Blood sacrifice
LETTER from a City house now making markets in Government stock: `We ought to let you know that, in accordance with what is becoming a widespread market practice, we are tape-recording our tele- phone calls.' Such firms must now have a compliance officer, to make the rules and enforce them. This firm's compliance offic- er, playing back his first sample of tape, heard one of the directors complaining at length about the atrociously slow running of his racehorse. The old City, then, survives. Tape-recorded calls are a symp- tom — unwelcome, I am bound to say — of the new City, where the investor's chief safeguard is `transparency'; that is, the ability to check, from available evidence, that the deal he got was all that it should have been. The new City drew a blood sacrifice this week in Geoffrey Collier, head of equity trading at Morgan Grenfell, who resigned, having admitted that he had broken his firm's staff rules. Morgan Gren- fell, attracts more schadenfreude than any- one else in the City, and much is said of how embarrassing the episode must be, and what a heavy blow. It is a blow in that Mr Collier, by all accounts, had made an excellent job of assembling and leading his team. It is embarrassing in the sense that such episodes are always hateful. It is, though, entirely to Morgan Grenfell's cre- dit that its compliance procedures have worked, and been seen to work, and been seen to apply to all. No one is senior to the rules. Nothing to scandalise there. It is when there are few rules, and limited supervision, and one code for the senior and established and another for the rest as in the bad old days at Lloyd's — that the City breeds its scandals. I predict that Lloyd's will shortly reveal a fruity legacy from the old days which will exemplify all these points, and, in particular, the point about seniority.
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