Receiving Wide Coverage ...
Where in the World are the London Whale Traders? The latest developments in the London Whale investigation may not make for a catchy a cappella tune, but the timing of a grand jury indictment and possible charges against the JPMorgan [JPM] traders at the focus of federal authorities' criminal investigation may hinge on the whereabouts of Javier Martin-Artajo and Julien Grout.
According to the gumshoes at the Wall Street Journal, "No one answered the door over the weekend at a London house listed under Mr. Martin-Artajo's name. Mr. Grout couldn't be reached at an apartment listed in his name. A man who works as a shoe cobbler and dry cleaner around the corner said the former J.P. Morgan trader used to be a regular customer but hadn't been around for about a month."
Both were believed to be in the U.K., which would have required U.S. officials to coordinate their arrest with U.K. officials. But Grout has been in his native France (which doesn't make a habit of extraditing its citizens) and Martin-Artajo is believed to be out of the U.K. on vacation.
According to Grout's lawyer, the trader returned to France shortly after losing his JPM job last December and even spent time this summer in the U.S., where his wife's family lives. "He has absolutely no intention of fleeing," his lawyer told the New York Times.
Meanwhile, JPMorgan is still expected to be weighing a settlement with the Securities and Exchange Commission to resolve civil allegations related to the $6 billion trading loss a deal that would likely include an admission of guilt by the bank, unusual for these sorts of deals.
Teller-Tale Sign of the Times: Amid the growing use of mobile-based and ATM technologies, banks are employing fewer tellers at their branches.
While banks are rolling out new hardware, like an ATM built by NCR Corp. that lets customers video conference with remote tellers from inside a bank lobby or drive-through, concerns about bank access for the elderly and disabled and a decline in entry-level banking jobs has some concerned about the unintended consequences of technological progress, reports the Dayton Daily News.
Lake State Credit Union in Minnesota is said to be using the same video ATM technology, while Wintrust Financial Corp., is testing technology at two ATMs that lets people pre-order cash using iPhones or Android devices.
The trend isn't exclusive to the U.S. In Europe, many small and remote communities must rely on monthly visits from buses that serve as mobile bank branches, the result of a shrinking network of banks throughout the continent.
Banks have shut about 20,000 branches across Europe in the last four years, including 5,500 last year and 7,200 in 2011, according to a Reuters analysis of European Central Bank data.
Wall Street Journal
The Journal details "the fortunes made and lost via all-or-nothing trades seeking to game decisions by regulators and other government officials." From GSO Capital Partners' $500 million bet that bond insurer MBIA would settle with banks and regulators over issues surrounding the U.S. housing bust, to hedge-fund firm Appaloosa Management, which made "windfall gains betting on crisis turning points," like the conservatorship of Fannie Mae and Freddie Mac and the government's decision not to not to nationalize struggling banks in 2009.
"On several occasions GSO's betincluding purchases of MBIA shares and bonds and agreements to pay trading partners if the company defaulted, or have them pay GSO if it didn'tdove far into the red. The roller-coaster ride led to marathon weekend conference calls on which Mr. Richman defended his bet to GSO partners who pushed him to pull out," the paper reports.
New York Times
Bank fees from underwriting companies' initial public offerings are on the rise, having topped $1.7 billion in the U.S. this year. It's a boon for the likes of Citigroup [C], Goldman Sachs [GS] and JPMorgan Chase. But amid the growing appetite for IPOs, research analysts say they're feeling pressured to "say the right things to curry favor with a company's management and owners," according to the paper.
The analysts are expected to be independent of their investment bank's underwriting activities because they're relied on to provide clients with buy and sell recommendations on stocks. But companies (and their private investment owners) routinely interview banks' research analysts as part of the process for selecting an underwriter for their IPOs.
"Participants say company meetings with the analysts and bankers are held separately, but can happen within hours of each other, and banks rarely send compliance officers to monitor the discussions," the Times reports, adding that the Financial Industry Regulatory Authority is said to have opened an inquiry into the matter.
While research analysts may meet with potential clients of their banks to discuss broad industry trends, regulations have prohibited them from pitching underwriting services since the practice was blamed for contributing to the rise and fall of the dot-com bubble. The move was meant to curtail analysts from issuing overly optimistic reports about soon-to-be public companies to help the investment banking side of their bank win an underwriting job.