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2. Profile: A banker giving back

Once you amass a certain wealth, you are considered a "family office" in the eyes of the wealth management industry, which means you are accorded their highest status. Basically, you are one of their most coveted would-be clients. The fact is that family offices are among the highest priorities now. And more companies are getting more creative with their marketing. Of course, they will dangle an interesting mix of custodial, brokerage, administrative services in front of you. But the most aggressive of these companies will offer much more, often with a personal touch.

Ascent Private Capital Management, a new unit of U.S. Bancorp, has hired a former professor at the University of California, Berkeley, to help "clients discover their pasts, skeletons and all, and gain perspective on their Gatsby-sized fortunes," notes Bloomberg. "The job is the creation of Michael Cole, Ascent's president, who's determined to make Minneapolis-based U.S. Bancorp, the fifth-largest U.S. lender, a contender in the market for high-end financial services."

While these firms yearn for billionaires, they would be happy to sign on young millionaires with their eye on future wealth. The number of millionaires in North America rose 11.5 percent to 3.73 million last year.

In general, we're seeing a bit more diversity these days. One firm, CV Advisors, made its mark by wooing wealthy Latin Americans. Iconiq has sought out early Facebook employees. It manages $5 billion on behalf of just 200 clients.

All in all, it's nice to see smaller firms trying to make their mark against the big boys. It will be interesting to see what sort of marketing emerges from the industry's trenches. It's a competitive game. It would be nice to be wooed.

For more:
- here's the article

Read more about: family offices
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By Jim Kim

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3. JPMorgan faces more enforcement actions

At the height of the financial crisis and in the aftermath, bankers were stereotyped as greedy manipulators. That image has proven to be remarkably enduring, as an SEC prosecutor scored points with a jury for painting a mid-level Goldman Sachs executive as the personification of greed.

Thankfully, there are many examples of decent people in the industry. And it is a pleasure to comment on Audette Exel, a banker who puts the lie to the stereotype.

Notes Bloomberg Markets: "In New York, London, Bermuda and Sydney, she's a company director and the owner and head of Isis (Asia Pacific) Pty, which advises companies on mergers and raises money for fund managers such as New York-based Aquiline Capital Partners LLC. In the dirt-poor Himalayan foothills and civil war-ravaged East African bush, Exel is better known as the caftan-wearing founder and chief fundraiser of the Isis Foundation, which she says provides life-saving health care and education for 20,000 people a year in two of the world's most impoverished nations, Nepal and Uganda."

She doesn't have as much at her disposal as Bill Gates and William Buffett, but she also didn't wait until the end of her career before she started giving back.

"Isis AP pursues deals as relentlessly as its competitors, with one difference: Exel turns over all of the Sydney-based company's profit to her foundation, which spends it on projects ranging from a neonatal intensive care ward in Kiwoko, Uganda, to a refuge for 136 Nepalese children who had faced being sold for prostitution and child labor."

Now that's commitment. You will be hard-pressed to find other closely held concerns do the same. As for her personal fortune, it's something not measured in money. She often pays herself a small salary only, if at all. She drives a 1997 RAV4. And until recently she didn't own a residence.

It would be asking a lot for people to emulate her. But we can all admire her. And it must be noted that others, quite young, are thinking about how they can turn success into social good.

For more:
- here's the article

Read more about: Philanthropy, bankers
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By Jim Kim

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4. Aluminum market controversy spawns lawsuits

The financial crisis has proven to be a fat cornucopia for prosecutors and a long-running nightmare for big banks. The effort to charge banks with myriad sins in the run-up to the credit implosion of 2008-2009 continues to charge ahead. The latest development: Prosecutors in two states have targeted JPMorgan Chase with criminal and civil inquiries into the bank's conduct when it sold mortgage-backed securities that eventually imploded.

In California, the bank faces a civil inquiry that seems fairly far along and a criminal inquiry that may be lagging just a bit. In Philadelphia, the bank is grappling with similar investigations.

All in all, projected legal costs, which some thought had crested, seemed to heading right back up. JPMorgan booked a $678 million expense for additional litigation reserves in the second quarter, up from $323 million in the same period a year ago. The bank also said it could incur up to $6.8 billion in losses beyond its reserves, nearly $1 billion more than the first quarter of the year, as noted by DealBook.

These loses will hit the income statement over time, however, not all at once. While the bank has recovered from a profit perspective and will likely be able to bear the added costs, there might be considerable uncertainty around the issue from quarter to quarter.

Bank routinely deny the charges in the initial round of news articles. But they would be wise to settle these issues and move on. That effort will play out over time.

As the federal tasks force continues to target banks for fraudulent activity around MBSs, it's fair to wonder: who's next? There's a lot of evidence out there are already from many private and public suits. Bringing additional cases may not be that difficult.

For more:

- here's the article

Read more about: Enforcement Action
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By Jim Kim

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5. Tension at the top of Goldman Sachs

As if big banks didn't face enough legal risk right now, more lawsuits related to the great metals warehousing controversy have cropped up. In Florida, a suit has just been filed, targeting Goldman Sachs, JPMorgan Chase, Glencore and the London Metals Exchange (LME). That followed a suit filed in Detroit that aimed at Goldman Sachs, which owns a huge warehousing operating there. A third suit has been filed in Louisiana. All three seek class action status on behalf of aggrieved metals users, which generally think that the banks and exchange have employed racketeering tactics to drive up metals prices and delay delivery times, of mainly aluminum, at the expense of companies that actually use the metal.

At the same time, federal investigators are also taking a look. Given the many potential plaintiffs in this area, the risks loom large. One would think that banks have to gird for a protracted battle to eventually settle these cases and then move on.

For now anyway, the banks proclaim their innocence. "We believe this suit is without merit and we intend to vigorously contest it. We also note that aluminum prices are down 40 percent from their peak in 2006," a spokesman for Goldman Sachs was quoted by Reuters.

"There are no queues at our warehouses. We believe this suit has no merit," a JPMorgan spokesman added.

It will be interesting to see whether premiere companies decide to take the litigation express. The likes of Coca Cola and other large companies have complained in the past. Whether such companies will go so far as to sue Goldman Sachs, which might also be there investment bankers, remains to be seen. I doubt it, however.

For more:
- here's the article

Read more about: commodities, Aluminum
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By Jim Kim

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