Morning Coffee: Deutsche Bank's 39 year-old $1bn trader was fired last summer and he's suing. HSBC finds you can’t do deals with no bankers

Investment banking, and particularly trading, is an industry full of people with strong convictions, lots of self-confidence and plenty of spare money to spend on lawyers.  So when people fall out with their employers, it can get very dramatic, very quickly.  And it looks like Deutsche Bank might have a bit of a situation on their hands.

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A few years ago, Mark Spehn was one of the most profitable employees on one of Deutsche’s most profitable teams.  He made a trade in the distressed debt of a shipping company which turned into an insanely profitable equity play when freight rates went through the roof during the pandemic. In 2021, Spehn - then aged 35 - is likely to have cleared over $1bn in revenues.

But something went off the rails.  The Deutsche distressed debt team have had quite a bit of turnover – Michael Sutton and Alex Mahler left to set up Alex Capital, Robbie Harris came in to manage the team’s analysts and at the end of last year, Frank Kotsen from BNP Paribas replaced Gavin Colquhoun as the global head.  In between these moves, some time last summer, Spehn’s “employment was terminated.” Now he's suing Deutsche at a London employment tribunal.

Court filings state that Spehn's case is alleging both disability discrimination and whistleblowing – we’ve asked Spehn for clarification, but it’s not yet clear what disability they might be referring to.  Spehn is a volunteer and benefactor of an autism charity, which might be a clue, although he’s also made a social media post saying that “I have suffered a serious health condition as a result of what happened to me at DB”. The condition is not stated. 

For its part, Deutsche are saying that “We refute the tribunal claim that has been made and are defending ourselves against it”.  Whistleblowing and discrimination cases in the UK come with unlimited damages. Unfair dismissal cases do not. 

Deutsche Bank may have a fight on its hands. Someone who’s demonstrated the strength of will to hold on to a contrarian trade for a period of years is unlikely to give up easily, and distressed debt traders are not put off by the prospect of litigation.  On the other hand, experience has shown that if your health has been damaged by stress, it’s really rare for it to be improved by suing your employer. Sphen is clearly a determined and well-capitalized person. This could be an exhausting battle.

Elsewhere, when HSBC announced that it was going to be shutting down its European and American equity capital markets business, somebody presumably had the job of going around and telling the clients.  Among those clients would have been Bain Capital and Cinven, owners of the German pharma company Stada.  HSBC was, at the time, joint bookrunner on Staden’s $1.5bn IPO (valuing the company at around $10bn) – now they’re not.

This shouldn't be a surprise.  Although banks always attempt to shut things down in an orderly way, nobody really wants their transaction to be handled by people who have their minds half on future unemployment.  And if there are IPO fees and league table credits to be handed out, financial sponsors clients are likely to want to give them to a bank with which they can look forward to an ongoing relationship.  (In this case, HSBC’s loss was a gain for Bank of America, which replaces them as joint bookrunner).

Georges Elhedery is likely to have budgeted for this as part of the cost of closing down the business, of course.  You can’t expect to keep the deals and get rid of the bankers, and no matter when a decision like this is made, there are always going to be some transactions in the middle of being executed.  But it’s a clear reminder that cutting costs isn’t costless.

Meanwhile …

A few weeks ago we noticed that Vis Raghavan was looking internally for talent to drive his growth project at Citi rather than just hiring his old colleagues from JPMorgan.  Now there’s even more evidence – Ashu Kullar, the former head of India, has been moved across to London in order to lead the EMEA and Asia financial sponsors business. (Financial News)

Possibly an all-time terrible idea – a third year Associate suggests that junior bankers should protest their bonuses with a sort of “go-slow”, making meetings even more unendurable and nitpicking presentations and models to even greater levels of pointlessness in order to make the MDs’ lives a little more annoying.  While making their own lives much worse.  (Wall Street Oasis)

Apollo is aiming to take over more of the market (and to annoy linguistic pedants) by building an open electronic trading platform for loans, but still calling them “private” credit. (Bloomberg)

He's not exactly a neutral party, and it’s not completely clear who asked, but the President of Colombia has said that cocaine is no more harmful than whisky. (FT)

Mewing is some kind of jaw exercise, rizz is short for charisma and you can just seemingly drop random Greek letters into conversation as if you were an options quant.  That’s the basis of modern teenage slang, from which apparently some parents are buying noise-cancelling headphones to protect themselves. (WSJ)

Wild tales of a Silicon Valley founder, a Steve Mnuchin lookalike, and angry investors in an anti-gravity machine.  The downward slope of Joseph Firmage’s career seems to have begun the day he was first contacted by aliens. (Bloomberg)

Bill Ackman has been causing trouble on X the app formerly known as Twitter again. (FT)

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