THE HEADLINES

 

DON’T QUIT YOUR DAY JOB

If Iqbal Khan, Credit Suisse’s former head of wealth management felt like he was being watched over the last few weeks, that’s because he was. Khan left Credit Suisse after a tiff with CEO Tidjane Thiam and was headed for greener pastures at UBS. To find out of Khan was taking any CS employees with him COO Pierre-Olivier Bouée ordered Investigo to start following him.

The problem? The PI wasn’t so private. Mr. Khan caught wind of and confronted the stalker outside a Zurich restaurant in September and has filed a complaint with the authorities. Cue the PR nightmare for CS.

Crossing the line

In a press conference on Tuesday, CS threw its COO under the bus. Chairman Urs Rohner said “it was wrong to order surveillance,” and called for those responsible to step down. Well, Urs got his wish. Bouée and head of Credit Suisse security, Remo Boccali, both handed in their resignation. Neither of them will get the pay-out standard for departing executives. And you thought DB was the most f*cked up bank in Europe.

It wasn’t just the COO and head of security who were embroiled in this scandal … some lost more than just their jobs. The unnamed contractor who was acting as a middle man between CS and the private investigating firm turned up dead of an apparent suicide. The plot thickens.

When asked if CS felt any responsibility, Mr. Rohner said the bank was “deeply saddened.” As sad as he can be that the only person who really knew what was going on wound up dead.

How high up does it go?

If CS is to be believed, the buck stopped with Boccali and Bouée. According to a statement by the firm, neither the CEO or else anyone on the executive board had any idea this was going on. Sure thing, guys.

The bottom line …

While spying on former employees isn’t necessarily illegal, investigations into criminal wrongdoing by the bank are ongoing. According to Zurich prosecutors, the consultant’s death is part of that investigation.

As far as the COO role goes, Bouée will be replaced by the former CFO of Credit Suisse’s US operation, James B. Walker.

 

CHARLES SCHWAB DOESN’T WANT YOUR MONEY

Charles Schwab is going all Robinhood on us. Chuck announced it will remove fees for US stocks, ETFs, and options.

Why tho?

This move is at least partially a reaction to Interactive Brokers’ announcement last week that it would provide free trades, following the trend in recent years (g*d d*mn millenials). In fact, just last year, Fidelity, Vanguard, and JPMorgan all eliminated fees and commissions on several of their offerings.

Schwab, which has struggled as of late due to a challenging economic environment and announced more than 600 job cuts last month, will focus on making up for the lost revenue by offering advice and portfolios to clients approaching retirement.

To put things in perspective, the $4.95 commission per trade made up roughly 4% of Chuck’s net revenue each quarter.

The bottom line …

Unsurprisingly, this announcement did not bode well with Schwab’s investors, who infer that more zero-fee investment options at Charles’ rivals are on the horizon. And they were right. Late last night TD Ameritrade announced it too will eliminate its commission for ETF and options trades.

Schwab and Interactive’s shares were both down over 9%, which sounds bad, but pales in comparison to TD Ameritrade’s drop of OVER 25%. Ameritrade estimates its net revenue will decline by around 15% thanks to this loss of fees.

 

---

IN OTHER NEWS

• Airbnb is flying direct. Airbnb is becoming a public company in 2020, this much we know. And it appears that Airbnb is laying the groundwork for a direct listing as opposed to a traditional IPO, following in the footsteps of Slack and Spotify. With a direct listing, it can save money on underwriting fees. But why direct? Usually, an IPO is a better way to help employees and early investors cash out, but it hasn’t worked out so well for the likes of Uber, Lyft, and WeWork this year.

 

• FCC won’t let me be. A federal appeals court upheld the decision by the FCC to repeal net neutrality provisions created during the Obama presidency. The idea of net neutrality presumes that internet providers like AT&T, Verizon, and Comcast must treat all traffic over the internet equally. Repealing it means that those providers can charge different amounts for different types of data and upcharge users to get faster, higher quality internet. Equal-speed-porn-for-all isn’t quite a lost cause yet, though. Thank goodness. The federal court also ruled that states will have the ability to make the rulings in their own jurisdictions.

 

• J&J seeks discount settlement. Butterfly effect. After being ordered to pay $572M to the state of Oklahoma for its contribution to a drug epidemic, Johnson & Johnson decided it would settle early with two counties in Ohio. The drug manufacturer agreed to a $20M settlement with Cuyahoga and Summit counties with no admission of guilt. Ah yes, the $20M “not-guilty” fee. The payment includes $10M in cash, $5M in legal fees, and another $5.4M to help facilitate drug rehab programs.

 

• UPS earns drone approval. The FAA approved UPS’ drone-delivery initiative, making it the first company with approval from the aviation organization. Amazon, Google, and Uber are all now racing to get their own products approved after the milestone for UPS. The initial deliveries will be strictly for hospitals but thanks to the FAA’s Part 135 certification the drones can fly at night, and carry packages up to 55 pounds. As it stands, the drones aren’t allowed to fly in residential areas but the hope is that they will be able to airdrop 30 packs and pallettes of Mango Juul pods to college campuses sooner rather than later.

 

Ready to become the most well-informed bro in any room? You can subscribe here.