Morning Coffee: 33-year-old hedge fund quant's vanished $20m+ bonus. Even French traders didn't want to go to Paris, at first
Last year, we reported on a chart that was doing the rounds on Xiaohongshu, a Chinese messaging site, allegedly showing the $23m pay of an unnamed Chinese quant working for an unnamed American hedge fund. The supposition at the time was that the quant in question worked somewhere like Two Sigma. The question now is, was that Jian Wu?
Two Sigma didn't respond to a request to comment, but if it was Wu, that bonus has almost certainly been withdrawn. Wu, who we estimate to be in his early 30s is the quant accused of tampering with Two Sigma's operating models to boost his profits and so boost his pay. The Wall Street Journal says he made $450m for some Two Sigma funds by his efforts, including funds that Two Sigma employees invest in. But a further $170m was lost from other funds which clients invest in, and Wu has been placed on administrative leave.
There's no indication how much Wu was paid for his efforts, but a 5% payout seems the least he could have hoped for given the 30% of pnl on offer at the likes of BlueCrest.
There are signs that Two Sigma was initially impressed with the work of Wu, who has based in New York City and who has a PhD from Cornell and a Bachelors degree from Tsinghua. Nearly a year ago, he was promoted to senior vice president at the fund, where he said he was running "a strong alpha generation team."
Two Sigma spotted Wu's alleged model-fiddling this summer, after correlations between its trading models suddenly increased. It's not clear where he is now, but he's presumably not boasting on any local messaging boards. Wu didn't respond to our request to comment.
Separately, non-French traders in Paris are getting on fine, even if they didn't much fancy the French city at first.
Matthieu Wiltz, head of JPMorgan's markets business in France, told the Times that JPMorgan has moved 300-400 people to Paris and that most of them didn't want to go there, including the French.
Now they're there, though, sitting on JPMorgan's 'ultra-modern trading floor behind the grand old Place Vendôme building', they're pretty content. The Times also spoke to Zoeb Sachee, Citi's head of linear rates trading and a graduate of Cambridge University, and to Saverio Michienzi-Rowedder, a 22-year-old Swiss student, who just joined Citi in Paris. Sachee, who still lists his location as London but who actually volunteered to move, said working in Paris equates to doing "the same job in a different city." Michienzi-Rowedder said he relished the opportunity of starting his career in Paris and that if he was asked to move to London he'd probably say no. "Paris is a ... growing financial centre; you can feel the dynamism here,” he informed the Times.
The enthusiasm for Paris comes despite the complaints from banks that it's difficult to find staff there because of the expatriate tax regime, which provides 30% of income tax-free for expats for eight years, but is removed if they leave for a new job. The local employment market is less liquid as a result.
Nonetheless, banks are growing.
Arnaud Fornas, head of France investment banking advisory for Jefferies, told The Banker, they now have, "around 45 Paris-based bankers, half of them trading floor professionals and the other half investment bankers,” after deciding to "expand meaningfully" three years ago.
JPMorgan now has 900 people in Paris. Goldman Sachs has 400. Citi has 400 and Bank of America has 400.
The Times reports that the agency 'Choose Paris Region' says 5,500 financial services jobs have been created in Paris since Brexit. However, the French city was aiming for 10,000 and 3,000 additional jobs have also been created in London during that interval, so London's pretty dynamic too.
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Meanwhile...
Jamie Dimon is selling JPM shares worth $141m, the first big transaction since he became CEO 18 years ago. It's being done for diversification and tax planning purposes. (Bloomberg)
Incoming Morgan Stanley CEO Ted Pick says the "forward pipeline has gotten sequentially bigger with each passing month," and that mid cap and large-cap M&A across industry groups were "seen as the most interesting part of the next cycle." (Reuters)
Pick, Andy Saperstein and Dan Simkowitz were each awarded $20m by Morgan Stanley. It's not clear why Saperstein and Simkowitz got the same as Pick - possibly as a consolation prize. (Financial Times)
Selling a career in fixed income: "The real reason to go into fixed income investing, I explained, is that you get to tell governments what to do. The rapid fall of UK Prime Minister Liz Truss just over a year ago showed the “bond vigilantes” are back." (Breaking Views)
Citi is letting 250 of its developers use generative AI and has used the technology to read through the 1,089 pages of new capital rules on the US banking sector. (Bloomberg)
NatWest shares initially fell 18% after it admitted to “serious failings” in the way its private bank Coutts treated Nigel Farage when it closed his account. (Financial Times)
Goldman Sachs set up a geopolitical advisory business called The Goldman Sachs Global Institute. It will be initially focused on geopolitical tensions and disruption from the rise of artificial intelligence. (Financial Times)
Sam Bankman Fried says he split up with Caroline Ellison because "she wanted more from [the relationship] than I was able to give,” that he did not “have the time or the energy” to live up to Ellison’s expectations, and that relationships were “not something I have been great at”. (Financial Times)
Sam Bankman-Fried says he knew “basically nothing” about crypto before starting FTX and that it was a mistake not to have a risk management team. (The Times)
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