Chase to Hedge Funds: Drop Dead
By Barry Ritholtz - November 29th, 2011, 10:30AM
We don’t fancy your kind around these parts. Sheriff, why don’t you show the man to his horse, . . . its best if you were to just mosey along, move out of town.
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Fascinating note from Chase to a Hedge Fund client of ours: “JPMorgan Chase will no longer provide financial services to Hedge Funds or Private Equity customers.”
Before you assume its Dodd-Frank regs, the services in question are 1) Checking account; and b. Savings account.
Astonishing . . .
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November 29th, 2011 at 10:36 am
Looks like a fax…you sure someone’s not yanking your chain?
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BR: No, that is my fax #
November 29th, 2011 at 10:36 am
BR relayed:
Fascinating note from Chase to a Hedge Fund client of ours:
reply:
———–
Aren’t hedge funds supposed to do their own asset management? THIS is astonishing.
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BR: Um, hedge funds buy Research
November 29th, 2011 at 10:37 am
check out the fax #….
November 29th, 2011 at 10:49 am
is it possible that this is related to the “BankOfNewYork charging big customers to keep cash in the bank” story from a month back? ie, JPM doesn’t want big cash balances sitting there that they have to pay FDIC fees on?
November 29th, 2011 at 11:04 am
It’s not a lot to go on.
I’m not sticking up for JPM, but it’s still their choice if they want to provide banking services for HF and PE customers at all, right?
And if they don’t want their business banking division dealing with HF or PE clients, that’s still their choice, right? I doubt my local or small-regional banks would want me as a client if I was running either of the above businesses.
I suppose the tin-foil-helmet correlation is JPM’s exposure/intertwined relationship to MF Global.
November 29th, 2011 at 11:04 am
The beauty is to see the lack of shame when they hope that you keep your personal and other accounts with Chase. Looks like hope is a business plan after all.
The best way to break these “too big to fail” banks is to move your money, pro-actively. Before they kick you out, charge so many fees that you explode or go belly up.
November 29th, 2011 at 11:17 am
RE BusSchDean,
Better yet google the fax number, naughty, naughty, naughty……
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BR: Google away
November 29th, 2011 at 11:25 am
Anybody told JPM they own one of the top prime brokers?
I wouldn’t jump to the conclusion someone at Chase has gone OWS and decided they don’t want the business.
Since this is the Internet, I speculate that they may be moving the business out of the business banking to someplace they can monitor for compliance and whatnot. Don’t want to get sued by the next Ponzi schemer who custodied someplace else but had a checking account at Chase.
November 29th, 2011 at 11:30 am
MF Global + Chase fallout
November 29th, 2011 at 11:32 am
Must say that I am surprised that the “fax number” (re: DSS10) seems to link to some sort of “Escort” agency. Its racy enough that it’s blocked by my server… strange aside from that I cannot believe that JPM is shutting down hedge fund accounts. Something doesn’t look right, either its a way to move the accounts to other divisions of the bank or there is something wrong with the account (or paperwork that backs it).
Just too weird, plus no one has picked this story up anywhere. Barry are you being punked?
November 29th, 2011 at 11:33 am
I call hoax based on the fax number. The number this fax was sent to shows up as an escort service on a google search.
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BR: Send a fax to that number to my attention. Put a 7 digit code on it
I will post the answer
November 29th, 2011 at 11:46 am
Agree wtih KidDynamite. It just confirms that banks have more deposits than they need and want. They cannot even give you 0% interest and purchase short-term treasuries without losing money. The longer treasuries are too risky with the Fed intervention, and nothing else has an attractive risk-reward ration. So they tell people to stick their cash in the mattress.
November 29th, 2011 at 11:48 am
Is this MF Global fallout?
November 29th, 2011 at 11:53 am
Barry did you intentionally leave the fax number on this?
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BR: Yes, look up our fax #
November 29th, 2011 at 12:33 pm
FusionIQ gives your assets full-service and hands-on attention.
November 29th, 2011 at 12:35 pm
Is this fundamentally about extinguishing any sort of fiduciary responsibility? What event do they see coming down the pike that leads them to turn away deposits? Its preemptive. So, what is JPM preempting? And if Paulson isn’t there to tip them off, who did?
November 29th, 2011 at 12:35 pm
This is a new marketing program to get street-tough, hard-edged, bad-asses …like Einhorn, Ackman …the sort of Deadliest-Catch/Gold-Rush-Alaska-esque macho Hedge Fundie guys (who wear flannel shirts, muddy boots, cut down trees on the weekends and have B.O) to sign up for Chase Premier Paladium Banking…
https://www.chase.com/ccp/index.jsp?pg_name=ccpmapp/shared/corporate/page/jpmorgan_palladium
November 29th, 2011 at 1:48 pm
Add one more commenter to the ‘is this related to MF Global?’ queue…
That, or perhaps legal queries of which we are yet unaware…?
November 29th, 2011 at 2:22 pm
Interesting. It does make one wonder if the fit is about to hit shan. Could be some combination of risk management and PR to give the appearance of preventing the risk of another MF Global metastasizing within their shop? Could also be a pre-emptive move to smooth the volatility profile of depositors given the macro-economic environment globally. If it’s symptomatic of FDIC fees (per KidDynamite) driving away cash deposits, that really, really doesn’t bode well for Chase, and likely the entire TBTF banking sector.
November 29th, 2011 at 3:17 pm
Chase discovered the web they all wove was first practiced to deceive.
Lo! Now Chase is all CYA in size; you can take that to the bank now shading the easier cost of talent
that surpriselessly ran out of confidence.
November 29th, 2011 at 6:16 pm
Chase’s website still touts their hedge fund services:
http://www.jpmorgan.com/tss/General/Hedge_Fund_Services/1133192122562
Dedicated Solutions for Funds of Hedge Funds
Administration:
Consolidated valuation of the investments for independent net asset value reporting
Dedicated FOHF accounting platform and proprietary FOHF price capture and control solution
Maintenance of Shareholder Register of the Fund
Automated transfer agency reporting and complex fee calculation solution
Financial statement preparation and interaction with auditors
Custody:
Registration of the fund’s investments in the name of J.P. Morgan
Full oversight of subscription and redemption order processing
Custody Service supported by market leading FOHF Specific Custody Platform.
Controlled environment to mitigate risk with automated trade capture, continuous review of transaction status in work-flow process, segregation of responsibilities, and reconciliation of holdings with target fund administrators
November 29th, 2011 at 10:10 pm
So JPMorgan Chase Bank N.A. is winding down that side of that part of their business. Nice way of saying take your business elsewhere. And on a pedestrain DDA/Svaings accounts no less.
The fax number is meaningless here-this was a real piece of genuine mail dutifully sent out by whatever system houses the account as part of some project that’s now being rolled out.
November 30th, 2011 at 3:42 am
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