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Morning Coffee: Vomiting in elevators, urinating off roofs: the worst employer in finance. Michael Klein's unlikely return

Bankers often travel to meet clients, and sometimes they do so in groups. Bankers also attend off-sites and conferences, which sometimes involve them staying together in hotels. On these occasions, inappropriate behaviour does occur, but for the most part people employed by major banks have got the message: strip clubs, drunkenness and lewd activities, particularly involving junior female colleagues, will get you fired. 

Employees at the US Federal Deposit Insurance Corp (FDIC), which is charged with regulating US banks, have not only failed to get this message, but have had their Overton window of acceptable behaviour shifted so far towards extremes, that merely attending a strip club with colleagues on a work trip is considered completely normal. 

The WSJ spoke to 100 current and former employees at the FDIC and their stories are a sorry testimony to the culture at the regulator, where staff are often on the road or training at the FDIC's own hotel and campus in Arlington. Female trainees complain of a drinking culture and relentless harassment by senior men touting dick picks and championing outings to strip joints. There's urinating off the roof and vomiting in the elevator, or vice versa. There's a tale of a compliance examiner who held a party in his room and became so drunk that colleagues felt they were trapped there and had to be rescued by security.

Women who didn't participate weren't promoted. Men who complained weren't heard. “It was just an accepted part of the culture,” says one former female employee at the regulator.

Nor does there seem much penitence among the perpetrators. One FDIC supervisor told the WSJ he'd attended a strip club with colleagues, but saw no reason why that was a problem. Another, who was demoted for his behaviour, said he hadn't invited colleagues to a sex cafe, just a strip joint.

The FDIC is saying all the right things. Harassment in any form is contrary to the FDIC’s values and our deep commitment to fostering a diverse and inclusive workplace,” a spokeswoman told the WSJ. The agency is all about creating, a “safe and equitable environment where all employees can feel valued and respected,” the spokeswoman added.  

Departed employees disagree. “There was no recognition that we were mistreated, no recognition that it was wrong, no recognition that the environment they placed us in was inappropriate,” says one former male examiner. 

It's conceivable that the regulator needs some advice from banks on how to improve its culture...

Separately, Michael Klein, the M&A banker who this time last year was on track to sell his boutique to Credit Suisse for $210m, making a small fortune for himself in the process, has settled for a less exalted future. 

The WSJ reports that Klein is launching a new investment bank focused on sports, media and entertainment deals. It will be formed by merging his existing advisory firm, M. Klein & Co, with Evolution Media Capital, a firm owned by the Creative Artists Agency. Klein says it's an opportune time.

It seems a curious departure for a banker previously known for oil and gas deals, but the Middle East sovereign wealth funds that love Klein are pouring money into sports and entertainment, so it presumably makes sense.


Schonfeld employees have no idea what's happening with Millennium. This is a problem because November 16 is the deadline for redemptions in many of Schonfeld's share classes. (Business Insider) 

People at EY in London are supposed to retire aged 60, which is a problem as Andy Baldwin, one of the contenders for the new head of the business, is aged 57. (Financial Times)  

Gaurav Grover, founder of Hong Kong-based Trikon Asset Management, is closing the fund to spend more time with his family. (Bloomberg) 

Kostas Bintas, the former co-head of metals at commodity trading giant Trafigura Group, is leaving the company after being demoted. (Mining) 

Trafigura Group shares rose 188% in its financial year to September, meaning 1,200 executives who own shares there made a huge gain. (Bloomberg) 

China Investment Corp (CIC) has a new head for its US office. Bai Xiaoqing was previously running private equity in Beijing. (Reuters) 

Banks are building geopolitical advisory units, but McKinsey & Co/, BlackRock and numerous think-tanks are all offering clients geopolitical insights already. (Financial News) 

Michael Hsueh, a FIG MD at Bank of America in Hong Kong is leaving after 20 years and on gardening leave. (Bloomberg) 

David Solomon at Goldman Sachs thinks deals will rebound next year but says interest rates and war in the Middle East are weighing on confidence. (Bloomberg) 

Morgan Stanley's stock is down 14% over the past three months. Goldman's is down 4.5%. (Yahoo)

Eisler Capital is going to lock up money so that clients can take out only 12.5% of their investment during each three-months period, down from 25% previously. Funds like Brevan Howard Asset Management, Marshall Wace and Millennium Management do this already. (Bloomberg) 

Living in Cornwall as an American in your 80s is a fine thing. (WSJ) 

AUTHORSarah Butcher Global Editor

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