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The hedge fund manager who really does give his money to charity.

Morning Coffee: “Working class hero” trader makes $2m a day. How FTX staff spent absurd amounts on food

Anyone from the USA or Europe who has spent time in a room full of British bankers will be aware that the topic of “who is most / least posh?” is a conversation that can last literally forever.  There’s no end to the hours that can be spent on the social nuances of which school they went to, what name they call the evening meal and how distant they are in genealogical terms from either a coal miner or a Duke.  Even the way Brits pronounce the word “class” can be evidence one way or the other. 

However, if the recommendations of a new government task force get put into practice, these debates could become important as well as tedious.  It’s been recommended that by 2030 “at least 50% of senior leaders within the financial and professional services industry” should come from “a working class background”.  So when today’s vice presidents start preparing their promotion cases for managing director, they might need to be emphasising their lowly origins.  It might not quite be OK to say that you were “brought up on an estate” if you mean a grouse moor, but expect people to start talking a lot about their parents being unemployed, without necessarily making it clear they’re referring to a period between leaving investment banking and starting a hedge fund.

One star of the industry who doesn’t have to exaggerate his working class credentials is Sir Chris Hohn.  Despite having attended a state school and being the son of a mechanic and a legal secretary, he’s now become the record holder for the highest amount paid to a single person in the history of the UK, with the $690m dividend payment made this year by his hedge fund, TCI.  Along the way, he has been the boss of a number of people considerably posher than himself, including the current Prime Minister.

Interestingly, Hohn hasn’t developed upper-class tastes,  Even the judge in his divorce case referred to him as having a “Swatch lifestyle”.  Instead, he spends his money on philanthropy – his fund is actually named after his personal charity (it’s “The Children’s Investment Fund”).  It’s one of the largest charities of its kind in the UK, with Sir Chris’s personal donations over the years amounting to a sum considerably greater than half of his current net worth.  He’s also the single biggest donor to climate activists Extinction Rebellion.

It's a sort of “earn to give” philosophy; as a student, he spent some time in the Philippines and seeing the poverty there made him consider becoming a doctor or working in the caring professions.  But then he realized that his talents were in making money, and set his heart on becoming the philanthropic equivalent of a Premier League footballer.  So far it seems to have worked, and when you consider what the real thing looks like, it makes the “effective altruism” of people like Sam Bankman-Fried look a little bit second-rate.

The FTX crowd certainly don’t seem to have restricted themselves to a Swatch lifestyle – at the company headquarters, they were allowed free groceries, “pop-up barbershops and bi-weekly massages” and chartered planes to bring their purchases across because Amazon doesn’t deliver to the Bahamas.  Employees in the USA were allowed a budget of $200 a day for DoorDash deliveries – that’s enough to feed seven Morgan Stanley juniors at the going rate for late working allowances.

What were they spending it on?  Sam Bankman-Fried himself certainly doesn’t seem to have eaten out much – on December 30, he was posting slightly depressing recipes on social media and he doesn’t drink or eat meat.  The Bahamas are a sandy group of islands which import most of their food and consequently have comparatively few vegan options.  But somebody ran up a $55,000 tab at the Margaritaville resort on the island; it’s the second biggest creditor listed in the bankruptcy filing.  Looking through the food and drinks menu, cocktails there seem to be priced at about $15 a go and bar meals around $20.  So a team of ten, having two drinks each and something to eat, would be charging a little more than $600 a visit, including tip.  At that rate, they’d need to be going there every single evening, assuming that the resort wouldn’t let invoices go unsettled for more than ninety days.  Unless there’s another explanation – it’s possible that FTX used the resort as temporary accommodation for staff that weren’t invited to the penthouse – someone has been hitting the expenses like a TradFi banker.

Meanwhile …

Jamie Dimon has joined Miles Davis, Sean Connery and Alan Greenspan (and a very, very large number of Second World War veterans) as a member of the Legion d’Honneur.  The award is being partly made in recognition of JPMorgan’s massive contribution to recruitment in the Paris financial centre. Maybe Sanaz Zaimi should get an award too? (Bloomberg)

Philippe Reynier, formerly of BCG and more recently of UBS’ internal venture capital fund, has decided to take his knowledge of Swiss fintech and become a specialist headhunter. (Finews)

Stefan Hoops is continuing to make his mark on DWS; he’s now hired Paul Kelly from Blackstone to be the head of alternatives.  (Institutional Investor)

It’s generally regarded to be a bearish sign when senior bankers move to the client side.  Young-ki Kim, JP Morgan’s head of investment banking for Korea, is going to become CFO of Naver Corp, the tech company. (Bloomberg)

Would it be called Panmure Boston? Or Credit Suisse First Bob? Atlas Merchant Capital, Bob Diamond’s firm, is considering making an investment in the CSFB spin-off. (Global Capital)

Thiebaud Format has left BNPP to join the Deutsche Bank precious metals trading desk, but “people familiar with the matter” say he will also be trading base metals, a market that DBK left nearly a decade ago. (Bloomberg)

“If you only see one, they are mostly doing it for show”.  A look at the world of people who want or need to be followed down the street by someone with a short haircut who doesn’t smile.  There are apparently “Close Protection Officers” for genuine threats, and “buddy-guards” for more insta-friendly guarding.  The going rate is about £80k a year, so they’re cheaper than analysts. (FT)

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AUTHORDaniel Davies Insider Comment
  • Ma
    Matt
    1 December 2022

    I don't think the industry can afford to just look at state school students in Surrey and pat itself on the back. It will take a lot more than that to have a substantial impact.

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