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.
Articles
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.
Do Deutsche Bank’s ‘Prettier’ Women Get the Best?
This article originally appeared in Bloomberg View on May 5th, 2013.
Most big-name financial firms pay lip service to diversity, peppering their websites with smiling women and people of color who are in short supply in the mostly white-male trading rooms and executive offices of real life.
Amid the spin, though, there’s one bank that wins plaudits around the globe for its gender programs.
At Deutsche Bank AG, business conferences and seminars for women attracted 5,000 of the company’s employees and clients last year, according to the bank’s website. It has scored a spot on Working Mother magazine’s “100 Best Companies” list 13 times since 1996, and was named “Best in Financial Services Sector” by the U.K. charity Working Families, which does research on work-life issues.
Eileen Taylor, Deutsche Bank’s global head of diversity, said in an e-mailed statement that a program called Atlas, started in 2009, has helped push 50 percent of the women who have used it into broader roles.
So you have to wonder why the Frankfurt-based bank is spending so much of its time fending off lawsuits that accuse it of harassment, retaliation, gender bias and discrimination against pregnant women.
In a lawsuit filed Jan. 28 in New York State Supreme Court in Manhattan, Yosefa Shliselberg, a director in the global transaction banking group and 10-year Deutsche Bank veteran, said she was called into human resources one afternoon in 2011 and told, “The business has decided to exit you.” She says it happened two months after she complained to HR about gender discrimination and sexual harassment.
Performance Reviews
Shliselberg, whose performance evaluations cited her “remarkable analytic skills” and “deep understanding” of the bank’s products, told me during an interview last month at her lawyer’s office in New York that the bank had opened an investigation into her effort to start — I’m not kidding — a women’s initiative.
The probe found no wrongdoing, according to her complaint, which would hardly be a shock considering she says she received kudos for her project from everyone from her immediate boss to Deutsche Bank’s former chief executive officer of the Americas: “I’m very proud of you,” Seth Waugh wrote in an e-mail on Feb 11, 2011, that Shliselberg allowed me to review.
After that session in HR, Shliselberg was escorted to her desk, where boxes had already been delivered so she could pack and leave.
You almost wonder if there was something in the water at the bank that can’t do enough to advocate for women. Twelve days before Shliselberg filed her lawsuit, Deutsche Bank fired Heather Zhao, a vice president in Deutsche Bank’s global investment solutions group.
That axing came nine days before Zhao was scheduled to return from maternity leave, according to her complaint filed March 29 in the U.S. District Court for the Southern District of New York. Zhao’s suit says that after she learned she was pregnant in early 2012, she was blanketed with Neanderthal-style remarks from men at the bank. One highlight, according to her complaint: “Maybe I should get pregnant so I can work from home.”
Best place for mothers, indeed.
Deutsche Bank spokeswoman Michele Allison said the bank wouldn’t comment on pending litigation.
Not to pile on, but while we’re on the subject of pregnancy, another employee, Kelley Voelker, was fired from her job as a vice president on the securities-lending desk in September. She said in an amended complaint in U.S. District Court in October that after suing the bank for pregnancy discrimination in September 2011, Deutsche Bank retaliated by firing her. In a response, the bank denied it discriminated or retaliated against Voelker.
Class Act
Deutsche Bank is still in litigation with Voelker, but according to a transcript of a March 18 hearing in her case, two unidentified women who considered starting a class action reached settlements with the bank this year.
Another settlement: Latifa Bouabdillah, a former director in London who sued in May 2011 in the U.K. for sex discrimination. Her lawyer, Tim Johnson, said in an e-mail that the terms were confidential.
As for Shliselberg, I have to wonder if her sorry fate wasn’t somehow related to the dopey public statement of Deutsche Bank’s former CEO Josef Ackermann, who in February 2011 said that the bank’s executive committee would be “more colorful and prettier” once it added a woman or two. Ackermann’s words led to a media maelstrom just as Shliselberg was getting traction for her idea to start a nonprofit group to be called Women in Sovereign Entities.
By the time she was meeting with a bank steering committee in London in April 2011, she was hearing worries that had more than a hint of paranoia: Shliselberg told me one man at the meeting said he was afraid that her proposed group might host an event where women could “get out of control” and take over the agenda.
In its response to a parallel complaint Shliselberg filed with the Equal Employment Opportunity Commission, Deutsche Bank said she had misinterpreted management’s support for her proposal, and that she had raised her allegations of discrimination as leverage to negotiate a cushy exit package. Shliselberg “began neglecting her work” after she started to focus on creating the women’s organization, the bank said. Deutsche Bank’s decision not to sponsor her project was based on business concerns, not discrimination, according to the response.
It’s hard to buy the idea that the same woman who had been praised in performance evaluations as having “excellent communications skills” somehow went clueless when her bosses were trying to tell her that her project for women was a no-go. If this is the best that the “best” company for women can come up with, the banking industry is even more hopeless than I thought.
2013 Excellence in Journalism Award, Society of the Silurians
2013 Excellence in Financial Journalism Award
The New York State Society of CPAs said today that I’ve won the 2013 Excellence in Financial Journalism award for my Bloomberg View columns. The NYSSCPA’s press release is here.
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.
JPMorgan’s Teflon CEO Glides Past Reputation Hits
This article originally appeared in Bloomberg View on April 3rd, 2013.
JPMorgan Chase & Co. and its chief executive officer, Jamie Dimon, have been dealing with a blitz of bad news of late, but you wouldn’t know it from the accolades that keep getting heaped on them.
There was the $6.2 billion trading loss best known as the London Whale debacle that Dimon dismissed as a “tempest in a teapot”; the humiliating hearing before Senator Carl Levin’s Permanent Subcommittee on Investigations, where we learned that Dimon had played a role in managing the wrong-way trades; and, to top it off, the New York Times on March 26 reported that eight federal agencies were circling the bank with various probes.
Then there are the costs to settle regulatory cases and litigation. Joshua Rosner, an analyst at Graham Fisher & Co. in New York, estimated these have totaled as much as $8.5 billion since 2009 — and that doesn’t count any of the mortgage-related givebacks that came after the financial crisis.
That’s all serious stuff, you might be thinking. So why are investors and sycophantic media types still under the spell of JPMorgan and its top guy?
Even as the grim news was piling up for Dimon and his bank, Barron’s magazine last month honored him as one of the “World’s Best CEOs” — a short list of 30 international superstars.
Feeling Loved
JPMorgan, meanwhile, is feeling the love when it comes to its stakeholders. Steel City Re, a Pittsburgh-based firm that measures corporate reputations, ranks the bank in the 90th percentile among 50 financial conglomerates. Nir Kossovsky, a Steel City co-founder, says he calculates how stakeholders reward or punish companies through such things as sales volume, vendor terms and credit costs.
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?
Joe Evangelisti, a spokesman for JPMorgan, declined to comment.
At least some of the goodwill toward JPMorgan exists because when it comes to controversy, the bank is a master at spin. At a black-tie gala at New York’s over-the-top restaurant Cipriani Wall Street on March 19, Dimon landed first prize for “Best IR by a CEO or chairman” at the IR Magazine Awards, aka “the industry’s most prestigious and coveted awards that honor leading companies and professionals in investor relations.” A second award to JPMorgan specifically cited the bank for its bang-up job at crisis management.
To win a prize for crisis management, of course, you need to be in a crisis, but that doesn’t seem to sway supporters of the bank or its CEO, who make what sounds like a reasonable argument: JPMorgan is making money, which makes shareholders happy and keeps the board off Dimon’s back. So what’s not to like?
Amar Bhide, a professor of international business at Tufts University’s Fletcher School of Law and Diplomacy, has done some thinking about that question, and said JPMorgan and its competitors are making too much of their money with taxpayer support.
“From the point of view of shareholders, Dimon is not doing a terrible job,” Bhide said. “One could take the extreme point of view and say that you want these people to gamble because they are gambling with the public’s money. If you are a stockholder, you get a nearly free ride, so why not?”
Taxpayer Backing
Banks and their investors know that there’s an implicit backstop — a taxpayer bailout — that will kick in during the worst-case scenario of a financial-system meltdown. Dimon actually endorses the idea of a resolution authority that would wind down failing banks, which sounds great as far as it goes.
But the “savvy leader of the world’s most important bank,” as Barron’s calls him, wants JPMorgan to be able to get bigger and to serve more global clients. How do you force countries outside of the U.S. to comply with another country’s resolution authority? In his letter to shareholders last year, Dimon said that close cooperation would be “required by multiple regulators.”
Sydney Finkelstein, a management professor at the Tuck School of Business at Dartmouth College, says a resolution plan isn’t enough and that banks need to be broken up. The U.S.’s biggest banks are too unwieldy for anyone to manage, he said.
Which takes us back to that $6.2 billion loss springing from the London Whale trades.
Some of JPMorgan’s problems are a lot like the problems of its competitors. Banks are peddling products that sometimes are only understood by a small club of physicists who used to work at places such as NASA before rocket science became the new profit driver at banks.
But I digress. Our banks are selling stuff that top management can’t keep tabs on, and it’s putting the financial system at risk. Even Dimon showed he was at a loss to explain the Whale blowup when he made his reference to a tempest in a teapot.
JPMorgan’s CEO has another problem: that enormous tab the bank has run up to settle cases with regulators and litigants. In a March 12 report titled “JPMorgan Chase: Out of Control,” Rosner, the Graham Fisher analyst, wrote that he couldn’t find another U.S. bank with such big settlement outlays.
JPMorgan is a master at racking up PR points when it’s boasting about things such as its “fortress balance sheet.” But it has been able to dodge setbacks when it breaks the rules. You have to wonder whether, at some point, it might catch up with the world’s most-admired bank and its magazine-cover CEO.
After Boom-Boom Room, Fresh Tactics to Fight Bias
The headline-grabbing sex-harassment charges against Wall Street firms in the 1990s are a thing of the past, but not necessarily because things are better for women at financial firms.
In my story today for The New York Times, I discuss the progress — and lack of progress — since “The Boom-Boom Room” lawsuit against Smith Barney became synonymous with lurid behavior at brokerage firms.
Fast-forward 17 years, and such landmark cases are not as prevalent. Wall Street’s women are more aware of their rights and are not so timid anymore, says Linda D. Friedman, a partner at Stowell & Friedman. Still, she says her firm does a lot of work these days behind the scenes, assisting women who face discrimination but are reluctant to pursue litigation because of the repercussions it would have on their careers.
You may not be reading about these problems in your favorite newspaper or blog, but they’re still part of life for women who work in finance. You can read my story here.