JPMorgan Needs Clients Like Jeffrey Epstein

JPMorgan just settled another lawsuit for its role in facilitating Jeffrey Epstein’s crimes, settling with the US Virgin Islands for US$ 75 million, and crucially, avoiding discovery. They had previously settled a Jane Doe class action lawsuit in June for US$ 290 million. This also comes on the heels of financier Leon Black - infamous for sending minders around NYC hotspots to recruit young women for his notorious Hamptons parties - personally shelling out $62.5 million in August to make the issue of his Epstein Island visits disappear.

JPMorgan continued to bank Jeffrey Epstein for years after he was released from jail for raping a teenage girl. But, they are hardly an outlier. Epstein’s get-out-of-jail party was attended by George Stephanopoulos, Katie Couric, Chelsea Handler, and of course, Prince Andrew.

Every bank has a roster of Jeffrey Epsteins. They need them. They support them. They make each other rich.

Go to the south of France, Dubai, or Mykonos and check out the “yacht girls.” I spent my analyst bonus ever summer in St. Tropez. Now, it’s all on Instagram - the depravity on the yachts and in the clubs - a total disregard for money, accountability, and societal norms. These are the billionaires that don’t appear on any rich lists, and they’re all clients of Citigroup, Morgan Stanley, and Goldman Sachs.

Jes Staley was Jeffrey Epstein’s banker at JPMorgan, and then went on to become the CEO of Barclays.

“That was fun. Say hi to Snow White,” Staley emailed Epstein in July 2010, according to filings with the US District Court in Manhattan.

“What character would you like next?” Epstein replied.

“Beauty and the Beast,” Staley responded, to which Epstein replied: “Well one side is available.” It’s no wonder JPMorgan settled to avoid discovery.

None of this was surprising to me.

When I worked on the fixed income syndicate desk for Citigroup (in New York, London, and Hong Kong), we facilitated horrendous behavior for many nefarious clients as a matter of good business.

We’d fulfill requests for girls and drugs. We’d add unnecessary cities to roadshows, paid for by the banks, solely because of the nightlife extracurriculars. Bankers in New York would invent excuses to take their clients on Asian investor roadshows just to show them a good, and exceptionally deviant, time. It was a running joke; wedding rings were optional.

The former head of leveraged finance at a prominent US investment bank (a delightful family man, and a close friend of mine) was chastised for not fulfilling a request from a CEO to take the deal team to a late night karaoke bar - a euphemism for brothel. “Future business was on the line,” senior management said, and “the competition [was] more than eager to oblige.”

Many of our celebratory closing dinners were “men only” for this very reason. The karaoke bars would provide fake receipts that looked like really expensive restaurant tabs, just so that we could expense it. But internally, everyone knew the drill: participate or risk losing the business, in which case it’s your ass.

Here’s just one example. I’ll keep the details vague to protect the innocent:

During my tenure, one of the most prestigious US investment banks was leading a benchmark US$ bond deal for one of the largest property developers in China, along with several other global banks, or bookrunners. As an inaugural bond deal, it required taking the founder & CEO on a global roadshow to meet with investors. (If you don’t know what that is, here’s an explanation.)

The gross fees on the deal were approximately US$ 10 million, but as pre-IPO financing, the real prize would be winning favor with the client and thus securing the subsequent IPO mandate, and the US$ 50-60 million in fees that go with that.

During the roadshow, the very intoxicated billionaire CEO assaulted a young female analyst twice.

After complaining internally, instead of stepping down from the transaction, the bank responded by sending the victim home, removing her from the deal team… and punitively thinking twice about future (career-boosting) deal assignments.

Banks claim this kind of behavior is a deviation from the norm. But as someone who sat above the Chinese Wall, as the bridge between Investment Banking and Sales & Trading, doing deals with every single bank on Wall Street, I saw it all; this was commonplace. Deviance was encouraged.

Banks also claim these anecdotes are “a thing of the past.” In fairness, this is broadly true, except in the Emerging Markets, where societal norms are “different” and most of the CEOs are billionaire founders. Too much money is at stake.

The culture might have evolved, but the people haven’t changed. Many of the people I worked with are still there, albeit in much more senior and influential positions.

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John LeFevre is the creator of @GSElevator and the author of the New York Times bestselling book, Amazon Book of the Month, and TIME Book of the summer, Straight To Hell: True Tales of Deviance, Debauchery, And Billion-Dollar Deals.