Morning Coffee: 23-year-old analyst gets early morning wakeup call from the Feds. J.P. Morgan M&A bankers are partying
While there aren’t any specific guidelines to insider trading, most offenders at least wait until the ink dries on their first set of business cards before taking a swing. The latest example seems to test that theory. A 23-year-old RBC Capital Markets analyst has been busted for allegedly trading on non-public information just eight months into his professional career.
Bill Tsai, who just last year was the student body president at NYU’s Stern School of Business for undergrads, was arrested on Sunday morning on charges that he traded ahead of the April acquisition of Electronics for Imaging Inc. by private equity firm Siris Capital Group. He learned of the impending $1.7 billion acquisition from his work at RBC, which included updating and circulating a confidential internal report that tracked client deals, reports Bloomberg.
Tsai allegedly purchased call options on Electronics for Imaging in the weeks leading up to the deal through an investment account he concealed from RBC. The near 30% jump in the company’s share price on the day of the acquisition resulted in a $98,750 gain for the accused, according to court records.
Tsai interned for RBC in New York in 2017 but didn’t start as a full-time analyst until last summer following his graduation from Stern, one of the biggest feeder universities for investment banks. In a bit of cruel irony, Stern’s website on Tuesday still hosted a transcript of an interview Tsai gave that that included his advice for first-year students. “Hold on to your values,” he said, according to Bloomberg. “I think the biggest thing is that you learn so many things in school. That’s a beautiful part of the school, but it’s to figure out what you believe in.” Delete…
RBC, which is not accused of any wrongdoing, said it had suspended the 23-year-old. In addition to criminal charges, Tsai is facing a civil suit from the U.S. Securities and Exchange Commission.
Elsewhere, a group of J.P. Morgan bankers have reason to celebrate. Despite the overall lackluster environment for big M&A deals, the firm is set to earn the largest-ever individual bank fee for selling a company. JPM will collect $123 million for advising Allergan on its proposed $63 billion sale to AbbVie, pending the completion of the deal.
While J.P. Morgan bankers surely worked hard on the deal, it appears that they didn’t have to work all that long on it, at least if we’re talking weeks, not hours. (They probably never slept). If you believe the Allergan proxy filing outlining the deal, the first key point of contact occurred on March 13 when the two CEOs shared a phone call to discuss “a variety of potential strategic opportunities” for Allergan, according to Fierce Pharma. AbbVie CEO Richard Gonzalez mentioned he was open to a “strategic relationship,” which led to an April 22 meeting between himself and Allergan Chief Executive Brent Saunders. The mega-deal was announced just two months later. Not bad work if you can get it – and stay awake for two straight months.
Commerzbank has combined its corporate finance and fixed income, currencies and commodities (FICC) businesses within its capital markets division. FICC head Roman Schmidt will oversee the new group. (The Trade)
Senior bankers who have been paid in shares that haven’t fully vested have likely lost more than a few dollars this month. Financials stocks are getting throttled through the first two weeks of August. (WSJ)
Companies preparing to go public may soon look to limit the number of banks they rely on following a new study that suggests fewer underwriters lead to higher first-day returns. (Financial News)
The Trump era has coincided with “three years of misery” for many Google employees, who don’t have near the same level of trust in the company and its leadership as they once did. (Wired)
The head seat at the Municipal Securities Rulemaking Board will open up at the end of September when longtime chief Lynnette Kelly retires. This may not sound like huge news, but the role pays more than $1 million, making it one of the more lucrative jobs in all of public service. You also get to oversee the market for state and local bonds, which sounds fun. (WSJ)
“Intuitively, anecdotally, and scientifically, PowerPoint may be the worst business tool every created.” (Inc)
“Maybe the only thing worse than being called a pedophile is being called a hedge fund manager,” Jeffrey Epstein once told Fox Business reporter Charlie Gasparino, “with a slight laugh.” (Dealbreaker)
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