Wall Street – Cross-Dressing Parties

Background:  http://en.wikipedia.org/wiki/Kappa_Beta_Phi

Members of the Wall Street Chapter

About 15 to 20 new members are inducted each year. Historically, the organization has inducted top executives of various Wall Street firms, including:

The Full Membership List of Wall Street’s Secret Society:  

Kappa Beta Phi – Wall Street Chapter

One-Percent Jokes and Plutocrats in Drag: What I Saw When I Crashed a Wall Street Secret Society

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Recently, our nation’s financial chieftains have been feeling a little unloved. Venture capitalists are comparing the persecution of the rich to the plight of Jews at Kristallnacht, Wall Street titans are saying that they’re sick of being beaten up, and this week, a billionaire investor, Wilbur Ross, proclaimed that “the 1 percent is being picked on for political reasons.”

Ross’s statement seemed particularly odd, because two years ago, I met Ross at an event that might single-handedly explain why the rest of the country still hates financial tycoons – the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi.

Adapted
from Kevin Roose’s bookYoung Money, published today by Grand Central Publishing.

“Good evening, Exalted High Council, former Grand Swipes, Grand Swipes-in-waiting, fellow Wall Street Kappas, Kappas from the Spring Street and Montgomery Street chapters, and worthless neophytes!”

It was January 2012, and Ross, wearing a tuxedo and purple velvet moccasins embroidered with the fraternity’s Greek letters, was standing at the dais of the St. Regis Hotel ballroom, welcoming a crowd of two hundred wealthy and famous Wall Street figures to the Kappa Beta Phi dinner. Ross, the leader (or “Grand Swipe”) of the fraternity, was preparing to invite 21 new members — “neophytes,” as the group called them — to join its exclusive ranks.

Looking up at him from an elegant dinner of rack of lamb and foie gras were many of the most famous investors in the world, including executives from nearly every too-big-to-fail bank, private equity megafirm, and major hedge fund. AIG CEO Bob Benmosche was there, as were Wall Street superlawyer Marty Lipton and Alan “Ace” Greenberg, the former chairman of Bear Stearns. And those were just the returning members. Among the neophytes were hedge fund billionaire and major Obama donor Marc Lasry and Joe Reece, a high-ranking dealmaker at Credit Suisse. [To see the full Kappa Beta Phi member list, click here.] All told, enough wealth and power was concentrated in the St. Regis that night that if you had dropped a bomb on the roof, global finance as we know it might have ceased to exist.

During his introductory remarks, Ross spoke for several minutes about the legend of Kappa Beta Phi – how it had been started in 1929 by “four C+ William and Mary students”; how its crest, depicting a “macho right hand in a proper Savile Row suit and a Turnbull and Asser shirtsleeve,” was superior to that of its namesake Phi Beta Kappa (Ross called Phi Beta Kappa’s ruffled-sleeve logo a “tacit confession of homosexuality”); and how the fraternity’s motto, “Dum vivamus edimus et biberimus,” was Latin for “While we live, we eat and drink.”

On cue, the financiers shouted out in a thundering bellow: “DUM VIVAMUS EDIMUS ET BIBERIMUS.”

The only person not saying the chant along with Ross was me — a journalist who had sneaked into the event, and who was hiding out at a table in the back corner in a rented tuxedo.

Several Kappas at the table next to me, presumably discussing the coming plutocracy.

I’d heard whisperings about the existence of Kappa Beta Phi, whose members included both incredibly successful financiers (New York City’s Mayor Michael Bloomberg, former Goldman Sachs chairman John Whitehead, hedge-fund billionaire Paul Tudor Jones) and incredibly unsuccessful ones (Lehman Brothers CEO Dick Fuld, Bear Stearns CEO Jimmy Cayne, former New Jersey governor and MF Global flameout Jon Corzine). It was a secret fraternity, founded at the beginning of the Great Depression, that functioned as a sort of one-percenter’s Friars Club. Each year, the group’s dinner features comedy skits, musical acts in drag, and off-color jokes, and its group’s privacy mantra is “What happens at the St. Regis stays at the St. Regis.” For eight decades, it worked. No outsider in living memory had witnessed the entire proceedings firsthand.

A Kappa neophyte (left) chats up a vet.

I wanted to break the streak for several reasons. As part of my research for my book,Young Money, I’d been investigating the lives of young Wall Street bankers – the 22-year-olds toiling at the bottom of the financial sector’s food chain. I knew what made those people tick. But in my career as a financial journalist, one question that proved stubbornly elusive was what happened to Wall Streeters as they climbed the ladder to adulthood. Whenever I’d interviewed CEOs and chairmen at big Wall Street firms, they were always too guarded, too on-message and wrapped in media-relations armor to reveal anything interesting about the psychology of the ultra-wealthy. But if I could somehow see these barons in their natural environment, with their defenses down, I might be able to understand the world my young subjects were stepping into.

So when I learned when and where Kappa Beta Phi’s annual dinner was being held, I knew I needed to try to go.

Getting in was shockingly easy — a brisk walk past the sign-in desk, and I was inside cocktail hour. Immediately, I saw faces I recognized from the papers. I picked up an event program and saw that there were other boldface names on the Kappa Beta Phi membership roll — among them, then-Citigroup CEO Vikram Pandit, BlackRock CEO Larry Fink, Home Depot billionaire Ken Langone, Morgan Stanley bigwig Greg Fleming, and JPMorgan Chase vice chairman Jimmy Lee. Any way you count, this was one of the most powerful groups of business executives in the world. (Since I was a good 20 years younger than any other attendee, I suspect that anyone taking note of my presence assumed I was a waiter.)

I hadn’t counted on getting in to the Kappa Beta Phi dinner, and now that I had gotten past security, I wasn’t sure quite what to do. I wanted to avoid rousing suspicion, and I knew that talking to people would get me outed in short order. So I did the next best thing — slouched against a far wall of the room, and pretended to tap out emails on my phone.

The 2012 Kappa Beta Phi neophyte class.

After cocktail hour, the new inductees – all of whom were required to dress in leotards and gold-sequined skirts, with costume wigs – began their variety-show acts. Among the night’s lowlights:

• Paul Queally, a private-equity executive with Welsh, Carson, Anderson, & Stowe, told off-color jokes to Ted Virtue, another private-equity bigwig with MidOcean Partners. The jokes ranged from unfunny and sexist (Q: “What’s the biggest difference between Hillary Clinton and a catfish?” A: “One has whiskers and stinks, and the other is a fish”) to unfunny and homophobic (Q: “What’s the biggest difference between Barney Frank and a Fenway Frank?” A: “Barney Frank comes in different-size buns”).

• Bill Mulrow, a top executive at the Blackstone Group (who was later appointedchairman of the New York State Housing Finance Agency), and Emil Henry, a hedge fund manager with Tiger Infrastructure Partners and former assistant secretary of the Treasury, performed a bizarre two-man comedy skit. Mulrow was dressed in raggedy, tie-dye clothes to play the part of a liberal radical, and Henry was playing the part of a wealthy baron. They exchanged lines as if staging a debate between the 99 percent and the 1 percent. (“Bill, look at you! You’re pathetic, you liberal! You need a bath!” Henry shouted. “My God, you callow, insensitive Republican! Don’t you know what we need to do? We need to create jobs,” Mulrow shot back.)

• David MooreMarc Lasry, and Keith Meister — respectively, a holding company CEO, a billionaire hedge-fund manager, and an activist investor — sang a few seconds of a finance-themed parody of “YMCA” before getting the hook.

• Warren Stephens, an investment banking CEO, took the stage in a Confederate flag hat and sang a song about the financial crisis, set to the tune of “Dixie.” (“In Wall Street land we’ll take our stand, said Morgan and Goldman. But first we better get some loans, so quick, get to the Fed, man.”)

A few more acts followed, during which the veteran Kappas continued to gorge themselves on racks of lamb, throw petits fours at the stage, and laugh uproariously. Michael Novogratz, a former Army helicopter pilot with a shaved head and a stocky build whose firm, Fortress Investment Group, had made him a billionaire, was sitting next to me, drinking liberally and annotating each performance with jokes and insults.

“Can you fuckin’ believe Lasry up there?” Novogratz asked me. I nodded. He added, “He just gave me a ride in his jet a month ago.”

The neophytes – who had changed from their drag outfits into Mormon missionary costumes — broke into their musical finale: a parody version of “I Believe,” the hit ballad from The Book of Mormon, with customized lyrics like “I believe that God has a plan for all of us. I believe my plan involves a seven-figure bonus.” Amused, I pulled out my phone, and began recording the proceedings on video. Wrong move.

The grand finale, a parody of “I Believe” from The Book of Mormon

“Who the hell are you?” Novogratz demanded.

I felt my pulse spike. I was tempted to make a run for it, but – due to the ethics code of the New York Times, my then-employer – I had no choice but to out myself.

“I’m a reporter,” I said.

Novogratz stood up from the table.

“You’re not allowed to be here,” he said.

I, too, stood, and tried to excuse myself, but he grabbed my arm and wouldn’t let go.

“Give me that or I’ll fucking break it!” Novogratz yelled, grabbing for my phone, which was filled with damning evidence. His eyes were bloodshot, and his neck veins were bulging. The song onstage was now over, and a number of prominent Kappas had rushed over to our table. Before the situation could escalate dangerously, a bond investor and former Grand Swipe named Alexandra Lebenthal stepped in between us. Wilbur Ross quickly followed, and the two of them led me out into the lobby, past a throng of Wall Street tycoons, some of whom seemed to be hyperventilating.

Once we made it to the lobby, Ross and Lebenthal reassured me that what I’d just seen wasn’t really a group of wealthy and powerful financiers making homophobic jokes, making light of the financial crisis, and bragging about their business conquests at Main Street’s expense. No, it was just a group of friends who came together to roast each other in a benign and self-deprecating manner. Nothing to see here.

But the extent of their worry wasn’t made clear until Ross offered himself up as a source for future stories in exchange for my cooperation.

“I’ll pick up the phone anytime, get you any help you need,” he said.

“Yeah, the people in this group could be very helpful,” Lebenthal chimed in. “If you could just keep their privacy in mind.”

I wasn’t going to be bribed off my story, but I understood their panic.  Here, after all, was a group that included many of the executives whose firms had collectively wrecked the global economy in 2008 and 2009. And they were laughing off the entire disaster in private, as if it were a long-forgotten lark. (Or worse, sing about it — one of the last skits of the night was a self-congratulatory parody of ABBA’s “Dancing Queen,” called “Bailout King.”) These were activities that amounted to a gigantic middle finger to Main Street and that, if made public, could end careers and damage very public reputations.

After several more minutes spent trying to do damage control, Ross and Lebenthal escorted me out of the St. Regis.

As I walked through the streets of midtown in my ill-fitting tuxedo, I thought about the implications of what I’d just seen.

The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.

The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.

The last thought I had, and the saddest, was that many of these self-righteous Kappa Beta Phi members had surely been first-year bankers once. And in the 20, 30, or 40 years since, something fundamental about them had changed. Their pursuit of money and power had removed them from the larger world to the sad extent that, now, in the primes of their careers, the only people with whom they could be truly themselves were a handful of other prominent financiers.

Perhaps, I realized, this social isolation is why despite extraordinary evidence to the contrary, one-percenters like Ross keep saying how badly persecuted they are. When you’re a member of the fraternity of money, it can be hard to see past the foie gras to the real world.

Copyright 2014 by Kevin Roose. Reprinted by permission of Grand Central Publishing. All rights reserved.

 

Barclays and Credit Suisse

Barclays, Credit Suisse Battle Banker Exodus, Legal Woes

By Elisa Martinuzzi May 5, 2014 2:00 PM ET

Barclays Plc (BARC), Credit Suisse Group AG and UBS AG (UBSN) will confront questions this week about key banker departures, legal challenges and their efforts to boost profitability.

Barclays last week lost three top bankers in the U.S. and Asia before a May 8 strategy announcement that will probably include shrinking the London-based firm’s investment bank. Credit Suisse, which holds a shareholder meeting May 9, is facing potential U.S. criminal charges over its role in helping Americans avoid paying taxes, people familiar with the matter said last week. UBS AG, meeting investors tomorrow, is falling short of profit goals, according to analysts’ estimates.

Europe’s top banks are under heightened scrutiny from shareholders, regulators and legal authorities after they’ve already lost market share in some investment banking businesses to U.S. competitors. Meanwhile key areas of Wall Street revenue are under pressure: JPMorgan Chase & Co. (JPM), the biggest U.S. bank, said last week that it expects trading revenue to drop about 20 percent this quarter from a year ago.

“Whether you’re European or in the U.S., what you’re facing is a declining trading environment,” said Charles Peabody, an analyst at Portales Partners LLC in New York. “So where you gain share is on the investment banking side, especially underwriting, and the U.S. banks have been doing that.”

Photographer: Gianluca Colla/Bloomberg

Brady Dougan, chief executive officer of Credit Suisse Group AG.

‘Disadvantage’

Barclays will now have to compete without some of the key dealmakers it acquired with its purchase of Lehman Brothers Holdings Inc.’s North American operations. Hugh “Skip” McGee, the Lehman Brothers alumnus who received a stock bonus more than twice the size of Barclays Chief Executive Officer Antony Jenkins, left last week. That was followed by the departures of Ros Stephenson to Zurich-based UBS and Robert Morrice, the Asia-Pacific chairman and CEO, who is retiring after 17 years.

The Lehman Brothers acquisition helped Barclays in the U.S. The bank ranks higher among underwriters of U.S. stock sales than it does in Europe, according to data compiled by Bloomberg. The bank is also more active on mergers involving U.S. companies than on European deals, the data show.

“If people are departing, and you don’t have continuity in your relationships, that’s a disadvantage,” Peabody said.

Investors are demanding that Jenkins, 52, outline a strategy for the investment bank, the biggest source of income for the firm, after falling behind on targets and boosting pay.

‘Bad Bank’

Return on average equity at Barclays’s securities unit, a measure of profitability, fell to 8.2 percent last year from 13 percent in 2012, short of Jenkins’s target of at least 11 percent in 2015.

Barclays could eliminate 7,500 jobs at its investment bank, according to an April 22 report by Sanford C. Bernstein. The European fixed-income, currencies and commodities business may be the hardest hit, with about 5,000 job losses, analysts led by Chirantan Barua said in the note. Cuts of 6,500 to 7,500 equate to between 25 percent and 30 percent of the unit’s employees, the report estimated.

In the strategy review this week, Barclays will say it’s naming Corporate and Investment Bank Co-Head Eric Bommensath to oversee a so-called bad bank of unwanted assets and units, leaving Tom King in charge of the investment bank, a person familiar with the plan said last week. The bad bank will include the commodities business and other units previously assigned to the bank’s “exit quadrant,” including some of the firm’s rates trading, derivatives and other fixed-income assets, the person said.

‘Unforeseen Events’

The challenge for Barclays “is to continue the rebalancing of the group away from being a fixed-income dominated investment bank to being a more balanced investment bank,” UBS analysts led by John-Paul Crutchley said in a May 1 research note. Investors would favor “a restructuring that reduced the overall balance sheet and lowered capital intensity.”

Credit Suisse (CSGN) CEO Brady Dougan, 54, will probably face questions at his company’s May 9 annual meeting about the implications of possible U.S. charges against the firm, the largest of the 14 Swiss banks under criminal investigation in a crackdown on offshore tax evasion.

Clients — including trustees, fiduciaries and pension funds — could be forced to cut ties with a financial institution labeled a criminal enterprise, some lawyers and bankers have said.

“Unforeseen events can occur,” Brad Hintz, an analyst at Sanford C. Bernstein in New York told Bloomberg Television last week. “A criminal charge is going to cause the clients to pull away and you can set off that wildfire in confidence.”

Shedding Assets

The uncertainty is already weighing on BNP Paribas SA. (BNP) France’s biggest bank posted the biggest two-day loss in almost a year last week as analysts cut their ratings on the stock, citing concern over potential criminal charges for violations of U.S. sanctions barring business with prohibited countries. BNP Paribas said on April 30 it may need to pay “far in excess of” the $1.1 billion it has set aside for legal investigations by U.S. authorities.

At UBS, which has already retrenched in fixed income and settled a U.S. tax case, the challenge for CEO Sergio Ermotti is shedding unwanted assets fast enough and cutting costs. Ermotti, 53, will seek to reassure shareholders at a meeting in Zurich tomorrow that the firm won’t need to review its objectives after the Swiss regulator’s demands that the bank hold more capital to cover legal risks delayed profitability targets last year.

UBS may post a return on equity of 12.9 percent in 2016, missing a target of 15 percent, according to the average estimate of 15 analysts surveyed by Bloomberg.

As of Dec. 31, UBS was about 1 billion Swiss francs ($1.14 billion) short of its cost-reduction target, leaving an additional 3.2 billion francs of targeted expense savings, Citigroup Inc. analysts led by Kinner Lakhani wrote in a May 2 research note. Costs and capital are two areas that will probably be the focus of the investor day, the analysts wrote.

To contact the reporter on this story: Elisa Martinuzzi in Milan atemartinuzzi@bloomberg.net

To contact the editors responsible for this story: Edward Evans ateevans3@bloomberg.net; Frank Connelly at fconnelly@bloomberg.netMark Bentley, Christine Harper

 

 

 

 

Libor

Registered Business # CIK#: DUNS #:
Respondent T&C Ref: Other
Rothschild 36 Rothschild Bankers charged
US regulator sues 16 banks for alleged Libor rigging BBC News  A US regulator has sued 16 banks for allegedly manipulating the London interbank offered rate (Libor).
The Libor rate is used to set trillions of dollars of financial contracts, including mortgages and financial transactions around the world.
The regulator said the manipulation caused substantial losses to 38 US banks which were shut down during and after the 2008 financial crisis.
The sued banks include Barclays, HSBC, Citigroup and Royal Bank of Scotland.
Former UBS and Citigroup Trader charged over Libor BBC News

Former UBS and Citigroup trader Tom Hayes has been charged by the Serious Fraud Office (SFO) in connection with its investigation into the manipulation of Libor.

Mr Hayes, 33, has been charged with eight counts of conspiracy to defraud, and will appear before Westminster Magistrates’ Court on Thursday.