Tag: Goldman

Indian-origin partner at McKinsey arrested; charged with insider-trading, BFSI News, ET BFSI

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By Yoshita Singh (Eds: Updating with more details) New York, Puneet Dikshit, a 40-year-old Indian-origin partner at management consulting giant, McKinsey & Company, has been arrested and charged with insider-trading and making illegal profits totalling over USD 450,000 in the US.

Dikshit, a partner at a global management consulting firm, has been charged with “illegally trading in advance of a corporate acquisition by one of the firm’s clients in September,” the Securities and Exchange Commission (SEC) said in a statement on Wednesday.

Dikshit, who was arrested on Wednesday and charged with two counts of securities fraud – violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder – faces up to 20 years in prison on each count, the Department of Justice said in a press release.

US Attorney for the Southern District of New York Damian Williams and Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation Michael Driscoll announced the unsealing of the criminal complaint against Dikshit.

The SEC’s complaint, filed in federal district court in Manhattan, alleges that in the course of providing consulting services, Dikshit learned highly confidential information concerning The Goldman Sachs Group Inc.’s impending acquisition of GreenSky Inc (GSKY).

According to the SEC’s complaint, in the days leading up to the acquisition announcement on September 15, 2021, Dikshit used this information to purchase out-of-the-money GreenSky call options that were set to expire just days after the announcement.

He sold all of the call options referencing GSKY on September 15, 2021, realising profits of over USD 450,000, a return on investment of approximately 1,829 per cent.

The SEC’s complaint further alleges that Dikshit violated his firm’s policies by failing to pre-clear these options purchases. “In total, Dikshit realised profits of more than USD 450,000 from his insider trading in GSKY options, a return on investment of approximately 1,829 per cent.”

“Dikshit knew or was reckless is not knowing that the information he had obtained from Consulting Firm and Goldman concerning the acquisition of GreenSky was material and nonpublic, and that he owed a duty to Consulting Firm and Goldman to keep that information confidential and to refrain from trading on it,” the SEC said.

The SEC said that by trading in GSKY securities on the basis of material nonpublic information that he had obtained from the consulting firm and Goldman, “Dikshit breached a duty of trust or confidence to Consulting Firm and Goldman.”

“As alleged, Puneet Dikshit, a consulting firm partner, exploited his access to material nonpublic information about a pending acquisition of GreenSky, Inc., to trade in GreenSky call options. This breach of duties to his firm and its investment bank client – and violation of the law – allegedly reaped the defendant nearly half a million dollars in illegal profits. Now Puneet Dikshit has been charged with serious felonies for his alleged conduct,” Williams said.

According to the allegations in the Complaint unsealed Wednesday in Manhattan federal court, GreenSky was a publicly traded financial technology company that provided technology to banks and merchants to make loans to consumers for home improvement, solar, healthcare, and other purposes.

Between on or about November 2019 and July 2020, and again between April 2021 and September 2021, Goldman engaged McKinsey to provide various consulting services related to its consideration of an acquisition of GreenSky and the post-acquisition integration of GreenSky.

Dikshit was one of McKinsey’s partners leading these engagements. In that role, he had access to material, nonpublic information, which he misappropriated and, in violation of the duties that he owed to Goldman and McKinsey, used to trade GreenSky call options.

He engaged in this trading between on or about July 26, 2021, and on or about September 15, 2021 – at the same time he was leading the McKinsey team that was advising Goldman about its potential acquisition of GreenSky.

At various times between on or about July 26, 2021, and on or about September 13, 2021, Dikshit purchased and sold relatively small numbers of GreenSky call options, which had expiration dates weeks or months from the time of purchase.

However, in the two days before the September 15, 2021, public announcement that Goldman would be acquiring GreenSky, he sold all of these longer-dated GreenSky call options and purchased approximately 2,500 out-of-the-money GreenSky call options that were due to expire just a few days later, on September 17, 2021.

After the deal was announced, he sold these calls and realised profits of approximately USD 450,000

Dikshit’s lawyers at Kramer Levin did not immediately respond to requests for comment, CNBC reported.

“We have terminated the employment of a partner for a gross violation of our policies and code of conduct. We have zero tolerance for the appalling behavior described in the complaint, and we will continue cooperating with the authorities,” McKinsey told CNBC news outlet.

“We allege that Dikshit breached duties to his employer and his client by misusing their confidential information for his own financial gain. Thanks to our trading analysis tools, we were able to move swiftly to hold him accountable for his actions and protect the fairness of our securities markets,” Joseph G Sansone, chief of the SEC’s Market Abuse Unit, said in a statement.

In 2012, former Goldman Sachs director and former Managing Director of McKinsey Rajat Gupta was sentenced to two years in prison after being found guilty in 2012 of passing confidential boardroom information about Goldman Sachs to then hedge fund founder Raj Rajaratnam. Gupta served 19 months in prison and was released in 2016.



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MOVES-Goldman hires Citi banker as co-head of investment banking in MENA

Banking & Finance

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DUBAI, Sept 5 – Goldman Sachs has hired senior Citigroup banker Jassim AlSane as its co-head of investment banking in the Middle East and North Africa region, according to two sources familiar with the matter.

AlSane, a Kuwaiti national, has spent 13 years with Citi where he has most recently been managing director in its investment banking unit, focusing on mostly Abu Dhabi and Kuwait, one of the sources said.

Goldman has also hired Omar AlZaim from HSBC as head of investment banking for Saudi Arabia, one of the sources said.

Goldman Sachs and HSBC did not immediately respond to requests for comment. Citi declined to comment.

Bloomberg reported the news of the appointments earlier on Sunday.

Goldman Sachs has been pushing to win deals in Saudi Arabia and Abu Dhabi, where initial public offerings (IPOs) and mergers and acquisitions are on the up.

It landed a lead role https://www.reuters.com/world/middle-east/abu-dhabis-adnoc-adds-goldman-sachs-lead-banks-drilling-ipo-sources-2021-07-01 in the IPO of ADNOC’s drilling unit, sources said in July, in it first such high-profile deal in the emirate since 2019.

Goldman’s investment banking unit was sidelined from any new business from Abu Dhabi more than two years ago after state fund Mubadala’s subsidiary filed a lawsuit against it to recover losses suffered through its dealings with Malaysia’s fund 1MDB.

The lawsuit was dropped last year.

In Saudi Arabia, Goldman is advising on the sale of Saudi Aramco’s gas pipelines stake sale and previously worked on Aramco’s IPO. (Reporting by Davide Barbuscia and Saeed Azhar; Editing by Pravin Char)



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Banks bulk up in Hong Kong as China business overshadows politics, BFSI News, ET BFSI

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HONG KONG – Some global banks, funds and other financial services providers say they are stepping up hiring in Hong Kong, in a sign the city’s unique position as a financial gateway to China is outweighing concerns about Beijing’s tightening grip over it.

Goldman Sachs Group Inc, Citigroup Inc, UBS AG and other banks are each hiring hundreds of people in the city this year, adding substantially to their existing ranks.

Citigroup, for example, has said it is bulking up its staffing by 1,500 people, including additional headcount and replacements in 2021, double the number of people it hired a year ago.

It has about 4,000 people in the city. A Goldman spokesman said the bank, which has about 2,000 people in Greater China, expects hiring in Hong Kong to be up 20% this year.

The Securities and Futures Commission, Hong Kong’s market regulator, is seeing a rebound in licenses it issues for people involved in asset management, securities and other financial activities, according to data on its website.

The total number of licenses it issued was up 1.7% at the end of March, compared with nine months earlier, and just shy of an all-time peak in 2019.

“Hong Kong has some unique advantages, and it will remain the gateway for many of our local and global clients to access China,” said Kaleem Rizvi, Head of Citi’s Asia-Pacific corporate bank.

Many financial companies slowed hiring last year, after protests against Chinese rule and a new security law imposed on the city to crush dissent by Beijing, as well as the coronavirus pandemic, six bankers, recruiters and other industry executives said.

The increased hiring plans of some major players show that they are now willing to live with the political risks.

“Everyone in the business community I have spoken with welcomes the peace and stability now, compared with the chaos of 2019,” said Weijian Shan, chairman and chief executive of Hong Kong-based private equity group PAG.

To be sure, politics remains contentious and unsettling for some finance professionals, some bankers have said. Some expatriate financial workers have left or considered leaving Hong Kong, along with thousands of residents of the former British colony.

Hong Kong police have asked some banks to hand over account details of opposition activists and politicians arrested under a stringent national security law imposed by Beijing, and the government has threatened jail time for bankers handling assets belonging to media tycoon Jimmy Lai frozen under the new law.

Hong Kong’s financial regulators declined to comment on banks’ hiring plans or some bankers’ disquiet about the political tightening.

CLOSE TO CHINA

Bankers and other financial services professionals interviewed by Reuters said much of the lure of being in Hong Kong comes from the city’s close ties to China and the business it brings.

That business is booming. Flows via the stock connect schemes linking Hong Kong with the Shanghai and Shenzhen exchanges rose to record highs in the first quarter of 2021.

Companies, mostly from mainland China, raised more money through Hong Kong listings in the first five months of this year than they did in the same period of the last four years combined, Refinitiv data shows.

Mergers and acquisitions in Greater China are the highest since 2018.

Anthony Fasso, Asia Pacific chief executive of global asset manager PineBridge Investments, said Hong Kong was adapting to the new realities.

“We believe that Hong Kong will remain a globally competitive international city at the doorstep of one of the largest and fastest growing economies in the world,” Fasso said.

HIRING SPREE

Besides Goldman and Citigroup, Swiss bank UBS hired 200 people in the year through March, which consisted of 20 new full-time staff compared to seven in the previously financial year, a spokesman said.

The bank took on 100 contractors and 80 graduates in the year to March. It was the highest number of graduate recruits to join UBS in more than 10 years. The bank has 2,500 people based in Hong Kong.

HSBC Holdings Plc has said it plans to add 400 staff in Hong Kong this year, part of its plan to recruit 5,000 people in the next five years in the region to wealth management in Asia.

Lok Yim, Hong Kong chief executive of Deutsche Bank AG, said the German bank was also planning on making further strategic hires, after a first quarter that had been its strongest in years.

“We are probably two to three times as busy now as we were late last year,” said Olga Yung, regional director at recruitment firm Michael Page in Hong Kong.



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Goldman offers new Bitcoin derivatives to Wall Street investors, BFSI News, ET BFSI

Personal Finance

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By Matthew Leising

Goldman Sachs Group Inc. is wading deeper into the $1 trillion Bitcoin market, offering Wall Street investors a way to place big bets.

The investment bank has opened up trading with non-deliverable forwards, a derivative tied to Bitcoin’s price that pays out in cash. The firm then protects itself from the digital currency’s famous volatility by buying and selling Bitcoin futures in block trades on CME Group Inc., using Cumberland DRW as its trading partner. Goldman, which still isn’t active in the Bitcoin spot market, introduced the wagers to clients last month without an announcement.

“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities,” said Max Minton, Goldman’s Asia-Pacific head of digital assets. The new offering is “paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”

Goldman Sachs, which restarted a trading desk this year to help clients deal in publicly traded futures tied to Bitcoin, said in March it was also close to offering private wealth clients additional vehicles to bet on crypto prices. But the push into forwards dramatically increases its capacity to help big investors take positions. The partnership with Cumberland underscores the bank’s willingness to work with outside firms to help it do so, according to people familiar with the matter, speaking on the condition they not be identified.

For years after its creation in 2009, Bitcoin was shunned by Wall Street banks, with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon once threatening to fire any of his traders caught buying and selling the digital currency. While Dimon later softened his tone, the banking world has long seen Bitcoin as a plaything for criminals, drug dealers and money launderers.

But client interest and Bitcoin’s astronomical price gains — reaching a high of almost $65,000 in April — have turned many bankers around, with Morgan Stanley making a Bitcoin trust product available to its customers and JPMorgan working on a similar offering.

“Goldman Sachs serves as a bellwether of how sophisticated, institutional investors approach shifts in the market,” said Justin Chow, global head of business development for Cumberland DRW. “We’ve seen rapid adoption and interest in crypto from more traditional financial firms this year, and Goldman’s entrance into the space is yet another sign of how it’s maturing.”

Banks are still wary of the regulatory challenges of holding Bitcoin outright. As derivatives settled with cash, the products Goldman Sachs is offering don’t require dealing with physical Bitcoin. In a similar way, the Morgan Stanley and JPMorgan trusts give customers access to vehicles tracking Bitcoin’s price while using a third party to buy and hold the underlying digital asset.

Goldman Sachs may next offer hedge fund clients exchange-traded notes based on Bitcoin or access to the Grayscale Bitcoin Trust, one of the people said.

“The crypto ecosystem is developing rapidly,” Chow said. “There is progress being made in offering ETFs, new custody providers coming online and optimism that regulatory efforts are coming into focus. It’s a great time to be in the space.”



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Wall Street banks beat earnings estimates, see a boom ahead, BFSI News, ET BFSI

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From just a year ago when they provisioned for billions of dollars anticipating huge loan defaults due to pandemic, Wall Street banks are now an ebullient lot.

On Wednesday, executives at Goldman Sachs, JPMorgan Chase and Wells Fargo posted a huge jump in earnings in the January-March quarter and delivered a bullish economic forecast.

Goldman and JPMorgan reported profits roughly five times as high as in the first three months of 2020, thanks to a combination of strong business results and a reduction in the amount of money they had put aside to cover losses on loans. Wells Fargo reported profits that were seven times as high.

JPMorgan

JPMorgan earnings skyrocketed 477% to $4.50 a share. Revenue climbed to $33.12 billion. But earnings got a big boost from JPMorgan releasing $5.2 billion from credit loss reserves.

Consumer banking revenue fell 10% to $6.7 billion. Investment banking revenue more than tripled to $2.9 billion. Fixed income trading revenue grew 15% to $5.8 billion, and equities trading revenue jumped 47% to $3.3 billion. Commercial banking rose 11% to $2.4 billion. Asset management revenue swelled 20% to $4.1 billion.

Goldman Sachs

EPS of $18.60 on revenue of $17.7 billion. Investment banking revenue jumped 73% to $3.77 billion. Fixed income trading revenue climbed 31% to $3.89 billion, and equities trading revenue surged 68% to $3.69 billion. Asset management revenue shot up to $4.61 billion vs. a negative $96 million a year ago. Wealth management revenue grew 16% to $1.74 billion.

Provision for credit losses was a net benefit of $70 million, compared with net provisions of $937 million a year ago.

Wells Fargo

EPS of $1.05 on revenue of $18.06 billion. Provision for credit losses decreased $5.1 billion. Consumer banking revenue was flat at $8.65 billion. Commercial banking revenue fell 12% to $2.2 billion. Corporate and investment banking revenue grew 7% to $3.6 billion. Wealth management revenue rose 8% to $3.5 billion.

The boom ahead

Wall Street banks now see consumers tanked up on stimulus money spending huge and companies rushing to expand by buying or building new businesses, as the US emerges from the Covid-19 pandemic

“It is clear to me that the U.S. is poised for a strong recovery this year, led by consumer spending that is rebounding to pre-Covid levels,” David M Solomon, chief executive of Goldman Sachs, told analysts.

Jamie Dimon, his counterpart at JPMorgan Chase, the country’s largest bank by assets, took a similar view. “We believe that the economy has the potential to have extremely robust, multiyear growth,” Dimon said in a statement. He attributed his outlook to government spending on stimulus and infrastructure, supportive policies from the Federal Reserve and high hopes for the end of the pandemic.

According to an executive, bank earnings reveal a dramatic shift from an unprecedented downdraft in growth to a V-shaped recovery in the economy.

Provisioning

The three banks are set to reduce the cushion they had set aside at the start of the pandemic to withstand continued losses from credit cards, mortgages and other loans they had made.

JPMorgan released $5.2 billion of that credit cushion, and Wells reduced its cushion by $1.6 billion. Wells also noted provisioning for bad loans was at a historic low. Goldman also reduced what it had set aside by about $200 million.



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