Deutsche Sucks Up $50 Million CDO Overstatement
by StockJockey
Tuesday, January 10, 2006 - 8:09 am
A trader of CDOs (which are just pools of debt that are sliced into varying yield pieces) appears to have inflated Deutsche Bank’s books by some $50 million. The firm has suspended the London-based derivatives trader, Anshul Rustagi, and notified the Financial Services Authority about the matter, noting that i did not regard it as criminal. CDOs have caused problems at other banks in the recent past: Barclays PLC and Bank of America Corp. last year confidentially settled claims that they either had missold or mismanaged CDOs for clients
Deutsche Bank Probes Disparity [Wall Street Journal]
Comments:
A sell-side trader mis-marking his book at year-end? I’m shocked, shocked!
Every end-Novenber and end-December I amaze my colleagues by predicting with a high degree of accuracy which sell-side traders are going to leave for new jobs. My methodology is simple: at the month-end corresponding to the relevant bank’s year-end, just look for the guy who provides ridiculously aggressive marks. He’s trying to squeeze out every last bit of PNL in order to boost his bonus before checking out. I love to make them sweat by calling up and demanding: “You have three choices: 1) get the mark changed; 2) trade it with me where you marked it; 3) get your boss on the phone and let’s all have a friendly chat.” I’ve made decent money off traders who are willing to do a little bit of (2) to make the problem go away. After all, it’s going to be some new guy’s loss!
Posted by on 12/31/1969 at 03:00 PM
How enterprising! Anyone else ever used this technique of drumming up business?
Posted by UTC on 12/31/1969 at 03:00 PM
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