FDIC eyeing bank dividends; Morgan Stanley sued by former diversity head
Receiving Wide Coverage ...
Not going quietly
Morgan Stanley managing director Marilyn Booker, the bank’s former head of diversity, is suing the bank, “saying it hadn’t done enough to promote people of color and that it fired her in December for pushing for it to move faster,” the Wall Street Journal said. “She said in a court filing that her budget for diversity efforts was repeatedly cut, that she was ‘trotted out’ as a token minority at public events, and that she was belittled by white colleagues while watching more than a dozen black executives leave the firm since 2017.”
“We strongly reject the allegations made in this claim and intend to vigorously defend ourselves in the appropriate forum,” the bank said, adding that it was “steadfast in our commitment to improve the diversity of our employees and have made steady progress—while recognizing that we have further progress to make.”
Booker’s complaint says “only about 100 of Morgan Stanley’s 16,000 financial advisers are black, while there are only 41 black managing directors among the thousands of managing directors across the group.” CEO James Gorman and Barry Krouk, the chief administrator of its wealth management division, were also named as defendants, the Financial Times said.
“At first, Ms. Booker tried to handle her separation from the firm quietly,” the New York Times reported. “She continued to offer help and advice to black employees who reached out to her. But this month, as she watched the nationwide protests over police brutality and the widespread inequality that black Americans endure, she decided it was time to speak up.”
Booker said she was fired “after she had spent months outlining a plan to address the firm’s lack of diversity and what her lawsuit referred to as the company’s toxic workplace culture for employees of color,” the Washington Post said. “Booker alleged that the firm’s senior leadership initially feigned interest and support in her efforts but ultimately refused to listen to her plan and instead, ignored and evaded her.”
Wall Street Journal
The European Union has launched a formal antitrust investigation into Apple’s Apple Pay service, “escalating the bloc’s broader campaign to curb Silicon Valley giants’ alleged attempts to corner markets and squash rivals. In its announcement Tuesday, the European Commission, the EU’s executive arm, said it would examine how Apple allows only its own Apple Pay service to use the no-contact payment system built into Apple devices. The EU has fielded informal complaints that Apple has abused its control of Apple Pay to force app developers to use its system rather than those of rivals.”
The U.K.’s Serious Fraud Office “has ended its probe into bank note producer De La Rue PLC, saying Tuesday that the evidence in the case doesn’t meet the threshold for prosecution. De La Rue, which makes bank notes for governments around the world and produces identity documents such as passports,” said last November that it was cooperating with the investigation.
“After an extensive investigation and a thorough review of the available evidence, the SFO said the case didn’t meet the agency’s test required for bringing charges.” The agency was looking into the company’s alleged role in corruption in South Sudan.
The Federal Deposit Insurance Corp. “said it is monitoring U.S. banks’ dividend policies after they declared payouts totaling almost twice their earnings in the first quarter, eroding capital cushions as the coronavirus crisis took hold. The country’s 5,100 lenders and savings institutions declared dividends of $32.7 billion for a quarter when they made profits of $18.5 billion — 70% less than the same period the year before, the FDIC said.”
“We’re certainly looking at the banks’ payments of dividends and monitoring what’s going on there,” FDIC chair Jelena McWilliams told reporters.
More than half of all banks reported a decline in annual net income during the quarter, American Banker’s Brendan Pedersen reports. A big driver of the profit decline was a dramatic increase in reserves banks set aside to prepare for future losses.
Let the cuts begin
HSBC is “pressing ahead with a broad overhaul that will include 35,000 job losses, reviving a program of job cuts it put on hold three months ago,” the FT reports.
“The reality is that the measures and the change we announced in February are even more necessary today,” according to a memo from CEO Noel Quinn. “We could not pause the job losses indefinitely — it was always a question of ‘not if, but when’.”
The pandemic is creating a “permanent” shift away from credit to debit card spending, and a continued move to digital spending from cash, Visa’s European CEO Charlotte Hogg told the FT.
Wirecard, the “high-flying” German payments company that has been accused of shady accounting practices, has asked the High Court in London to dismiss a civil suit brought by former shareholders in an Indian payments company who claim they were defrauded when Wirecard bought the firm in 2015. Munich prosecutors are also looking into the transaction, in which Wirecard agreed to buy the Indian company “for €326 million just weeks after it changed hands for €36 million.” Wirecard, which denies any wrongdoing, is scheduled “to release delayed full-year results on Thursday.”
“My story is the same story as those of many black people on Wall Street. Our fate has been tied to the goodness of whatever white person is in charge. That is no way to have a career.” — Former Morgan Stanley managing director Marilyn Booker, who is suing the bank for racial and pay discrimination after she was fired in December.