Financial Services - Mahony Partners

May

2012

The Facebook IPO Trainwreck

No one is covering themselves in glory in the aftermath of the Facebook IPO. Lead underwriter Morgan Stanley is battling allegations that it priced the deal too richly. Facebook insiders are being called greedy for the last-minute increase in the number of shares they sold in the offering. Facebook’s management is being criticized for signaling analysts to lower their revenue estimates just days before the deal priced – ... Read More

May

2012

What’s Next for the FX Lawsuits Against State Street and Bank of New York?

Financial Services, Taking & Managing Risk

Although it didn’t make the headlines last week, State Street suffered a setback in its long-running legal dispute over the fees it charges clients for foreign exchange services when a District Court judge in Boston denied its motion to dismiss the suit. State pension funds in Arkansas and California have sued State Street, alleging that they were for years systematically overcharged by the bank for foreign exchange transactions. State Street has not set aside a reserve against potential claims in these cases, according to a regulatory filing, and its public sta... Read More

May

2012

Misreporting CEO Pay

Financial Services, Media

This is the season for tallying CEO compensation, and for shaming those who profited while shareholders suffered. I’m no defender of high CEO pay, but much of the reporting on it is inconsistent at best, and in many cases it’s highly misleading. The problem arises from combining two things that should be separate: pay granted by the board and stock gains taken by the executive. (more…) Read More

Apr

2012

At Barclays, Inaction Speaks Louder than Words

Crisis, Financial Services

The Barclays annual shareholder meeting last week was a loud and lively affair, with howls of protest directed at CEO Bob Diamond and Chairman Marcus Agius over the bank’s pay practices. Here’s how it was reported by the New York Times: "The atmosphere at the meeting was hostile from the start, and the speeches were repeatedly interrupted by hecklers. Mr. Diamond was booed as soon as he stepped on the stage to take his seat, and when Mr. Agius said Barclays had “made progress” over the last two years in accepting that “remuneration levels ... Read More

Apr

2012

The Rise of the Undead: E.F. Hutton Returns

Advertising, Financial Services, Taking & Managing Risk

E.F. Hutton is set to return to the brokerage world, according to a report in The Wall Street Journal. Backed by former Hutton executives, the long-dormant name is being revived and the firm is set to launch later this year. E.F. Hutton’s return is a measure of how badly damaged major financial brands are in the aftermath of the financial crisis. Although Hutton was tarnished by a check-kiting scandal in the 1980s, the brand retains wide public recognition and favorability. Given the public’s dismal regard for financial firms today, it wouldn’t surprise me to see other dormant ... Read More

Apr

2012

Throwing Softballs at Henry Kravis

Financial Services, Taking & Managing Risk

I must have missed this Reuters interview with KKR co-founder Henry Kravis last week, which isn’t too surprising because it didn’t make many waves. Based on an interview with Reuters Editor-in-Chief Steven Adler, it is the very definition of a puff piece. The article barely touched on whether Kravis believes the favorable tax treatment enjoyed by private equity should be allowed to continue: Kravis didn't say what he thought the tax rate on carried interest should be, though the company has said many times that an increase in the tax rate would be negative for the firm and its inve... Read More

Mar

2012

A Damage-Control Weekend for BATS and Jon Corzine

Crisis, Financial Services

It was a busy weekend for damage control, with two examples of executives who tried to regroup after enduring very bad news. First, there was an effort by former MF Global CEO Jon Corzine to counter a memo that emerged late last week that said Corzine authorized the transfer of client monies to J.P. Morgan. The memo’s contents, first reported by Bloomberg, would appear to contradict Corzine’s sworn testimony before Congress that he did not approve such actions in the chaotic, final days of the firm. Corzine’s team (presumably led by his lawyers) pro... Read More

Mar

2012

Liam McGee Still Needs a Communication Strategy

Crisis, Financial Services

Hartford Financial CEO Liam McGee on Wednesday announced plans to break up the company, largely along the lines recommended by hedge-fund activist John Paulson, whose funds own about 8.5% of the insurer. It looks like McGee never put up a serious effort to counter Paulson’s recommendation to separate Hartford’s property and casualty insurance business, despite saying such a split faced regulatory and market “challenges.” In an investor presentation Wednesday, McGee did a pretty good job of describing t... Read More

Mar

2012

Was the New York Times at Fault for its Handling of Greg Smith’s Letter?

Crisis, Financial Services

Now that we are in day two of the Memo that Shook Wall Street - the most famous resignation since Jerry Maguire’s “mission statement” – it’s worth asking whether the New York Times has anything to answer for in this episode. Landing a prominent article on the Times op-ed page doesn’t happen overnight. Unlike the news pages, which are designed to cover breaking news quickly, an op-ed takes several days if not weeks to produce. There’s internal bickering among the Times’s editorial-page editors over which issues and writers will appear on its coveted pages. Then there’s usually a bit of trimming and primping - usually without the writer’s involvement - as the submitted piece gets ready... Read More

Mar

2012

Welcome to Goldman Sachs, Mr. Siewert – Update

Crisis, Financial Services

In an earlier post, I suggested that Goldman send a note to its employees to respond to Greg Smith’s public resignation letter. It appears my advice was taken. Goldman chiefs Lloyd Blankfein and Gary Cohn did indeed send a memo (perhaps I'll send them a large bill). It was very well done. Here’s why: It used data, not opinion. Goldman was able to cite its employee survey data to demonstrate widespread support for ... Read More