Showing posts with label Wall St. Show all posts
Showing posts with label Wall St. Show all posts

July 1, 2020

Who Makes Millions on Police Brutality? Wall Street


More than 10,000 protesters across the U.S. have been arrested in the wake of George Floyd’s death at the hands of police. Nearly 20 people have died, and many more have suffered permanent injuries. As those numbers rise, so will the lawsuits — and the expensive settlements.

For example, New York City issued more than $237 million for NYPD payouts on legal settlements and judgements in 2018 alone. 
When faced with big legal bills or settlements, cities have lots of ways to come up with cash. Some have dedicated funds, some have insurance policies. Others finance their legal obligations by selling bonds, just as they would to raise money for infrastructure or public parks. And that’s where Wall Street makes bank, with next to no risk.
Big banks compete to underwrite — or act as the middle men — on these “general obligation bonds” because they pay out millions in fees. Then, they sell the bonds to high-net-worth individuals and hedge funds, which collect interest as high as 7%. These so-called “police brutality bonds,” as they're colloquially known, “quite literally allow banks and wealthy investors to profit from police violence,” according to a 2018 report from the American Center on Race and the Economy.

The bonds are also backed by the “full faith and credit” of the issuing municipality, which means the city can do just about anything to service that debt — including raising taxes. Since cities rarely default, the bonds are nearly risk-free for investors. And although taxpayers normally foot the bill for police settlements, the added interest on the bonds can nearly double the costs.
It’s a transfer of wealth from Main Street to Wall Street, and city officials are making it happen with almost no oversight from taxpayers.

“It feels intentional. They’re choosing to take money from us, our schools, our public housing, and give it to Wall Street.”

“It feels intentional. They’re choosing to take money from us, our schools, our public housing, and give it to Wall Street,” said Damon Wiliams, a 27-year-old South Side Chicago resident who was arrested during a protest in Hyde Park earlier this month. Williams, alongside other activists and the Cook County public defender’s office, are now suing the city for denying arrestees access to phone calls and their attorneys.

“Meanwhile, there’s a lawless, militarized force being used to surveil Black people,” Williams said. Between 2008 and 2017, Chicago sold over $700 million in “police brutality bonds,” more than any other city included in the American Center on Race and the Economy’s report. Over that period, investors reportedly collected $1 billion in interest — and taxpayers spent about twice that much servicing the debt.
And then there are the underwriting fees, or the commissions banks get for selling the bonds on behalf of the city. But the payments aren’t spread out over time like the interest. Banks take their cuts of the proceeds even before the deals are done.
In 2017, Goldman Sachs pocketed $1.8 million as the lead underwriter, or book-runner, on Chicago’s $275 million bond sale. Three years prior, Wells Fargo collected $1.72 million in fees on the city’s $450 million GO bond sale.
“It’s generally easy for GO [general obligation] issuers to find someone willing to underwrite their bonds; the underwriting process is very competitive with many investment banks vying for the business,” said R&C Investment Advisors managing director Roberto Roffo.
With cities across the country facing 20% budget shortfalls due to the pandemic, they’ll also likely need these bonds more than ever. In fact, it’s cities like Chicago — which has a near junk credit rating — that will need access to the credit market the most. And they’ll pay higher yields to do it, which makes a sweet deal for investors.

“Defaults are rare in the muni market and even rarer for general governments, which include GO bonds,” wrote Cooper Howard, Charles Schwab’s director of fixed income and income planning. “Although state and local governments face headwinds, such as a potential slowdown in the economy and rising pension burdens, we think defaults among GOs will continue to be rare.”

Right now, the office of Chicago’s comptroller told VICE News that “no bond borrowing is planned, but all options are on the table.”

Is it shady? Yes. Illegal? No.

In the first four months of 2020, Chicago had already paid out $17 million to victims of police violence, according to the city’s expenditure report. Of that, $10 million will go to Tarance Etheredge, who was paralyzed from the waist down after being shot in the back by Chicago police in 2012.

The settlements may be public information, but if a taxpayer or investor wanted to know whether a bond was used to pay for one, it’s not as easy. Every municipality issues and reports their debt for settlements and judgements differently, and some are more transparent than others. 
New York, for example, has reams of publicly available information on NYPD settlements, and the office of the city's comptroller told VICE News that they don't use bonds to pay those off. Los Angeles uses the term “judgment obligation bond,” and lets the public know the money is going to pay off lawsuits.
In Chicago, curious citizens need to look at the official GO bond statement, flip to the “sources and uses of funds” section buried in the prospectus, and they still won’t find any mention of specific lawsuits. Is it shady? Yes. Illegal? No.
Chicago last issued one of these bonds in 2017, for $275 million, $225 million of which was earmarked for settlements and judgements. The interest rate on that bond was over 7%. To put that in perspective, interest rates in the U.S. Treasury market are about 1%, and interest rates on New York City’s municipal bonds are about 3%.
That means an investor who bought $10 million of Chicago’s 2017 general obligation bonds would collect almost $8.5 million in interest over the bond’s lifetime. Chicago’s taxpayers, on the other hand, will be paying off that interest until the bond matures in 2029.

“Nothing about Mayor Lori Lightfoot’s politics makes me optimistic about the future,” said Williams, who’s considering suing the city over his treatment and others at the protest. I am, however, optimistic about the grassroots political effort from below that will put pressure on her.”

March 11, 2017

Trump Fires Preet Bharara, The Sheriff of Wall Street

  From the “Sheriff of Wall Street” to the man whose anti-corruption crusade put “Albany on Trial,” Preet Bharara has earned many nicknames during his uncommonly long tenure as U.S. attorney for the Southern District of New York. As one of the rare federal prosecutors invited by President-elect Donald Trump to remain in office, Bharara is poised to see his legacy evolve again.
 Bharara’s office declined to comment on this story, but a onetime federal judge who presided over several of Bharara’s cases noted in an interview just how unusual this development is.
 “I am surprised because typically, when a new president comes in, all of the U.S. attorneys in the country resign,” said Shira Scheindlin, now in private practice at Stroock & Stroock & Lavan. “It’s just the standard protocol. They all resign, and then generally, the incoming president does ask a few to stay. But mostly, they’re replaced. And that’s sort of the way politics is.”
 If Bharara stays on through Trump’s first term, he will become the longest-running U.S. attorney that the Southern District of New York has ever had.
 After meeting the president-elect in Trump Tower after the election, Bharara voiced a theory as to why Trump let him say on. “Presumably because he’s a New Yorker, and is aware of all this office has done over the past seven years,” Bharara said.
 But leading figures in New York’s legal community have found that explanation incomplete.
 “He says, ‘I’m kept on because I’m so good,’” Scheindlin said in a phone interview. “I understand that, but there have been many other good U.S. attorneys during the years who have not been kept on. So, I’m sure Mr. Trump had his reasons, but I can’t divine them.”
 Scheindlin, who herself is working on a project opposing Trump’s immigration agenda, noted that one has only to remember the prosecutors who investigated President Richard Nixon if they think Bharara could parlay his work against corruption and white-collar crime in New York City into meaningful check on the Oval Office. 
The Man is Busting Wall St
 On the same morning of his Nov. 30 meeting with Bharara, Trump vowed to settle concerns of interest conflicts by leaving his business “in total.” But the president-elect has since backpedaled from that position several times, leaving a role for his children to operate his organization while he continues to profit from it in a so-called “half-blind” trust.
 With all the hallmarks of a burgeoning kleptocracy in motion, Trump’s brand scored a public-relations coup by keeping an anti-corruption watchdog like Bharara at the Department of Justice.
 Bharara opened up his insider investigation into the Galleon Group, then-headed by billionaire Raj Rajaratnam, shortly after President Barack Obama appointed him in 2009. The probe netted more than 60 indictments – followed by a wave of convictions – against the fund’s executives.
 Major networks like ABC and CBS dubbed Bharara the “Sheriff of Wall Street.” Time magazine ran Bharara’s face on the cover, declaring “This Man Is Busting Wall Street.”
 The prosecutor’s aura of invincibility withstood even the fact that criminal prosecution eluded each of the major banks behind the 2008 mortgage fraud crisis that tanked the global economy.
 Attorney General Eric Holder took most of the heat for this, accused of treating some CEOs as too big to jail. The name “Preet” meanwhile became media shorthand for aggressive prosecution, a reputation that grew as Bharara set his sights on New York’s most powerful legislators: then-Assembly Speaker Sheldon Silver and then-Senate Majority Leader Dean Skelos.
 As those cases churned, Bharara got a silver-screen treatment in the Showtime series “Billions,” in which actor Paul Giamatti plays a fierce prosecutor modeled after him.
 Meanwhile appellate court decisions have threatened to chip away at some of his accomplishments. The Second Circuit narrowed the definition of insider trading in the case of United States v. Newman, and it remains to be seen how the Supreme Court’s exoneration of former Virginia Gov. Robert McDonnell will affect Bharara’s political-corruption legacy. The high court did tighten securities law closer to its former strength in United States v. Salman.
 ‘Law and Order’ and the Holder Memo
 Trump earned a reputation on the campaign trail for condensing important issues of policy into catchphrase form, swapping facts for visual cues. On immigration, “we’re gonna build a wall.” On his brutish treatment of women, “Just Rosie O’Donnell.” For criminal-justice reform, Trump had “law and order,” a phrase that cues its own sound effect of most television-owning voters.
 Portraying Bharara as a good fit for this stance, Scheindlin contrasted the prosecutor’s cases against the Obama administration’s efforts to combat mass incarceration.
 To this end in 2010, the Department of Justice issued what is known as the Holder memo. So named for the former attorney general, the memo instructed federal prosecutors not to default to the heaviest charging and sentencing decisions in drug cases. Scheindlin remembered that Bharara’s prosecutors tended to ignore that advice, not only in narcotics cases.
 “When I was on the bench all those years, his assistants routinely would ask for the highest sentence that they could ask for,” she said. “They were not lenient, and they would not ask that the judge exercise her discretion.”
 One of those cases involved Russian arms trafficker Viktor Bout, now serving the second decade of his sentence for trying to illegally sell weapons of mass destruction to U.S. agents posing as Colombian guerrillas.
 Bout had been vilified in a Hollywood movie as “The Lord of War” and in nonfiction as “The Merchant of Death” for his long record arming foreign warlords, dictators and militants.
 Though Bharara’s prosecutors wanted Bout locked up for life, Scheindlin took issue with the U.S. government’s sting operation that ultimately nabbed the notorious arms trafficker.
 Indeed the Colombian guerrillas Bout thought he was arming were undercover agents of the Drug Enforcement Administration. There is also no law in Bout’s native Russia that would have barred him from selling weapons to actual Colombian militants.
 After a jury convicted him, Scheindlin dealt Bout the lowest allowable sentence: 25 years.
  Viktor Bout deplanes after arriving at Westchester County Airport on Nov. 16, 2010, in White Plains, New York. Bout was extradited from Thailand to the U.S. to face terrorism charges after a final effort by Russian diplomats to have him released failed. (Courtesy of the U.S. Department of Justice)
“Even historically, sting operations do give judges pause,” Scheindlin noted.
 In another federal trial that stemmed from a sting operation, the FBI offered four residents of a poverty-stricken New York community $250,000 if they would agree to blow up a synagogue and military airbase. Agents intercepted the plot that they created, and a jury rejected the men’s entrapment defense.
 Bharara’s request for a life sentence for the so-called Newburgh Four earned harsh criticism from the judge in that case, Colleen McMahon, a former colleague of Scheindlin’s who is now the chief federal judge of the district.
 McMahon had skewering the prosecutors for using tactics that she believe fell just short of illegality, and Scheindlin voiced similar objections.
 “It’s a technique that is of concern because you can target who you want to target,” Scheindlin said. “You can decide who you want to lure in.”
 In the narcotics realm, Bharara’s office brought a string of prosecutions targeting Latin American leaders and their families, including a former Guatemalan president and the son of presidents of Suriname and Honduras.
 Recently Bharara’s team won the cocaine-trafficking convictions of two nephews of Venezuelan President Nicolas Maduro, after a jury rejected claims that the charges were politically motivated.
 His office has defended strong sentences for pushers of especially dangerous drugs, deploying the “death-resulting” statute against dealers of fentanyl-laced heroin that has killed addicts. The statue carries anywhere between a 20-year and life sentence.
Preet Bharara’s Digital Drug War
 Lindsay Lewis, an attorney who assisted in the defense of Silk Road founder Ross Ulbricht, went toe-to-toe against Bharara in a case that involves the digital front of the War on Drugs. 
A little more than a block away from where that trial took place, there is a coffee shop called the Silkroad. Like Ulbricht’s website, the cafe is named after the ancient trade route that began with the Han dynasty two centuries before the common era.
 Lewis agreed to meet there — “reluctantly,” she joked of the location — to discuss the case at length and the significance of Bharara’s extended tenure.
 Ulbricht is now serving a life sentence for operating an underground drug website on the so-called darknet.
 “The pursuit of his case and the way the office prosecuted that case is a suggestion of nothing short of the hardest stance on drugs that we can possibly imagine,” said Lewis, who last year became a director on the board of the National Association of Criminal Defense Lawyers. She spoke for this article in her individual capacity.
 Like Scheindlin, Lewis saw Bharara’s administration as out of step with Attorney General Holder instructions to pursue fairer sentences on a case-by-case basis.
 “Long sentences for low-level, non-violent drug offenses do not promote public safety, deterrence or rehabilitation,” the Holder memo says.
 Though Silk Road had been no small operation — prosecutors estimated more than $1 billion in sales through the website — Lewis emphasized that Ulbricht himself had not been accused of being a dealer.
 At Ulbricht’s appeal, U.S. Circuit Judge Christopher Droney appeared troubled by the 32-year-old’s life sentence.
 “It is unusual for a young man in his early 30s with no criminal record, who himself was not dealing drugs, except some mushrooms at one point, at least there was some evidence that suggested that, to receive a life sentence,” Droney said in October.
 Lewis described such severe sentences as par for course at Bharara’s office.
 “Even after the supposed reform, his assistants weren’t give the quality and kinds of offers that I would have expected to have been given after that mandate,” she said.
 To his credit, Bharara vigorously pursued the goals of Department of Justice’s Civil Rights Division with respect to clamping down on prison guards abusing inmates. His office reached a settlement reforming New York City’s Rikers Island and recently won the conviction of a guard who killed an inmate.
 Like many observers, Lewis expects reforms like these to be dismantled if Sen. Jeff Sessions becomes the next attorney general, as is widely expected.
 “I fear that this alignment, Preet Bharara and Jeff Sessions and Donald Trump, it’s essentially the end of criminal justice reform, and that’s a crazy and unbelievable thing to say when you think about the fact that really we just got started,” she said.
 As for Trump’s vision for the War on Drugs, the president-elect reportedly praised the approach of Philippine President Rodrigo Duterte, accused of supporting death squads behind hundreds of extrajudicial killings. Sessions, whose confirmation hearing started Tuesday, once remarked that his only objection to the Ku Klux Klan was their members’ marijuana use.
  ‘I Want to Surveil’
 Legal observers also find similarities between Trump’s campaign rhetoric on the subjects of surveillance and encryption and Bharara’s record in these areas.
 Rhetorically, Bharara and Trump could not be farther apart on encryption technology. The U.S. attorney typically opts for the lawyerly rhetoric of balancing privacy and security in his public statements, whereas Trump fully embraced the role of Big Brother when discussing immigration at a rally in late 2015.
 “I want to surveil,” Trump said. “I want surveillance of these people that are coming in, the Trojan horse, I want to know who the hell they are.”
 Even if Bharara’s public statements are more measured, his office chafes at any practical constraints on its ability snoop. Perhaps the most well-known case involved prosecutors attempting to force Microsoft to turn over emails stored in Dublin servers.
 The communications involved a target of Bharara’s drug investigation, but, rather than cooperate with the Irish government, his prosecutors tried to bypass the diplomatic process through a hybrid warrant-subpoena under the Stored Communications Act.
 A federal judge sided with the prosecutors, but Microsoft quashed the request on appeal. The company’s president called the ruling “major victory for the protection of people’s privacy rights under their own laws rather than the reach of foreign governments.”
 Working blocks away from Ground Zero, Bharara frequently raises the specter of a spectacular attack to argue about the need for prosecutors to “peek” into private communications.
 “There are moments when reasonable people can appreciate and understand that there are people who want to slaughter all of you, and the people who are trying to protect against that are doing so in good faith,” Bharara told the Wall Street Journal in June. “They’re not trying to be Big Brother, and there should be a reasonable way for rational people to figure out what that balance is.”
 For attorney Fred Jennings, a prominent privacy advocate at the firm Tor Ekeland, Bharara has embraced FBI Director James Comey’s “scaremongering” theory of encryption that terrorists have been “Going Dark.”
 Jennings noted that the evidence does not support law enforcement’s dire warnings.
 Of the more than 4,100 state and federal wiretaps reported in 2015, only seven could not be read because of encryption, according to the most recent report.
 In a study titled “Don’t Panic,” researchers at Harvard University’s Berkman Center for Internet & Society said that fighting encryption in the name of national security would be like poisoning a restaurant to catch a terrorist.
 “Yes, we might get lucky and poison a terrorist before he strikes, but we’ll harm all the innocent customers in the process,” the 37-page report states. “Weakening encryption for everyone is harmful in exactly the same way.”
 Echoing this argument, Jennings noted that weakening encryption — through “back doors,” as some law-enforcement officials advocate — could have repercussions for critical infrastructure that depends upon strong security. The trend in law enforcement to advocate for “backdoor” entry into electronics could have unintended repercussions, he added.
 “When you talk about mandating backdoor platforms, you’re also talking about bank data, credit card transactions, things that we encrypt and communicate with everyday in a way that is largely transparent to the end user,” Jennings said.
 Asked about Trump’s ability to exploit surveillance against political rivals, Jennings told an anecdote of his own human-rights work, as a lawyer observing the attempted coup last year on Turkish President Recep Tayyip Erdogan.
 Seeking to protect their plans, the coup plotters turned to the chat platform WhatsApp, whose parent company Facebook had recently introduced end-to-end encryption. The military officers reportedly named their group “Yurtta sulh,” Turkish for peace at home, but the Erdogan government discovered their communications and cracked down harshly on the plotters.
 “There were quite a few communication records that were pulled from a chat platform that I suspect the developers never thought of a case of someone in a repressive regime who would round up all of those contacts and do who-knows-what to them,” Jennings said.

Court House News   

July 17, 2016

Don’t Swallow the line ) Hillary Not Top Wall St Girl {but a Dough Boy is 3}


In May, Wall Streeters donated more than any other industry to Hillary Clinton’s campaign and pro-Clinton super PACs – nearly $4.45 million out of her total $314 million raised. Retired people and the printing & publishing industry took the Nos. 2 and 3 spots.
This news tracks with one of the major critiques of Clinton: that she’s been bought and paid for by Wall Street bankers. Clinton’s election, this storyline goes, could result in greater access for financial powerbrokers and a field day for the industry — and what’s good for Wall Street often is not good for Main Street.
The pattern is a repetition of what we’ve seen throughout Clinton’s campaign: The securities & investment industry (our term for what most think of as Wall Street), leads in overall donations to the Clinton effort, according to our numbers. Citing that same data, CNBC said recently that Clinton has had a “love affair” with Wall Street. Her rival for the Democratic presidential nomination, Sen. Bernie Sanders (D-Vt.), has accused Hillary Clinton of being “funded by Wall Street.”
One problem with the narrative, though: It ignores the fact that most of these contributions actually have come from a tiny group of ultra-wealthy, liberal donors who work in finance. Wall Street more broadly doesn’t have any outsized affection for Clinton, but a relative handful of donors who work in the industry have invested heavily in her.
Take May, for example. Of that $4.45 million given to the Clinton effort from securities & investment, $4.15 million – 93 percent – came from just five donors. That figure includes a $2 million donation from Donald Sussman, (No. 9 on our list of megadonors) and another $1 million from Bernard Schwartz (No. 28).
And since Clinton’s campaign began last year, 86 percent of the $39.5 million donated by the securities & investment industry to help her bid came from just 13 people.
These 13 gave $34.15 million. Each gave $250,000 or more in total to Priorities USA Action and other pro-Clinton super PACs, which — unlike her campaign — can take unlimited donations. The twelve include megadonors like George Soros and James Simons, who both have given $7 million and Donald Sussman, who has given $6.1 million.
Overall, 88 percent of securities & investment money contributed to the Clinton effort – $34.6 million –  went to Clinton outside spending groups, not her campaign. Only thirty-eight people account for all of that industry’s contributions to these super PACs.
The fact that there are fewer Wall Street donors than commonly thought doesn’t mean they won’t lobby Clinton for policy changes that benefit them. But if you buy Sanders’s assessment that someone donates to a candidate “in exchange for access and influence,” the data shows the entrée would be gained by these longtime liberal megadonors, and not the industry writ large.
It’s certainly possible these ultra-wealthy donors would lobby for policies that benefit the industry as a whole. But based on what they’ve said publicly, some of them advocate policy changes that would hurt not only other Wall Streeters, but their own bottom lines as well.
Simons supports closing the carried interest tax loophole, a significant benefit to many in the financial world, as do fellow megadonors Sussman and Soros. Soros has called for greater regulation of banks and financial institutions, and has also said he should pay more in taxes. Schwartz discussed why lack of regulation led to the 2008 recession in a Q&A with Democracy titled “I’m a Capitalist, But We Need a Regulatory Society.”  These four alone account for over half of the money contributed to the Clinton effort from the securities & investment industry.
So how fervently does Wall Street really support Clinton?
If Clinton was bought by investment bankers, hedge fund managers and the like, we’d expect to see them donating in large numbers to her campaign committee; even though individual contributions to that account are limited to $2,700 for the primary and another $2,700 for the general election, they are a good measure of which parts of the economy are really drawn to a candidate. But the securities and investment industry not only isn’t in Clinton’s top three industries, it’s down in seventh place.
For comparison, the same industry is also seventh in donations to the campaign of Clinton’s presumed opponent, Republican Donald Trump. Wall Street has given about $4.9 million to Clinton’s campaign, less than women’s issues interests.
Which industries donate the most to Clinton’s campaign?
Besides retired people, who have given the most at $26.8 million (and frequently lead candidates’ donor lists), the legal industry – lawyers and law firms – leads with $18.3 million, then education (mostly professors and other college employees) with $7.5 million, followed by real estate at $5.7 million. 
Alec GoodwinAlec Goodwin is a Reporting Intern for OpenSecrets Blog. Last summer, he covered the 2016 presidential primaries in Iowa as a Campaign Journalism Intern for ABC News. He currently studies economics at the University of Chicago, where he was senior news editor of the student newspaper, the Chicago Maroon. He was born and raised in Toronto, Canada.

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April 24, 2015

How Wall Street Scored on Gay Marriage


On March 6, the day of the U.S. Supreme Court's deadline for legal briefs backing same-sex marriage, gay rights activists quietly celebrated a victory on Wall Street. 
Twenty-eight of the country's biggest financial firms had made an unprecedented show of unity in support of gay marriage by urging the court to strike down state laws banning same-sex unions. 
That was double the number that signed on to a similar effort in 2013, signaling how the traditionally conservative financial industry has come to publicly embrace gay rights. Then, the Supreme Court struck down a federal law that denied benefits to same-sex couples. 
"Together, we pushed Wall Street to a place our industry has never gone before," Daniel Maury, a managing director at UBS Group AG, wrote in a celebratory email to his fellow members of Open Finance, a group of gay and lesbian Wall Street employees that lobbied hard for banks' signatures.
The 28 included major U.S. investment and retail banks, the "big four" accounting firms and financial information firms Thomson Reuters Corp, which owns Reuters, and Bloomberg LLP. 
Wall Street's evolution on gay rights mirrors a broader shift on the issue in corporate America and society. But in some ways it has been a more difficult transition for a financial industry known for a macho culture famously portrayed in the 1987 movie "Wall Street" and where homophobic sentiment has in the past been widespread.
Peter Staley, who worked at J.P. Morgan in the 1980s before becoming a high-profile HIV/AIDS activist, recalled constant homophobic comments when he was a bond trader.
"For a closeted gay man, it was probably the worst environment I could have chosen," he said. "It was very infuriating and humiliating for someone who had a dark secret like I had."
Wall Street has become a far less hostile environment for gay and lesbian employees, most workers say.
In the brief, banks and other companies said they face additional costs and administrative headaches due to the patchwork of state marriage laws that help determine how benefits are administered and taxes calculated.
Wall Street also has particular cause to embrace gay rights as part of its sharp competition for top young talent with more openly liberal Silicon Valley firms, several banking sources said.
Support from high-profile bankers, such as Goldman Sachs Group Inc CEO Lloyd Blankfein, has helped accelerate the change in attitudes.
“It’s fair to say it’s kind of a night and day difference” when compared with tales of the trading floor from decades past, said Mark Lane, director of media relations at Barclays Plc in New York and head of a gay and lesbian employee group.
James Gorman, CEO of Morgan Stanley, said the problem had not entirely gone away, particularly in the traditionally boisterous atmosphere of trading floors.
"It is there in subtle ways and probably in unsubtle ways, for example, on trading floors I’m sure," Gorman said at a summit this week organized by Out on the Street, a gay and lesbian networking group that focuses on senior executives.
Morgan Stanley, Barclays and Goldman Sachs all signed the brief.
A number of banks, including Barclays, have rolled out so-called “straight ally” programs over the past five years in which employees act as supporters of gay and lesbian colleagues. Participants generally post a sign on their desks identifying them as allies so gay and lesbian workers can easily spot them.
In a ruling due by the end of June, the Supreme Court will decide whether states can ever restrict marriage to heterosexual couples. Same-sex marriage is currently legal in 37 states.
After the court said on Jan. 16 that it was taking up the cases, Open Finance was tasked by gay rights group Freedom to Marry with signing up Wall Street firms to the "friend-of-the-court" brief that was ultimately signed by 379 companies and business groups.
Although the nine justices aren’t required to focus attention on the briefs, dozens of which have been filed on either side, they can influence how cases are decided. 
Maury and others involved in the campaign said the main obstacle to winning the banks' support was bureaucratic rather than any opposition to gay marriage. 
The effort in 2013 to sign Wall Street firms up to that year’s brief was an ad hoc move led by Maury. This time there were weekly meetings and a spreadsheet that showed the status of each firm.
Their challenge was to get approval from different departments, including legal and public affairs, before chief executives made the final decision by the March 6 deadline.
Gay marriage opponents, who lack any support from the business community in briefs filed at the Supreme Court, say well-funded activists have intimidated companies into supporting their cause.
Nine Wall Street companies that are members of Open Finance did not sign the brief. Seven were foreign firms and some said they were not asked to join. 
One of the nine, which Maury declined to identify, questioned whether employees would ask the firm to take a stance on other divisive social issues, such as abortion. 
Bank of America Corp proved to be a challenge for Open Finance. It had not signed on to the 2013 brief and does not generally speak out on issues like gay marriage. 
Todd Sears, the founder of Out on the Street, helped close the deal.
Sears called on Mark Stephanz, an openly gay vice-chairman at the bank and a member of Out on the Street’s leadership committee.
“We gave him as much information and ammunition as he needed,” Sears said. That included the list of other banks that were poised to sign. Bank of America signed up on March 2, four days before the deadline, Maury said.
    Bank of America declined to comment on its internal deliberations. “Our decision to sign the brief is consistent with our HR policies and the way we treat our employees," the bank said in a statement.
(Additional reporting by John McCrank in New York; editing by Stuart Grudgings.)

May 20, 2014

Wall Streets Big Cats open up about their gay sons the reason they back the Gay movement

john stephen mack
"I had one question: 'Are you happy?'" John Mack said when his son, Stephen, came out as gay. 

In the "boy's club" of Wall Street, some top executives' views on gay rights changed entirely when the issue became personal.

That is, when their own adult children came out of the closet. 
When he was CEO of Morgan Stanley (MS,Fortune 500) and Credit Suisse First Boston (CS), John Mack was known for his progressive views on lesbian, gay, bisexual and transgender equality.
But that wasn't always the case.
"I had strong views of being anti-gay," Mack said this month at a conference hosted by Out on the Street, an organization that helps firms recruit and retain LGBT talent. Growing up and playing football in a small town in North Carolina, Mack said he "was unfair, and in some cases downright cruel."
Those opinions began to shift after he got married and had children. But it wasn't until his son, Stephen, came out in 1997 that his views were completely transformed.
Throughout high school, Stephen said he didn't know he was gay. When he figured it out, at the age of 22 or 23, he called his mom to tell her -- but asked her not to tell his dad.
A month later, Stephen flew home to tell Mack in person. He was waiting for the right moment. His father was telling him something private, so he jumped on the opportunity:
"I said, 'while we're on the topic of sharing things ... I'm gay,'" said Stephen.
Mack said he had an "inkling" his son was gay. Despite his prior views, it was an easy conversation.
"I had one question: 'Are you happy?' That's all I cared about," said Mack.
Compared to the rest of the corporate world, Wall Street has been at the forefront of providing LGBT-friendly benefits and policies. But it's still not always an easy place for people to be open about their sexuality.
"I believe the boys' club has got to change," said Mack. "I deeply believe that we need to have a level playing field and we're not there yet."
Across all industries, more than half of U.S. workers are still closeted on the job, according to a new study from the Human Rights Campaign.
Companies with bosses who take the lead can instill a culture of acceptance that trickles down, says Todd Sears, founder of Out on the Street. And the views of the people at the top are often shaped by simply knowing someone who is gay.
paul andrew singer
"[I reacted] with fear and nervousness, I worried about the health aspects ... grandfatherhood," hedge fund billionaire Paul Singer said about his son Andrew when he first realized he was gay.
Hedge fund billionaire Paul Singer, CEO of Elliott Management Corp., said that before his son Andrew came out of the closet he would have rated himself "a solid 2.1" out of 10 when it came to accepting LGBT issues.
One night in 1998, when he and Andrew were at dinner, Andrew started asking Singer about his "views on homosexuality." The questions were asked in such a way that Singer began to wonder whether his son could be gay.
"[I reacted] with fear and nervousness, I worried about the health aspects ... grandfatherhood," Singer said.
He was determined to handle the issue carefully, but he wasted no time getting to the bottom of it.
The next day, "[Andrew] was walking in the door, and right there, [I said], 'Are you gay?'" Singer recalled. "He basically said 'yes.'"
Over the next couple months, Singer said his conversations with Andrew brought him to a 5.5 or 6 out of 10 on the acceptance scale. He eventually became a steadfast supporter of gay rights.
In 2012, he launched the American Unity PAC, which aims to persuade fellow conservatives to support same-sex marriage. He has actively supported same-sex marriage campaigns and makes large donations to LGBT groups.
dan jared oconnell
"I thought about what we did in our family to make it so he didn't come out sooner," said Dan O'Connell about his son Jared.
Dan O'Connell, CEO of Vestar Capital Partners and his son Jared didn't have quite as seamless a transition.
Jared stayed in the closet for a number of years before revealing his sexual orientation to his parents in 2011.
"My reaction was: 'Why did it take so long for you to come to grips with this and tell us?'" said O'Connell. "I thought about the angst and psychological turmoil. I thought about what we did in our family to make it so he didn't come out sooner."
O'Connell felt especially bad because he hadn't exactly been a champion of LGBT rights in the past.
"At best I was indifferent to ambivalent, at worst probably insensitive," he said. "My son coming out has caused me to be more sensitive [to these issues]. Maybe it should have happened earlier, but better late than never." To top of page

January 24, 2014

Wall St Moguls Invest in Gay Rights

 DAVOS, Switzerland – When the World Economic Forum made “inclusiveness” one of its pillar themes, it was safe to assume the assembled corporate leaders would discuss economic issues.
But two of the busiest activist hedge fund managers on Wall Street spent 90 minutes on Thursday morning debating the state of gay, lesbian and transgender rights with an international array of activists. (You canwatch video of the event.)
The financiers, Daniel S. Loeb of Third Point and Paul E. Singer of Elliott Management, were among the presenters and sponsors of the event. During their part of the debate, both men spoke of the seeming unlikelihood that prominent investors would take a stand on gay rights.
Mr. Singer recounted how his son told him he was gay at the age of 21, prompting him to examine the issue of gay rights. Despite being one of the biggest donors to the Republican party – as the host, the journalist Fareed Zakaria, jokingly put it, the financier is both politically conservative and “really rich” — he has become one of the most active same-sex marriage proponents in finance.
 When asked if he used his influence on politicians to push a pro-gay-marriage agenda, however, Mr. Singer demurred. But he added that would-be political beneficiaries were aware of his work.
“I don’t try to proselytize,” he said. “But they know that winning is better than losing.”
Mr. Singer reserved his highest praise for the panel that preceded his at the breakfast: Masha Gessen, a Russian lesbian activist who plans to move her family to the United States to avoid persecution; Alice Nkom, a lawyer from Cameroon who works alone to avoid endangering potential colleagues; and Dane Lewis, head of the Jamaican advocacy group J-FLAG.
Daniel S. Loeb of Third Point, seen in November, spoke of using social pressure to change attitudes.Michael Nagle for The New York TimesDaniel S. Loeb of Third Point, seen in November, spoke of using social pressure to change attitudes.
For Mr. Loeb, whose wife’s best friends are a lesbian couple and who was enlisted into the fight by Mr. Singer, the playbook for gay-rights campaigns was little different from the battles he has waged at companies like Sotheby’s and Yahoo. There is the financial lever, spending money to promote one’s agenda; the legal lever; and then there is social pressure to advance one’s cause. “It’s not cool to be antigay,” he declared.
“As an activist, it resonated to see the levers that can be pushed,” Mr. Loeb said.
Coloring the discussion was a recognition of setbacks on the gay rights front in recent months, including antigay laws passed in Russia, Nigeria and Uganda.
Making things more awkward: the presence of some of those governments at the forum. The Russian government gave a party on Tuesday night to celebrate its role as host of the 2014 Winter Olympic Games, a soiree that featured both the country’s deputy prime minister, Dmitry Kozak, and the Russian-born model Natalia Vodianova. And Nigeria’s president, Goodluck Jonathan, was a featured panelist at Davos only the day before.
“For many, these stories seem like a triple blow to the cause of equality,” said Navi Pillay, the United Nations’ high commissioner for human rights. But she urged the assembled to consider the long-term progress that had been made.
Chad Griffin, president of the Human Rights Campaign, called for a little activism at the forum.
“Fifty feet across the street is President Jonathan,” he said. “He wants your business. Ensure that you ask the questions.”
Thursday’s discussion attracted an array of prominent attendees, including Richard Branson; William Browder, the head of the hedge fund Hermitage Capital Management and a critic of the Kremlin; and Brad Smith, Microsoft’s top in-house lawyer.
Also present were two Democratic United States senators, Patrick Leahy of Vermont and Claire McCaskill of Missouri, the latter of whom kidded Mr. Singer about his unusual circumstances as gay rights activist and Republican moneyman.
“Paul, it’s a devil and angel situation,” Ms. McCaskill said. “The angel hopes they see the light. The devil hopes they stay there so that we can beat them over and over again.”
She later added, “Let me be clear: I want the angel to win.”

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