Morning Coffee: Intense Deutsche Bank trader with $140m bonus seeks revenge. Quants are having a hard time

When Tom Hayes and Carlo Palombo had their criminal convictions for conspiracy to defraud by rigging interest rates overturned earlier this week, it always seemed likely that other traders caught in the legal net might try extricating themselves too. Hayes himself is already campaigning for it. “The other seven convictions — they all need to go,” Hayes said yesterday. At least four of those convicted are all for it.

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The Financial Times reports that Jay Merchant, Jonathan Mathew and Philippe Moryoussef, all from Barclays, and Christian Bittar from Deutsche Bank are also planning to appeal their convictions. Bittar is a legend.

While Deutsche Bank's macro traders didn't do badly in the second quarter according to yesterday's results, none of them are likely to be paid this year like Christian Bittar was when he was 36 years old.

For several around the financial crisis, Bittar was one of the most successful traders in London. He made nearly €2bn in audited profits for Deutsche Bank over a five-year period and - unusually even at the time - negotiated a percentage pay deal from the German bank by threatening to leave for a hedge fund. In 2008, aged 36, he received a $140m bonus. Aside from this, at Deutsche Bank Bittar was known for being intense, softly spoken and alternately eating boiled eggs or junk food. 

In 2011, however, this way of life came to an end. Deutsche Bank fired him and he lost $50m in unvested stock. In 2018 the FCA fined him £6.5m. The same year, aged 46, Bittar was sentenced to five years and four months in prison.  His wife was reportedly "inconsolable." He got out after 23 months.

Now aged, 53, Bittar - who pleaded guilty in 2018 - has a chance to avenge himself through the courts. It's not clear what he's been doing since he was released in 2020, but Bittar has never been a big spender. He grew up in Senegal before getting into a top French Grande École and even at the height of his career lived in modest homes, drove a standard car and wore scruffy clothes. When he initially got out of prison, he was hanging out with his family in France. 

There are suggestions that Hayes, currently on holiday, may come back and pursue compensation. "All I would say is that everyone in the US who had their convictions overturned, almost to a man, sued their former employers," Hayes said this week. If Bittar overturns his conviction, he could consider doing the same thing. Deutsche Bank may want to start saving now. 

Separately, quant hedge funds are having some issues. After hiring hundreds of people and expanding into America, Business Insider reports that Qube Research & Technologies lost 5% in July, although is still up double digits year-on-year. 

Qube isn't the only place with problems. Cubist, Two Sigma, Man AHL and Renaissance Technologies are all floundering too. The problem is an 'accumulation of small losses over a period of weeks', which is unusual. The danger is the increased 'unwinding of crowded trades.' 

"It's survival of the fittest, basically," one quant trader told Business Insider. "Who is going to have the stomach to ride this out and stick to their bets?" Quants might wish they were working on something simple like model validation instead.  

Meanwhile

If you're a junior banker at Lazard you won't be made to attest that you haven't accepted a private equity job. (Bloomberg) 

Tom Hayes might get a job in Hong Kong. “I’ve got friends who run funds over in Hong Kong who I might be able to go and work with. I’ve got no idea right now.” (Bloomberg) 

Deutsche Bank reported its strongest second-quarter profit for nearly two decades, at €2.4 billion pre-tax. (Bloomberg) 

Deutsche Bank shares rose 6% yesterday. (WSJ) 

Apollo is building a team of 50 insurance specialists in Zurich and is moving some people from London there. (Bloomberg) 

Everything you've ever wanted to know about private equity, in the form of a fantasy Wonderland. (PE Laid Bare) 

Power posing, or the idea that taking a couple of minutes to adopt an expansive pose can boost your confidence and your performance in a job interview, turns out not to work. (FT)  

Optimistic people have similar thought processes. Pessimists are idiosyncratic. (Nature) 

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