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by Baz Hiralal
David Bagley, HSBC Holdings plc's compliance head, resigned after a Senate Permanent Subcommittee on Investigations found the bank had poor anti-money laundering controls. Bagley is assisting with the transition to a new compliance head.
The subcommittee pored over about 1.4 million documents and talked to numerous executives before releasing a 335-page case study on the London-based bank's operations overseas and in the U.S.
Sen. Carl Levin, D-Mich., the subcommittee chairman, said at a hearing Tuesday that five key areas of vulnerability were identified: providing U.S. correspondent accounts to high-risk HSBC affiliates without performing due diligence, including a Mexican affiliate with unreliable AML controls; failing to stop deceptive conduct by HSBC affiliates to circumvent a screening device designed to block transactions by terrorists, drug kingpins and rogue nations such as Iran; providing bank accounts to overseas banks with links to terrorist financing; clearing hundreds of millions of dollars in bulk U.S. dollar travelers checks, despite suspicious circumstances; and offering bearer-share accounts, a high-risk account that invites wrongdoing by facilitating hidden corporate ownership. The subcommittee also placed blame on the Office of the Comptroller of the Currency, which cited a massive backlog of unreviewed alerts among other problems.
Levin noted that "HSBC Bank USA is the key U.S. nexus for the entire HSBC worldwide network, including over 7,200 offices in more than 80 countries, 300,000 employees, and 2011 profits of nearly $22 billion. In 2008, it processed 600,000 wire transfers per week; in 2009, two-thirds of the U.S. dollar payments HBUS processed came from HSBC affiliates in other countries."
One of the solutions offered was for HBUS to close accounts with banks suspected of involvement in terrorist financing, revamp its travelers check controls and eliminate bearer-share accounts.
Among other changes, HSBC said it would create a new global structure to make the bank easier to control with four global businesses and 10 global functions. A fine may also be levied, which analysts predict could be up to $1 billion. The Department of Justice is also investigating.
Peter Stonor was named global head of infrastructure and transport for VTB Capital. Stonor was a managing director at RBS Global Banking & Markets.
In addition, VTB named Nikolay Podguzov, head of fixed-income strategy, as head of fixed-income research. Senior credit analyst Petr Grishin was named head of macro research. Podguzov and Grishin joined the firm in September 2010 from Renaissance Capital.
Also, at the request of Russian Prime Minister Dmitry Medvedev, Alexey Moiseev, who was head of macroeconomy analysis at VTB Capital, becomes deputy finance minister of the Russian Federation.
In San Francisco, Janney Montgomery Scott LLC hired Greg Roth as a managing director in the technology and media group in its investment banking group, focusing on the software sector. He was a managing director at ThinkEquity LLC, responsible for the software practice as well as venture capital/ private equity coverage on the West Coast. He was also a managing director at Hercules Technology Growth Capital and held investment banking roles at Credit Suisse Group and Piper Jaffray & Co.
Drexel Hamilton LLC brought in David Hilder as a senior equity research analyst, covering bank and financial services stocks. Hilder began his investment career as a bank and financial services analyst at First Boston Corp. in 1991, moved to Morgan Stanley in 1994, and was a senior bank analyst at Bear, Stearns & Co. from 2001 to 2008. He became head of financials research and co-manager of the Putnam Global Financials sector fund at Boston-based Putnam Investments in 2008. In 2010, Hilder returned to New York to cover large-cap banks with Susquehanna Financial Group.
Private equity firm Trinity Hunt Partners tapped Jake Moore as an analyst assisting in deal sourcing and execution. He was a member of the mergers and acquisitions group at SunTrust Robinson Humphrey Inc.
The firm also promoted Hunter Peterson to partner, Mike Steindorf to vice president and David Alexander to associate.
Debevoise & Plimpton LLP said Paul Patton joined the firm as counsel in its New York office and a member of its corporate department and financial institutions and banking groups. Patton hails from Morgan Stanley, where he was an executive director, advising the firm and its national bank subsidiaries on regulatory and transactional issues. As general counsel of Morgan Stanley Private Bank, he assisted in the expansion of its offering of deposit, credit and trust products to the firm's wealth management clientele. Patton was also the principal bank regulatory counsel to American Express Co. for nearly a decade.
Seyfarth Shaw LLP announced that A. Donald Lepore joined its corporate department as a partner in New York. Lepore joins from RNK Capital LLC, a private investment firm specializing in the environmental, clean technology and renewable energy sectors, where he was general counsel for four years.
Before joining RNK Capital, Lepore practiced with the mergers and acquisition groups at Hogan Lovells and Sullivan & Cromwell LLP.
Former Thompson & Knight LLP partner Glenn Reitman joined DLA Piper's corporate and finance practice as a partner in the Houston office.
Clippings from the next column:
-- Blackstone Group LP names Joe Baratta as head of global private equity for the firm.
-- MTS Health Partners LP hires Bank of America Merrill Lynch's Vince Lambert as a senior managing director.
-- Standard Chartered Bank plc names Richard Jaggard as head of transaction banking, Europe.
-- Gold Bullion International LLC names former Goldman, Sachs & Co. partners Steven Feldman as CEO and Eric Schwartz as chairman.
-- Investment firm Istithmar World names head of real estate Hamza Mustafa as CEO.
-- Commonfund hires Irakli Odisharia from Goldman Sachs Asset Management as a director, risk management.
-- Pramerica Real Estate Investors enlists Alfonso Munk as chief investment officer, Latin America.
Drexel Hamilton LLC brought in David Hilder as a senior equity research analyst, covering bank and financial services stocks.
