Morning Coffee: The fired trading MD who couldn’t get a hedge fund job. Morgan Stanley begins to learn the hard way about losing senior bankers
The Japanese macro trading space is currently one of the hottest labour markets in the world – stories abound of traders being dragged into hotel rooms so that prospective employers can give them a two-hour pitch on why they should accept a new role on exorbitant pay. So if someone has a career history which includes time as a Managing Director on Nomura’s JGB trading desk, but they still can’t find a job, then you know there’s a story there.
Get Morning Coffee ☕ in your inbox. Sign up here.
In the case of Takushi Sawada, the story is basically the one attributed to Ronald Reagan. For the last year, he’s been explaining, in detail, that the 2021 series of futures trades which resulted in him being fired (and Nomura being fined $150,000 and temporarily losing its JGB primary dealer entitlements) weren’t really as bad as they looked. But he’s been doing so on a blog, written in coffee shops in between trading equities for his own account, after gradually apprehending that he has become unemployable.
Sawada’s side of the story is that he put a load of futures orders in because he was obliged to bid in the primary JGB market, and then cancelled them when it turned out that demand had been much stronger than he’d expected. The Japanese Securities and Exchange Surveillance Commission’s side is that he placed a load of orders in the futures market, then cancelled them, in exactly the way that someone would if they were attempting to manipulate the market by misleading other traders about the true balance of supply and demand – the offence of “spoofing”.
Other traders in the Japanese interest rate futures market seem to have a limited degree of sympathy for Sawada. The difference between spoofing and hedging is something of a grey area, and in many ways it’s a crime that’s made by the intention of the trader – whether they sincerely intended those orders to be executed, at the time they made them. But sympathy does seem to be limited; even Sawada recognises that “Looking at the numbers alone, one would naturally conclude, ‘Yeah, this guy was clearly doing it.’”
He doesn’t really seem to have much hope of getting his job back. Nor does he have much chance of getting a job anywhere else. Hedge funds have come close to hiring him, but their offers have fallen through or been withdrawn.
And so Sawada is stuck writing and trading in cafés. He describes his endeavours as "toilet graffiti”, and his motivation is almost therapeutic. He just wants to clear his chest, put the past behind him and get on with the rest of his life; his family are urging him to do something more stable than day-trading.
Sawada is a cautionary example. Part of the job of being a skilled trader is to use that skill to read the markets and not to do anything which might later have you trying to convince the authorities that it wasn’t as bad as it looked.
Elsewhere, there are no doubt excellent reasons why Barclays, UBS and Mitsubishi UFJ have been added to the deal sheets for the bond and loan sale by xAI Corporation, alongside Morgan Stanley. It’s not that unusual for new banks to be added in the middle of a process, all three of them were involved in Elon Musk’s acquisition financing for X (formerly Twitter). And apparently the company wanted to include them, in order to preserve relationships and keep channels open for future financing.
But … it feels unlikely that the league table credit and fees would have been shared out in quite so egalitarian a manner if Michael Grimes was still there. It’s probably coincidental that UBS announced today that it’s poached Taylor Henricks from Grimes’ old team to be its new head of technology M&A, but it’s not what you could call a meaningless coincidence. As much as winning deals, one of the key skills of a top banker is that of holding on to them, and warding off competitors. At least for the time being, Morgan Stanley’s bulge bracket competitors are not nosing into MS tech deals, but if they do, then the bank’s management will have another example of how a single banker can drive the robustness of the entire franchise.
Meanwhile …
More London firms are going to be required to report incidents of “non-financial misconduct”, including bullying, drug use, harassment and racism. This includes behaviour on social media, and many companies new to the regime are likely to take a precautionary rather than proportionate approach, according to a specialist lawyer. Everyone be on your best behaviour. (FT)
The most senior bank supervisor at the Fed has decided to take the offer of voluntary redundancy that they’re offering as part of a program to cut staff by 10%. (Bloomberg)
Optimism about future deal pipelines isn’t just a matter of happy talk and good vibes. There is a literal hiring frenzy going on for senior financial lawyers at the moment, with job moves up 30% on last year in London. (Financial News)
The old Soviet joke was “we pretend to work and they pretend to pay us”. Now there’s an AI startup that will peruse the AI-generated job ads and create applications to the AI-driven recruitment processes. If you get the job, maybe you can get an AI agent to do the work for you, too. (Bloomberg)
An interesting sign of the times; Bank of America wants to keep its trading momentum going by breaking into the top three for both equities and fixed income in Europe. But it seems that Brian Weinstein, EMEA head of global markets, is identifying the tech stack as the constraint on growth, rather than front office headcount. (Financial News)
Bill Ackman is famously really good at tennis – he is now teaming up with a former Olympic gold medallist to enter the doubles in the Hall of Fame Open. This means there’s a chance that (at the age of 59) he might become the oldest player ever to win ATP ranking points. (Bloomberg)
Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22 Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libellous (in which case it won’t.)
