What's bad for bankers is good for journalists

Passengers risk being fined if they don't have a mask. AP

Careless talk costs dollars.

That’s the lesson from a case heard last week by one of France’s financial regulators. Lazard deal maker Vincent Le Stradic spent two and a half hours aboard a Eurostar train from London to Paris in 2014 working on a $15 billion takeover bid by Iliad for T-Mobile US. He was oblivious to the fact that the casually dressed man sitting next to him was Alexandre Zaluski, a UBS Group banker, who passed the information to a colleague, ultimately resulting in the bank pitching to Iliad to help finance the deal.

That feels like a rookie mistake for Mr Le Stradic. Client information, particularly related to multi-billion dollar offers for listed companies, should be sacrosanct to any investment banker. The train should be a place to catch up on admin, or get some sleep, or read a book. It shouldn’t be a place to do confidential work, especially not if you’ve got nosy neighbours.

In truth, the situation is a good deal less clear-cut. With those notorious 100-hour work weeks, investment bankers are under constant pressure to be at their clients’ beck and call, especially (as in the Iliad case) two weeks out from a major deal announcement. A financial adviser who habitually goes silent for hours at a time outside the office may find their clients prefer to work with someone more responsive.

Like spies, circumspect bankers ought to be highly aware of who’s around if they choose to do business in public – but slip-ups still seem inevitable. Journalists would be in trouble if bankers’ and government officials’ operations security was as rigorous as they’d like to think.

This columnist once got a tip from finding bound and printed pre-IPO documentation lying abandoned on his street. A New York Times journalist got a major scoop on the Mueller inquiry in 2017 when he found himself at a table adjacent to members of President Donald Trump's legal team at a Washington steakhouse. An officer for British spy agency MI6 once left a laptop carrying classified information in a taxi after a night out in a London tapas bar, one of a string of similar incidents in the country.

It’s an open secret in the media industry that some of the best scoops can be picked up by eavesdropping in lawyers and bankers hangouts, from London’s Ye Olde Cheshire Cheese and Michael’s in Midtown Manhattan to Hong Kong’s Captain’s Bar and Mumbai’s Willingdon Sports Club.

Travel is always going to be risky. Airport lounges, particularly the more exclusive ones, tend to be thick with knowledgeable figures who often behave like they’re in a private place. In the US, the Acela train between Washington and Boston is a notoriously good place to pick up gossip. The newly opened high-speed rail linking Hong Kong to the mainland is already reputed to be useful for overhearing China-focused bankers.

Even before the rise of the BlackBerry, there were plenty of ways for information to leak. Bankers travelling overseas would often have sensitive information from the head office faxed to their hotels’ front desks and slipped under their doors, and carry their clients’ contact details in folders full of Post-It notes ready to be scattered to the four winds.

It’s tempting to blame investment banks’ demanding workload for all this but in many ways the opposite may be the case. If bankers are doing more work outside the office than they did in the past, it’s probably at least partly because of protected weekends and other measures to restore a modicum of work-life balance.

For their own sake, bankers should take more care what they say and do in public spaces.

For the sake of us journalists, though – not too much.

Bloomberg