan topped the Fortune magazine list of most-admired banks in the world for the second year in a row. Are the bank’s admirers living in some parallel universe where black marks just don’t register?”

 

How does JPMorgan do it? You can read my column here.

2013 CT Press Club Award

I’m honored to have heard from the Connecticut Press Club tonight that my Bloomberg View columns from 2012 won first prize in the Personal Opinion Category. You can read the winning columns here and here.