Receiving Wide Coverage ...
Over it: Former Social Finance CEO and co-founder Mike Cagney now admits he had an affair with a female subordinate at the company as well as consensual sexual relationships with other women there. Cagney, who resigned last September following allegations about his activities at SoFi, is starting up a home equity lender called Figure Technologies, which made its first loan last week.
Cagney’s indiscretions at his former company haven’t prevented at least two firms from investing $17 million in his new project, which has raised nearly $60 million in venture capital. His “swift comeback — from ouster to new company took four months — provides one of the starkest illustrations of the speed with which the technology industry is moving past the sexual harassment allegations that swept Silicon Valley and many other industries over the last year.”
Accused: Melvin Watt, the head of the Federal Housing Finance Agency, has been accused in an Equal Employment Opportunity complaint of sexually harassing a female employee. “The selective leaks related to this matter are obviously intended to embarrass or to lead to an unfounded or political conclusion,” Watt said. “However, I am confident that the investigation currently in progress will confirm that I have not done anything contrary to law.” New York Times, Washington Post, American Banker here and here
Wells watch: Richard Yorke, chief operating officer of Wells Fargo’s wholesale banking unit, which contributes about half of the bank’s total earnings, is leaving the company.
Separately, Wells is being sued by a 78-year-old black woman in Fort Lauderdale who says the bank accused her of forgery when she tried to cash a $140 check last November. The woman, a noncustomer of the bank, says she was forced to wait nearly three hours while bank employees checked her credentials.
Wall Street Journal
In the crosshairs: Ant Financial Services “handled more payments last year than Mastercard, controls the world’s largest money-market fund and has made loans to tens of millions of people. Its online payments platform completed more than $8 trillion of transactions last year — the equivalent of more than twice Germany’s gross domestic product.” But “that success is also putting a target on the company’s back," the paper says. "China, even more than the U.S., is now under pressure to reckon with the disruptive power of a financial-technology giant.”
Bait and switch: American Express “routinely” raised foreign currency exchange rates on its small and midsize business customers without telling them after recruiting them with offers of low rates. The practice, which went on “for more than a decade,” was done to “boost revenue and employee commissions,” the paper reports Monday morning.
Skeptics: While mergers and acquisitions activity among American regional banks has picked up in recent weeks, stock prices of those involved have fallen on the news — which is “clouding the prospects for further consolidation” in the industry. “While Washington is removing regulatory barriers to deals, and the boost to profits from lower taxes is giving managers more financial firepower to pursue them, shareholders are far from convinced.”
“To see a stock market reaction like that is bad for bank M&A,” said Brady Gailey, an analyst at Keefe, Bruyette & Woods.
Nothing new under the sun: A study by the Bank of England finds the “seven sins of finance have been repeated for centuries, as fraudsters carry out the same tricks to rip off investors despite tightening levels of regulatory scrutiny and advances in technology.”
No biggie: The belief that “people in the U.K. are more likely to get divorced than split with their bank” is getting credence following the relative lack of customer fallout after “one of the most expensive IT problems in British banking history.” TSB, which botched the transfer of several million accounts in April due to technology problems, lost a “puny sounding” 6,000 net customers in the second quarter. While 26,000 customers left the bank, 20,000 opened new accounts or switched to TSB.
Not my responsibilty: Barclays’ U.S. head of foreign exchange trading wants American criminal charges that he defrauded Hewlett-Packard dismissed. Robert Bogucki, who has been on leave from the bank, says it had no fiduciary responsibility when it handled a £6 billion currency transaction for HP during its takeover of British software maker Autonomy. “The case will provide a fresh test of whether investment banks have to act in the interests of large corporate clients when providing them with complex financing products and services like foreign exchange swaps.”
New York Times
Welcome wagon: Small countries and territories like Bermuda, Malta, Gibraltar and Liechtenstein are working to “make themselves more welcoming to cryptocurrency companies and projects. Becoming a crypto center has many potential upsides, including jobs and tax revenue. But the drive to be a crypto nexus also comes with significant risk. Hackings and scams have followed the industry everywhere it has gone. And the cryptocurrencies are hardly stable, with the prices of most having plunged in 2018 after skyrocketing last year.”
“I think companies are spending money in the wrong way. A lot of companies try to chase that next silver bullet — artificial intelligence being a great example — and they put way too much money into it way too early. They could take that money and put it into improving basic cybersecurity hygiene, which would do much more to protect their company. It needs to be cost-effective security, not security at any cost.” — David Stender, chief security officer at M&T Bank Corp.