Morning Coffee: 25-year-old Big Four junior was just a bit naïve. American finance billionaires play at being English country squires
The word “professional” is used in the finance industry so much that it’s been practically robbed of all meaning. Most of the time, it’s just a synonym for “good behaviour” – if you show up on time, do your online compliance courses promptly and manage not to get in obscenity-laced social media arguments with the clients, you’re being professional.
But there is actually a specific meaning to the word, and if it becomes important to you, that’s a sign that events have developed suboptimally. Professional status means that you’re meant to have professional ethics; to know when you’re in a murky situation and to do the right thing. Most recently, Pratik Paw, until recently a 25 year-old junior auditor at Big Four firm KPMG, was brought face to face with this reality.
Pratik was a junior on the team responsible for auditing the outsourcing firm Carillion before it went bust. He was instructed by his boss to type up handwritten notes of meeting that was supposed to have taken place many months previously into a Word document, thereby creating the appearance that the meeting actually happened. Dutifully, Pratik did just that. He told the consequent tribunal that “I would have just carried out those instructions as quickly as I could to move on to my other work”.
The tribunal, unsurprisingly, didn’t commend him for this can-do attitude and enthusiasm for clearing a to-do list. It found – and this is worth memorising as something like it will no doubt appear on future compulsory online compliance courses – that he should have firstly asked why, and then secondly (when no convincing answer was possible) raised the matter with the “ethics and independence partner”.
It all seems so obvious in retrospect. However, justice has been tempered by mercy. The Financial Reporting Council wanted Paw to be banned from the accountancy profession for four years, and fined £50k. His lawyers pointed out that this was quite a life-destroying penalty to impose on a 25-year-old who should have known better, but who really wasn’t in a position where he was making the decisions. It would have been twice his annual salary at the time of the offence and would have wiped out his financial assets. The tribunal initially agreed that he should be given such a large fine as to force him to sell his matrimonial home.
In the end, they decided not to fine him, and to give him a “severe reprimand” rather than a ban, saying he’d acted “without integrity” but “not dishonestly”. It seems that they more or less bought his explanation; the tribunal had “considerable sympathy” for the position he was in. Pratik's superiors weren't so lucky. They all got suspensions and large fines.
The moral of the story seems to be that the “only obeying orders” defence works, up to a point. Pratik Paw has had his career put on hold for two and a half years and has a black mark on his record that will probably preclude being hired at a top firm forever. He’s kept his house, but only just. He would have been a lot better off today if he had acted like a real professional, rather than someone who wants to look good to his boss.
Elsewhere, the dwindling value of the pound sterling means that if your wealth is denominated in dollars but you’re a big Downton Abbey fan, there are some great opportunities to pick up bargains. A stately home like Conholt Park, with its 2,500 acre estate, is cheaper at $80m than an ice hockey team and comes with a surprisingly salacious backstory about its previous owner, a billionaire who divided his time between two such estates, with one mistress at each. Steve Schwarzman of Blackstone has already bought this one, but there must be others available.
Schwarzman’s purchase could also provide him with some decent sport. It’s “one of the hidden shooting gems of Southern England”, according to a company that used to organise package trips there. He can invite Crispin Odey round for a party if he wants. The flamboyant hedge fund tycoon has been featuring in a number of conspiracy theories related to his having previously employed Kwasi Kwarteng and more recently made a lot of money shorting gilts. But Odey says that he hasn’t been actively trading for months, having put his short positions in the summer then headed for the grouse moors.
Rumours suggest that Barclays might be the new power in Shoreditch. The contract with Tech Nation to run a government sponsored fintech accelerator was put up to tender recently, and there are reports that the big incumbent bank has won it, by promising large amounts of matching. Startup types are worrying about all sorts of possible conflicts of interest, although the final announcement hasn’t been made yet. (Sifted)
In echoes of similar cases in the banking industry, a 64-year old intellectual property manager at Apple was passed over for a retention award because, allegedly, it was felt that he was about to retire. Now he’s saying that was an unjustified and discriminatory assumption and is suing them. (Bloomberg)
The ”bad boy of ESG”, former HSBC responsible investing head Stuart Kirk, has started another argument with his former industry, with a LinkedIn post calling coal divestment pledges “immoral, negligent, and potentially harmful” (Financial News)
Russia’s defence ministry says that bankers and IT staff won’t be drafted in the “mobilisation” to fight in Ukraine. (Business Insider)
Another high profile departure at Credit Suisse – as well as Jens Welter, Danny McCarthy, the global head of credit products, has left. It’s almost as if there’s a big announcement affecting the investment bank on the way … (Bloomberg)
No more local takeaways for Barclays juniors; the pandemic-era perk of $25 worth of free food if you were working from home past 8pm is being withdrawn as part of the “back to the office” incentives. (Financial News)
Former equity analyst Geraint Anderson says that it’s a bad idea to allow uncapped bonuses for bankers – they are rarely grateful, they foster unhealthy competition and the bankers generally waste the money anyway. (The Times)
What is it about bankers and techno? (The Spectator)
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