5 ms·

As a former investment banker, it's pretty clear that corruption is everywhere in the UK, even if it's channeled via "legal" protocols. I mean, just on the trad

by osrec 9y ago

As a former investment banker, it's pretty clear that corruption is everywhere in the UK, even if it's channeled via "legal" protocols. I mean, just on the trading floor, we have all sorts of weird and wonderful deals going on between brokers, clients and other intermediaries. Most of this will never be picked up because (a) it's either shrouded in complexity (engineered by some of the brightest minds), or (b) hardly anyone actually investigates the audit trail in the level of detail required to highlight wrongdoing. As an example, the guy doing the the bad stuff is a triple first graduate from Cambridge, while the investigator is a 2:1 recipient from University of Salford. In most cases, the Cambridge guy gets away with it by outwitting his investigator.

rahimnathwani 9y ago
Can you provide a hypothetical example? I'm curious to know what type of corruption you have in mind, e.g. government corruption, or breach of fiduciary duty, or helping clients' employees defraud their employers through bespoke structured products.
- osrec 9y ago
  Let's take structured products as an example. Example: A UCITS fund is not allowed to invest in commodities directly, but it wants exposure to gold. The head of structuring knows the fund manager, so offers him a structured index for an under the table fee. The index contains only one item: a gold future! The fund gets the ability to speculate on commodities, the head of structuring gets a nice little payoff, and everyone's happy. When compliance asks why are you in commodities, the guys say "it's only an index" - and compliance goes away satisfied. Silly, but true story.
  - mynameishere 9y ago
    I'm not sure where the illegality in your story lies. You perhaps intentionally left that out to make it seem more complex. I don't know. But if someone wants exposure to gold (for whatever reason) why wouldn't they just buy GLD or futures directly?
    - osrec 9y ago
      UCITS regulation prevents direct exposure to commodities. It's mentioned near the start of my example.
      - mynameishere 9y ago
        Okay. I guess my confusion is with respect to the word "direct" and whether an index containing futures is "direct" or not. I guess it is. To me, "direct exposure" would be actually owning the commodities rather than two levels of indirection that an index containing futures would imply. But whatever. So I guess it's incumbent upon the person who understands such things to report them to the appropriate regulatory authorities rather than downvoting random people just hearing about them for the first time.
        osrec 9y ago
        That is precisely the point of my argument. You as a non experienced finance professional can see the fallacy in their methods (ie, they may as well have bought the gold in the first place, which is illegal), but they found a little loop hole to circumvent the rules and do whatever the hell they want with their fund, all while marketing it as UCITS compliant.
- amygdyl 9y ago
  For practical examples open the Companies Act, and flick through noting how many summary criminal penalties for infractions exist therein. Summary criminal justice is a judge without jury trial and the description is highly pertinent to anyone expecting a pedantic and thorough hearing. Unlikely will you benefit from one. But for the millions of company directors who rely on the sagacity of a accountant's counsel, it is not lawful to so recuse oneself from the direct responsibility. Which should be obvious. But how many company directors have you heard casually quip how they leave so much to their accountant or consulting firm?
Chriky 9y ago
As another former investment banker, and current NCA Investigator, and - for what it's worth - Cambridge graduate, I can tell you your description of the relative competencies of the good guys and bad guys is just elitist crap.
- stagbeetle 9y ago
  What was your IB path like? I know from experience, it's a much more common happening with Boutique firms.
  - Chriky 9y ago
    HFT at a bulge bracket bank
    - stagbeetle 9y ago
      I was gonna guess BB, things are more fast-paced and everyone's wrapped up tight that it's a bit harder to get the time to set those kinds of deals up (but it's not unheard of ;). As for HFT, I assume you were more systematic than discretionary (like our OG), and that would lend itself to not having the leeway needed to carry anything like that out.
- osrec 9y ago
  One counter example does not refute the averages across the industry. Makes me happy that you're on the good side though :)
  - Chriky 9y ago
    Well, I mean you didn't provide /any/ examples, you stated something false. My point was more that this "battle of wits" cops vs robbers narrative is just Hollywood nonsense. Do you feel the same about MI6/GCHQ (organisations staffed to a large degree by Cambridge grads) vs ISIS (an organisation staffed mainly by idiots and conspiracy theorists)? Clearly the two sides are not playing the same game, and any disparity in ability will be completely overwhelmed by structural differences in their respective challenges. The uninformed opinion you're spreading is damaging because it implicitly implies that these crimes wouldn't happen if only our cops were a bit brighter. If only they were as clever as those City boys! Too bad old chap, better luck next time, all's fair in love and war etc etc.
msangi 9y ago
I cannot believe you're serious with that condesending example. Putting people from Cambridge and Oxford on the pedestal is yet another example of what's wrong with Britain. This also shows in the way they work: people from Europe get the work done and move on to the next task. People from Cambridge and Oxford try hard to be smart and come up with solutions so complex that, when they work at all, have the net effect of slowing everyone down.
- osrec 9y ago
  That was not a hypothetical example, but an actual one. Condescending or otherwise, I'm just repeating what I saw. I'm not putting them on a pedestal either. If this was purely hypothetical, I could have said Imperial or UCL to the same effect. The point is, more clever people often end up in powerful roles that are often chaperoned/regulated/supported by less clever people. I don't like it, but it's what I see, and I personally consider it a major problem. Also, to say it's what's wrong with Britain is a tad hyperbolic! I've generally found my Oxford degree to be excess baggage when trying to get a job with someone who is not from Oxbridge/Ivy league - often because they have a similar attitude to yours.

by osrec 9y ago

rahimnathwani 9y ago

Can you provide a hypothetical example? I'm curious to know what type of corruption you have in mind, e.g. government corruption, or breach of fiduciary duty, or helping clients' employees defraud their employers through bespoke structured products.

osrec 9y ago
Let's take structured products as an example. Example: A UCITS fund is not allowed to invest in commodities directly, but it wants exposure to gold. The head of structuring knows the fund manager, so offers him a structured index for an under the table fee. The index contains only one item: a gold future! The fund gets the ability to speculate on commodities, the head of structuring gets a nice little payoff, and everyone's happy. When compliance asks why are you in commodities, the guys say "it's only an index" - and compliance goes away satisfied. Silly, but true story.
- mynameishere 9y ago
  I'm not sure where the illegality in your story lies. You perhaps intentionally left that out to make it seem more complex. I don't know. But if someone wants exposure to gold (for whatever reason) why wouldn't they just buy GLD or futures directly?
  - osrec 9y ago
    UCITS regulation prevents direct exposure to commodities. It's mentioned near the start of my example.
    - mynameishere 9y ago
      Okay. I guess my confusion is with respect to the word "direct" and whether an index containing futures is "direct" or not. I guess it is. To me, "direct exposure" would be actually owning the commodities rather than two levels of indirection that an index containing futures would imply. But whatever. So I guess it's incumbent upon the person who understands such things to report them to the appropriate regulatory authorities rather than downvoting random people just hearing about them for the first time.
      - osrec 9y ago
        That is precisely the point of my argument. You as a non experienced finance professional can see the fallacy in their methods (ie, they may as well have bought the gold in the first place, which is illegal), but they found a little loop hole to circumvent the rules and do whatever the hell they want with their fund, all while marketing it as UCITS compliant.
amygdyl 9y ago
For practical examples open the Companies Act, and flick through noting how many summary criminal penalties for infractions exist therein. Summary criminal justice is a judge without jury trial and the description is highly pertinent to anyone expecting a pedantic and thorough hearing. Unlikely will you benefit from one. But for the millions of company directors who rely on the sagacity of a accountant's counsel, it is not lawful to so recuse oneself from the direct responsibility. Which should be obvious. But how many company directors have you heard casually quip how they leave so much to their accountant or consulting firm?

Chriky 9y ago

As another former investment banker, and current NCA Investigator, and - for what it's worth - Cambridge graduate, I can tell you your description of the relative competencies of the good guys and bad guys is just elitist crap.

stagbeetle 9y ago
What was your IB path like? I know from experience, it's a much more common happening with Boutique firms.
- Chriky 9y ago
  HFT at a bulge bracket bank
  - stagbeetle 9y ago
    I was gonna guess BB, things are more fast-paced and everyone's wrapped up tight that it's a bit harder to get the time to set those kinds of deals up (but it's not unheard of ;). As for HFT, I assume you were more systematic than discretionary (like our OG), and that would lend itself to not having the leeway needed to carry anything like that out.
osrec 9y ago
One counter example does not refute the averages across the industry. Makes me happy that you're on the good side though :)
- Chriky 9y ago
  Well, I mean you didn't provide /any/ examples, you stated something false. My point was more that this "battle of wits" cops vs robbers narrative is just Hollywood nonsense. Do you feel the same about MI6/GCHQ (organisations staffed to a large degree by Cambridge grads) vs ISIS (an organisation staffed mainly by idiots and conspiracy theorists)? Clearly the two sides are not playing the same game, and any disparity in ability will be completely overwhelmed by structural differences in their respective challenges. The uninformed opinion you're spreading is damaging because it implicitly implies that these crimes wouldn't happen if only our cops were a bit brighter. If only they were as clever as those City boys! Too bad old chap, better luck next time, all's fair in love and war etc etc.

msangi 9y ago

I cannot believe you're serious with that condesending example. Putting people from Cambridge and Oxford on the pedestal is yet another example of what's wrong with Britain. This also shows in the way they work: people from Europe get the work done and move on to the next task. People from Cambridge and Oxford try hard to be smart and come up with solutions so complex that, when they work at all, have the net effect of slowing everyone down.

osrec 9y ago
That was not a hypothetical example, but an actual one. Condescending or otherwise, I'm just repeating what I saw. I'm not putting them on a pedestal either. If this was purely hypothetical, I could have said Imperial or UCL to the same effect. The point is, more clever people often end up in powerful roles that are often chaperoned/regulated/supported by less clever people. I don't like it, but it's what I see, and I personally consider it a major problem. Also, to say it's what's wrong with Britain is a tad hyperbolic! I've generally found my Oxford degree to be excess baggage when trying to get a job with someone who is not from Oxbridge/Ivy league - often because they have a similar attitude to yours.