Morning Coffee: Ex-UBS banker who rarely saw his children wanted $100m for firing. Deutsche Bank is still hiring, but only for one specialty
If you go into an arbitration asking for $107m, and come out being awarded $590k, then have you won or lost? The answer depends on a number of factors, including how much you spent on legal bills, and whether the higher figure was ever something you were expecting to get. It also often depends on features of the ruling which aren’t always made public, so it’s unlikely that anyone who doesn’t know Ryan Nelson personally will have much of a sense whether he’s celebrating or lamenting instead.
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Nelson was previously a UBS veteran, but he moved in 2018 to become global co-head of prime services at Credit Suisse. This was apparently not a great job; in a since deleted post, he said that “I travelled, worked very long hours (rarely home in time to see my kids for more than a few minutes at night and never in the morning) …Frankly, I was absent. Even when I was there I was dealing with work issues and constantly checking my phone.” And it got even worse in 2021, when he was dismissed along with a few other CS executives as a result of the $5.5bn losses taken in Archegos affair.
That’s obviously not a great thing to have on your resume, and indeed Ryan Nelson doesn’t seem to have any publicly available presence any more, other than his FINRA file. And it seems to be that FINRA file that was the subject of the litigation. Nelson's FINRA file is now going to say “Mr. Nelson was one of nine employees terminated, not for cause, in August 2021, after it became known that a business unit in which they held various executive positions sustained substantial financial losses”.
The news reports don’t say what the previous version was, but since various internal reports into Archegos have described the management of CS Prime Services as “lackadaisical”, “lack[ing in] competence” and “a failure to appreciate obvious and severe risks”, the guess would be that it wasn’t anything nice. This was presumably part of the reason why Nelson was suing – his claim was made up of $7m compensatory damages and $100m of “reputational harm and lost future income”.
It's clear from the numbers that FINRA didn’t think Ryan Nelson’s reputation was worth a hundred million dollars (or at least that it would have been if not for Credit Suisse’s actions). But it’s also clear, from the fact that they made an award and changed the wording, that they didn’t think that Archegos was all his fault. In this, they would be agreeing with the Bank of England and Fed, both of which found that the relationship with Bill Huang was managed out of New York, not out of London, where Nelson moved in 2019. Nelson’s only real contribution to the disaster was to go along with the promotion of a prime brokerage salesperson to be the risk manager responsible, and neither regulator seems to feel that deserved censure.
So it’s a form of rough justice; in one sense, Ryan Nelson has defended his reputation, but in other sense, the nature of the industry is that proximity to a smoking crater where billions of dollars ought to be is the sort of thing that tends to stick. Hopefully, he’s now got a more balanced lifestyle and is able to enjoy his family life a bit more, even if it is "far more exhausting than anything I have dealt with at work."
Elsewhere, 2025 is not yet turning into the job and bonus bonanza which optimists might have hoped for. But the wonderful phrase “hiring spree” is not completely disappeared from the markets. Deutsche Bank, for example, has just recruited four emerging market credit traders from Jefferies, including MD and LatAm specialist Justin Weinberg.
This looks like more of a strategic and franchise-building decision on Deutsche’s part than any particular hotness in the market – debt capital markets revenues are down in Latin America and MENA, and while emerging stock markets are at least up rather than down for the year to date, there’s no really strong economic trend. But Deutsche Bank has been aiming to increase its presence in flow credit, particularly in emerging markets. There are always pockets of activity, even in tough times.
Meanwhile …
Private credit does not exactly have a reputation for lots of warm and friendly characters – it’s where the phrase “creditor on creditor violence” was coined. So you have to be pretty hard work in that industry before people notice. Apparently, though, some counterparties are beginning to say that Prospect Capital, one of the original players in the industry, is just too mean to deal with. (Bloomberg)
There might be more job opportunities in the cybersecurity space. It seems that the current generation of LLMs are much more useful to criminals than in many other applications; their ability to quickly generate human-like text answers makes them a fantastic tool for phishing. (Business Insider)
It might seem odd to think that a big multistrategy hedge fund would pay seven figures for weather forecasters, but since their forecasts can be used in energy trading, commodities and even insurance risk, it makes sense. (Bloomberg)
Michelle Bowman is one of two Fed Board members appointed by the previous Trump administration, so she’s top of the running to be “America’s Next Top Bank Cop” (or “Vice-Chair for Supervision” if you want to be pedantic). (WSJ)
It’s not the last word for Andrea Orcel, but it’s certainly an important step – the ECB is apparently about to give regulatory approval for Unicredit’s shareholding in Commerzbank. (Bloomberg)
The upper house of the Swiss parliament has voted for Irish-style pay caps on bankers; a limit of between 3 and 5 million francs would make it quite difficult for many senior wealth managers to maintain their lifestyles. (Reuters)
A gradual “bulge bracket” seems to be developing among law firms. As well as making a play to take over the London “Magic Circle”, the biggest eight to ten US partnerships are hiring aggressively from one another; the latest big statement of intent has come from Paul Hastings, which has hired Eric Schiele from Kirkland & Ellis to be its global co-chair of M&A. (WSJ)
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