Morning Coffee: Ex-HSBC banker paid circa $1.4m destroyed career while saving money. A great time to work for a quant fund

These are straitened times. Costs are high and rising and anecdotally there are many well paid people in financial services who expected rates to remain low and are now nursing large increases in mortgage repayments.

It's not clear whether Joseph Molloy, a former head of passive equity at HSBC asset management, who has a £2m house in Orpington Kent, was facing ejection from his low fixed rate mortgage. But Molloy did want to save money. He is the man who rode the trains in and out of London for nearly a year and didn't pay the full fare. Molloy was caught, banned from South Eastern railway for 12 months and given a suspended sentence in February.

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Yesterday, the FCA also banned Molloy - who'd worked in financial services for at least two decades - from ever working in financial services again. It's an ignominious end to a career in which he rose the ranks at State Street, Northern Trust and Legal and General before joining HSBC to acclaim in 2015.  It's not clear how much Molloy was earning at HSBC, but given that the bank paid its material risk takers (MRTs) at Molloy's level an average of $1.4m last year, this would seem a reasonable guess. 

Now, Molloy - who is aged 53 and retired last year -  won't be earning $1.4m, Nor will he need to travel to HSBC or any other bank in London. In banning him from working in financial services again, the FCA said Molloy's actions demonstrated "a clear and serious lack of honesty and integrity such that he is not fit and proper to perform regulated activities."

The FCA also elaborated upon Molloy's techniques for saving money on his train fares. These were very involved. First, he "dishonestly acquired travel cards using two separate accounts with Southeastern with false names, addresses and email accounts." Then, he "paid for a short journey at the start and end of each journey but evaded the fare for the section of the journey in between." In this way, he saved nearly £6k over 740 journeys.  The FT says Molloy also achieved a Jobcentre Plus discount card for unemployed people, which gave him 50% off train tickets.

These techniques are usually used by students or the unemployed. Molloy had mitigating circumstances - his mother had recently died, and the judge in February said he was genuinely remorseful. The FCA was less sympathetic. Molloy's fraud was "sophisticated and determined," it said. Molloy was also more than able to pay the full price of the ticket. Now Molloy might have to go by bike instead.

Separately, it's a great time to work for a quant hedge fund. The Financial Times reports that trend following funds like Graham Capital and Winton are having a good year because the trends are so strong. Graham is up more than 31%; Winton's diversified macro fund is up 17.5%. 

The trends in question involve inflation, bonds and currencies. Multistrategy firms are doing less well: Millennium generated zero returns in September. 

Meanwhile...

Taula Capital's TSO fund made a large bet on European interest rates going down and lost 12.2% in September alone. Backers can't redeem their capital until next spring. (Business Insider) 

Paramount SkyDance is funding its $110bn purchase of Warner Bros Discovery with $52bn of debt. The new company will have net debt of $80bn and annual ebitda of only $12bn. Investors are demanding a 9% yield on the junk part of the new debt. (FT) 

Private equity executives are now being forced to admit that they won't be able to sell the companies they bought in the long era of low interest rates for much (if any?) of a profit. They are sitting on them instead. Human resources company UKG (formerly Kronos Inc.) has been owned by Hellman & Friedman for nearly two decades. (Bloomberg) 

Spreads on global corporate bonds have blown out about 5 basis points this week. (Bloomberg) 

Hernán Cristerna, JPMorgan's executive chairman of global investment banking and M&A has decided this is a good time to retire. (Reuters)  

M&A volume in the Australia has nearly doubled to $55 billion this year. (Bloomberg) 

Anthropic's IPO is expected in November and may be marketed from the week of November 9th. (Bloomberg) 

Chris Rokos sold his mansion in Palm Beach County for $83.2 million. In February 2025 he wanted $150m for it. (WSJ) 

Martin Pabari, COO of Millennium in EMEA, says people must use AI. “The most valuable outcomes come from knowing how to frame a problem, challenging an output, and figuring out how to apply an insight to a practical problem.” (Financial News) 

Barclays wants 50% of its software developers to be using Claude Code by the end of 2026. Its markets platform receives 120,000 emails a day and already uses Claude to streamline how client inquiries are processed and managed. (Bloomberg) 

How to save money on tokens: Direct employees to the company’s pre-built library of existing prompts that are optimized to not go overboard with token usage. (WSJ) 

Putting ADHD disclaimers at the end of emails is a thing. (The Times) 

Shannon Burns, a technology executive claimed record damages of £76 million after a tribunal found that she suffered discrimination at a company which fired her after she became intoxicated at a work event, locked herself out of a hotel room and was forced to sleep in a sauna. Burns said she was discriminated against because male colleagues were in a similar state. (The Times) 

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