The Wall Street Journal-20080128-Deal Journal - Breaking Insight From WSJ-com
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Deal Journal / Breaking Insight From WSJ.com
Full Text (512 words)The Morgans'
Selfless Deed?
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Wall Street Giants Take
Huge Risks in Agreeing
To Underwrite SocGen
Are Wall Street banks, the ultimate bastion of competitive capitalism, coming down with a case of altruism?
How else to explain J.P. Morgan Chase and Morgan Stanley agreeing to help a fellow bank-in-need by underwriting a proposed $8 billion capital raising for Societe Generale, the rogue-trader-benighted French bank?
According to a Reuters report, some analysts are speculating that to draw enough demand, the share offering may have to be done at the near-fire-sale prices of 50 euros ($73) to 65 euros a share. As underwriters, J.P. Morgan and Morgan Stanley could get stuck with any unsold shares. In these volatile markets, whether the deal gets done at all is anyone's guess.
Of course, it may not be a completely selfless act on the part of the scions of the House of Morgan. Some investors may want to get in on the action in case rival BNP Paribas steps in with a bid for SocGen.
And maybe they are encouraged by the recent experiences of Bank of America and Citigroup. BofA on Friday raised $12 billion in a stock offering -- double the $6 billion the bank sought. And Citigroup is flush following its own $19 billion equity issuance last week.
-- Heidi Moore
Leeson's Lesson:
'Rogue' Can Pay
One rogue trader's downfall is turning into another's windfall.
As media types scour the globe for experts who can offer some insight into how a lone trader could rack up more than $7 billion in losses at Societe Generale, they have generated a bonus for another former trader: Nick Leeson, whose $1.3 billion in losses surfaced in 1995 and brought down Barings Bank, one of Britain's oldest merchant banks.
An agent for Mr. Leeson -- who was released from jail in 1999 after serving half of a 6 1/2-year sentence -- said he has been charging United Kingdom media organizations for exclusive interviews. Among the buyers: British Broadcasting Corp., a media conglomerate funded by U.K. television-licensing fees. A BBC representative confirmed the broadcaster paid Mr. Leeson for an interview.
Mr. Leeson, who split up with his wife and was diagnosed with colon cancer while in prison, has shown a knack for turning misfortune into gain. After his release, he earned a degree in psychology, remarried and hit the conference circuit, giving speeches on risk management and on his life experiences. He took a job with the Galway United football club in Ireland, where he now serves as chief executive. His book on the Barings scandal -- titled "Rogue Trader" -- was turned into a movie starring Ewan McGregor. A second book, titled "Back from the Brink: Coping with Stress," was published by Virgin Books in 2005.
In the BBC interview, Mr. Leeson said: "The thing that I wanted, and I'm sure the thing that this guy wanted as well, was success. Success was the thing that drove him on . . . Probably his biggest fear is the fear of failure."
-- Alistair MacDonald and Aaron O. Patrick
