FirstFT: Morgan Stanley orders lawyer to oversee block trading desk

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Hello. Morgan Stanley has ordered an in-house attorney to monitor the unit involved in a federal block trading probe, underscoring the seriousness of the probe and the lender’s efforts to step up oversight.

The Wall Street bank has onboarded one of its attorneys to sit on its U.S. Stock Syndicate office to oversee bankers and answer legal questions, according to people briefed on the arrangement.

The decision was made after Morgan Stanley put Pawan Passi, head of the U.S. equity syndicate office, on furlough last year, the sources added. Last week they furloughed a second stock union board member, Charles Leisure, according to people familiar with the matter. Neither Passi nor Leisure have been charged with wrongdoing. The bank has not confirmed that either employee is on leave.

Investigations by the Justice Department and the Securities and Exchange Commission into Morgan Stanley’s block trading activities gained momentum after the collapse last year of Bill Hwang’s Archegos Capital Management.

Block trades are wholesale stock sales executed by an investment bank, normally for a client, that tend to be large enough to move the markets. US authorities are investigating whether investors were given advance notice of the transactions, which have become a major legal risk for Wall Street banks.

Go Further With Alphaville: Here’s Why Block Trading Matters

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2. California governor seeks lifeline for last nuclear power plant Proposals to extend the operation of California’s last nuclear power plant – supposed to close by 2025 – have caused furor. Democratic Gov. Gavin Newsom, a longtime supporter of closing the plant, backtracked and embarked on a last-ditch effort to extend its operation for a decade. But why did he do this?

3. NASA cancels the launch of the lunar mission after an engine problem The launch of the first US rocket in 50 years capable of carrying humans to the Moon has been canceled after last-minute problems with an engine cooling system.

4. New York Yankees and LA fund join AC Milan investors The New York Yankees baseball franchise and Los Angeles investment fund Main Street Advisors are investing in AC Milan alongside Redbird, the American private equity group. RedBird is expected to announce the entry of its new partners tomorrow, when it is expected to officially take control of the club from its current owner, US hedge fund Elliott Management.

5. Kerry seeks to revive US emissions talks with China US climate envoy John Kerry hailed China’s efforts to tackle global warming and urged Beijing to resume stalled talks on the issue, even as tensions erupt with Washington over Taiwan’s status. The former secretary of state urged Xi Jinping to relaunch climate talks with the United States, saying he was “hopeful” that the countries could “get back together”.

The day ahead

US consumer confidence: The Conference Board is expected to report that consumer confidence rose to 97.9 in August, according to analysts polled by Refinitiv.

Companies: Best Buy is expected to see lower revenue in the second quarter, compared to a year ago, due to high inflation concerns. Information technology maker Hewlett Packard Enterprise, cybersecurity group CrowdStrike, pet supplies retailer Chewy and luxury clothing retailer PVH all reported earnings after the bell.

US real estate market: The pace of house price increases is expected to ease in June, adding to concerns about a potential slowdown in the housing market.

Jobs in the United States: Data from the US Bureau of Labor Statistics is expected to show job openings fell slightly to around 10.5 million in July from 10.7 million the previous month. This data will also show the number of employees who resigned from their jobs in July.

Unemployment in Mexico: Mexico’s unemployment rate is expected to have risen to 3.5% in July from 3.3% in June.

EU Security EU foreign ministers are meeting in Prague to discuss a bloc-wide ban on tourist visas for Russians entering the Schengen area, a proposal backed by Finland, Poland, the Czech Republic and the Baltic countries.

What else we read

Has Covid-19 made us all sicker? There is already evidence to support geriatrician Dr David Strain’s concerns that the coronavirus has made people susceptible to other conditions ranging from strokes to heart failure. “It’s something that we’re going to be dealing with in a very big way in the near future,” he said.

Hopes for an audit agreement between the United States and China A deal last week for US regulators to inspect the audits of Chinese companies could prevent around 200 groups from being kicked out of US exchanges. U.S. officials — along with hundreds of Chinese companies and global investors who hold about $1.4 billion of their shares — are hoping Beijing’s rare concession is real.

Passport delays hamper Brits on the go Thousands of British citizens renewing their passports this year, particularly those living overseas, have endured chaos in processing their papers which, along with flight disruptions and train strikes, has created a collapse of basic services.

The enemies of globalization are turning in circles Don’t miss Gideon Rachman’s latest column, which discusses whether globalization might indeed be the best system we could have – and whether de-globalization is even possible.

Big U.S. mortgage lenders mock smaller rivals The US housing market has been rocked by the steepest and fastest rise in interest rates in more than 50 years. But now the two biggest mortgage lenders are turning up the heat on their smaller competitors, offering rebates and other incentives to gain market share.

Leadership

“A lot of leaders aren’t necessarily nice people,” says Jeffrey Pfeffer, professor of organizational behavior at Stanford University. He tells Stefan Stern the hard truth about management and power, including his seven crucial rules for reaching the top.

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