Morning Coffee: Barclays banker makes the dumbest joke in history. The new low-effort way into a hedge fund career
There are some things in banking that you shouldn’t joke about; the standard categories of “banter” that shade into discrimination or harassment. But there are some things in banking that you really really shouldn’t joke about.
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Matthew Humphrey, a former assistant VP in Barclays’ investment bank, discovered this the hard way. Apparently, there was a problem with some client fees and, in a light hearted spirit of fun, he suggested that he was “half tempted to just correct this quarter and move on”. He also said to a junior banker that the best time to disclose the error would be after one of them left Barclays.
Humphrey recognises, looking back from the perspective of having been fired, that he “misjudged the situation”. Not everyone gets English humour, and you can sort of see how, starting from a compliance mindset, this might have been interpreted not so much as a sardonic and understated witticism about the complexity of banking life, and more as a direct instruction to fiddle the numbers.
Barclays seems to have taken the humourless view, with one of its lawyers saying that “It is the dishonesty rather than the breach that is the issue” and “It was not a joke, rather an instruction not to escalate”. This is now all coming out in an employment court, as Humphrey is suing Barclays over the joke, claiming that nobody took it seriously, and that management took it all out of context because it wanted to get rid of him after he took sick leave.
The truth will presumably come out, but it’s a good rule of thumb to assume that if you ever find yourself in the position of wanting to use the phrase “out of context”, this is a good sign that you’ve done something dumb. After all, most of the time, the context is just more of the same garbage. Banking is an industry that rarely leaves its comedians short of material, so it might make sense to focus on subjects where there’s no danger of being mistaken for someone who might be about to commit a crime.
Elsewhere, if you want to manage your own hedge fund, the usual career pathway is to build up a reputation on the sell side, then move to a pod shop, put together a track record and finally go through the unremitting slog of raising money. Or, alternatively, you could put together a “manifesto” on a website, go viral and immediately get $1.5bn hurled at you.
Welcome to the world of trendy thematic investing; Leopold Aschenbrenner is the 23-year old AI influencer, and his new fund is called “Situational Awareness”. Apparently he “briefly” worked at OpenAI (since he’s 23, he hasn’t worked anywhere other than briefly), and believes that by being based in San Francisco and talking to a lot of billionaire podcasters, he’s going to do much better than New York veterans at picking stocks that will benefit from the AI revolution and those that will be left behind.
Long-short equity investing is a tricky discipline which has a nasty habit of destroying reputations, but given the amount of money he’s raised (with significant lock-up periods), Aschenbrenner is likely to come out rich no matter what. Good luck to him, and also to the fantastically named “Blaze O’Byrne”, who is leaving Citi Ventures to launch his own AI-driven venture. Let’s just hope that the space doesn’t get discredited too quickly by all the quick-buck merchants who have already jumped on the trend and started launching “AI powered” hedge funds with no AI, and all too often no real fund.
Meanwhile…
Almost 40% of takeovers in the UK end up getting reported in the media before their official announcement. This is kind of ridiculous, and both clients and the Takeover Panel are beginning to crack down on their loose-lipped bankers. (City AM)
Macquarie Bank, the Australian “millionaire factory” spends an even greater proportion of its revenue on tech investment than the famously high-spending JP Morgan (13.4% versus Jamie Dimon’s 10%). As with the employee compensation, shareholders are beginning to ask whether they’re getting value for money. (AFR)
After a pilot programme last year, Jain Global is launching its first proper internship class, with 21 students across its five international offices. (Financial News)
It’s hard to say whether this is a sign of market conditions or not; maybe it’s just a coincidence that Bao Fan, the founder of China Renaissance Holdings, was imprisoned in 2023 just as the APAC IPO market started to fall apart, and that now, with IPOs returning, he’s been released. (Guardian)
Another possible sign of the market outlook – Erich Bluhm, Goldman Sachs’ head of financial institutions ECM coverage, is retiring after 18 years at the bank, and is apparently “not going to another institution”. (Bloomberg)
The US super-boutiques’ assault on European investment banking has now reached the stage at which they’re able to poach from each other. Technology banker Mathijn Queis has gone from Perella Weinberg to become a partner at Evercore. (Financial News)
A very strange story of oil trading and people who might or might not have claimed to be CIA spies – having been sanctioned for dealing with Russia, Niels Troost is suing his former business partner. Part of the struggle between them appears to have been carried out through podcasts. (FT)
“Accidental” compliance breaches and a sudden resignation for personal reasons – the circumstances of the latest vacancy on the Federal Reserve Board seem really confusing. (WSJ)
What’s it like to be a financial historian and an expert in the past history and structure of financial bubbles, when half of the people you meet at parties are crypto dads who are convinced it’s different this time? Quite awkward, apparently. (FT)
If you want to teach poker to a four-year-old (and why wouldn’t you?), it’s better to start off with one card and teach them how to bluff, rather than starting with the list of hands and teaching them how to calculate odds. (Bloomberg)
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