Receiving Wide Coverage ...
Burying the News 101: It's a PR trick as old as Wall Street. If you're going to release ugly news, do it when nobody's watching. That appears to be the play Citigroup (NYSE:C) called late Friday when just before Veteran's Day weekend it disclosed that its recently ousted chief executive, Vikram Pandit, will receive $6.7 million in pay for 2012. That's on top of $8.8 million for 2011, bringing Pandit's two-year total north of $15 million, notes the Financial Times. Pandit's right-hand man, John Havens, who was forced out at the same time from his position as Citi's president and chief operating officer, will receive $6.8 million for the current year. Pandit's payout is the latest upswing in what has proven a highly volatile paycheck during his Citi tenure. The banking company paid $800 million for the former money manager's hedge fund, Old Lane Partners (which it promptly shut down), prior to naming him CEO. Pandit later agreed to work for $1 in 2010 as Citi struggled to survive with the help of a $45 billion government bailout. As CEO, Pandit shrank and stabilized Citi'’s operations but was also criticized for a number of miscues. They included submitting a request to pay a shareholder dividend that was rejected by regulators. His own pay package was also rejected by Citi shareholders earlier this year. Citi Chairman Michael O'Neill was widely credited with orchestrating an October surprise and firing Pandit and Havens one day after the company released its quarterly earnings. On Friday, O'Neill said in a written statement that "Vikram steered Citi through the financial crisis, realigned its strategy, bolstered its risk-management processes and returned it to profitability ... We remain grateful for [Pandit's and Havens'] contributions and wish them well." To the extent that they're noticed, the payments to Pandit and Havens are likely to bolster Citi's reputation for miscues within its senior ranks and boardroom. Just a year ago, Citi's directors awarded Pandit a multimillion-dollar pay package to ensure he'd remain at the helm for at least four more years, the Journal notes. Since Pandit's departure "the mood among some senior executives has been grim," the New York Times reports, citing several people close to the bank. "The executives felt that the board's actions last month were particularly brutal and humiliating to Mr. Pandit, considering his role in reviving the bank." It seems the mixed messages from Citi are destined to continue. Pandit received nearly $7 million in performance pay for the current year, but he will forego severance and is prohibited during the next year from working for 13 rivals. They include Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC). New York Times, Wall Street Journal, Financial Times
Wall Street Journal
What would Jed Rakoff say? Probably something unfit for print. That, anyway, is a fair guess regarding the paper's report that the Securities and Exchange Commission is planning to extract a settlement from JPMorgan Chase over the allegedly fraudulent sale of mortgage bonds, while neither requiring the firm to admit wrongdoing nor charging any employees. Rakoff, otherwise known as "Judge Dread," is the U.S. District Judge for the Southern District of New York who made a name for himself lambasting similar pocket a settlement, declare victory and go home deals. That included one between the SEC and Citigroup. "Why is [no admission of liability] a sensible way to go instead of establishing what the facts are?" Rakoff asked the SEC in that case. "Last time I checked, anyone can make an allegation." The SEC apparently has taken note that Rakoff was later overruled on appeal for overstepping his authority. It now intends to require JPMorgan Chase to pay a significant financial penalty under a deal that has been approved by SEC’s staff but not by its five commissioners, the Journal reports. The agreement is expected to be the first in a series of enforcement actions related to Wall Street's manufacture and sale of mortgage-backed securities, it added, again citing people close to the investigation. For the individuals involved in the deals the heat is still on, however. The Federal Housing Finance Agency, in a lawsuit against J.P. Morgan last year related to more than $33 billion of securitizations by the bank and companies it owns, named 42 individuals who had signed the certificates for the deals. Robert Khuzami, the SEC's director of enforcement, also vowed that the agency will "take enforcement action against individuals whenever the law and the evidence justifies doing so."
Financial Times
Another Swiss miss may be on the way. The Financial Times reports that UBS shareholders are applauding management's plans to take an ax to its troubled investment banking division and focus more intently on lucrative--and less risky--wealth management. For Swiss giants UBS and Credit Suisse (CS), it's proven a tried and true formula over the years. The pair ranked one and two among global banking Goliaths in 2011 in the percentage of pretax profits derived from wealth management, the FT says. "But there are serious challenges in wealth management too – not least those arising from the struggle between Switzerland and its neighbours over the Alpine state's controversial bank secrecy laws," it reports. Here in the U.S., there's the sordid tale of UBS's whistleblower Bradley Birkenfeld and tax-dodging antics that included smuggling diamonds out of the country in toothpaste tubes. In September, UBS's Paris headquarters was raided by local police in a separate investigation into alleged tax evasion. Last week Mannheim, Germany, prosecutors said they were investigating whether UBS employees had helped clients in the country spirit money into Switzerland to evade taxes. Skeptics have long claimed that, at least with the ultra-rich to whom UBS caters, "wealth management" is actually a pejorative term for tax evasion, or in some cases money laundering. Global investment banks intent on replacing risky trading activities with coupon-clipping wealth management can count on plenty of scrutiny along the way. Financial Times
Elsewhere...
Twitter: Who is that averge Joe-looking guy in the jeans and T-shirt doing Hurricane Sandy cleanup duty next to the wheelbarrow? Why, it's Goldman Sachs (GS) Chief Executive Lloyd Blankfein, according to a post on the banking giant's Twitter feed. It's unclear whether the master of the universe took a company limo or the subway to his Rockaways work station, but the scenery was likely familiar along the way. Blankfein is, after all, himself Bronx-born and Brooklyn-bred.
