Jutting, it seems, was working on a jumbo deal with a Luxembourg client. The plan was that a Merrill subsidiary would buy shares in EDF, sell them to the client, then buy them back a few days later. Result: a risk-free tax gain for the client.
However, Merrill was uneasy, blocking the trade at the last minute for fear it breached the rules against artificial deals.
But, according to the WSJ, the bank was less squeamish about Seft trades he did for another customer. He was promoted and sent to Asia.
Some managers expressed concerns about Seft, with one describing its trades as “sleazy”. A report to Merrill management warned they carried “reputational risks” and “could be portrayed as tax avoidance”.
Now it emerges that regulators are looking closely at Merrill’s dividend arbitrage work. But, given that the trading appears to have taken place in London, guess which watchdog that might be — our fearless FCA? Of course not.
As ever, our cousins at the US Securities and Exchange Commission are having to do the legwork.
Merrill, which denies its trades violated any rules, has come over all sheepish about Seft lately.
“Don’t refer to Seft anymore,” a London manager is said to have told staff last summer.
It would be nice if UK regulators mentioned it more often.
Saudi distress signal
As Shell’s Ben van Beurden tours his shareholders to sell the BG takeover, another deal looms that would make Shell-BG smaller than a pinprick.
Saudi Arabia is considering selling or floating Aramco, the state company with
16% of the planet’s oil reserves.
That the Saudis would even talk of selling their $1 trillion cash cow when oil is below $35 a barrel tells us two connected things: they don’t reckon crude prices are rising any time soon, and — more concerning for stability in the Middle East — they’re even more worried about their economy than anyone thought.
