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updated: 2/24/2014 7:30 AM

Sorry about earnings, where's my bonus?

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By Matt Levine
Bloomberg News

HSBC is paying for performance.

No, kidding, it's paying for something else. After "missing its targets for cost efficiency and return on equity last year, as it reported a 10 per cent year-on-year fall in pre-tax profits in the three months to December," HSBC also "became the first bank to say it would seek the necessary shareholder approval to lift the new EU bonus cap from 100 per cent of its top executives' salary to 200 per cent." I will casually bet that shareholders will say yes but, you know, should they? Shouldn't you mostly get a bonus for hitting your targets? Or exceeding them even? HSBC is also doing the "allowance" thing -- giving senior risk-takers quarterly fixed allowances of cash or shares to essentially move bonus into base salary -- but is trying to lower expectations of the allowances: "Under this new variation, the maximum I can get is significantly lower -- the minimum I can get paid has gone up, so the maximum has to come down." That is sensible, though I wonder for how long it will be true. If you're used to big bonuses, lower but more guaranteed bonuses may seem like, you know, a pay cut.

Would you like to invest your Bitcoins in binary options?

Probably, right? That seems like something good to do with Bitcoins, plus, it offers risk-free returns of over 84 percent, so what could possibly etc. This is a delightful story from Roddy Boyd at the Southern Investigative Reporting Foundation, which at one point in the story is accused of "being a front for BlackRock, the giant asset management firm." It probably isn't. The high point for me is an initial public offering underwritten by firms including "Thompson LLC, Phillip Davis, Price, Steinberg & Smith Incorporated, Steven Goldberg & Co. and Isaac W. Rothschild & Co. Incorporated," but there are a lot of other good moments too.

Would you like to buy stocks that hedge funds owned 45 days ago?

Believing in efficient markets is globally soothing but sometimes locally annoying, as when you learn that exchange- traded funds whose strategy is just to buy stocks that hedge funds report owning in their Schedule 13Fs -- which are out-of- date, backwards-looking information -- tend to outperform the underlying hedge funds. Or sort of, anyway. "The Global X Guru fund was up 47 percent in 2013, a year when the average hedge fund returned 9.3 percent." Also the guru thing probably charges less. "But it is not clear how such funds, which benefited from a strong stock market last year, will perform in more-volatile or down times, when hedge funds might be expected to fare better." Probably. But I want my outperformance now.

ISDA fixed its Greece problem.

A while back, Greece defaulted on its debt in a clever way that created weird results for holders of credit default swaps on Greek debt, though it all more or less worked out. On Friday the International Swaps and Derivatives Association fixed CDS going forward (for participants who affirmatively adopt the new definitions anyway), so the next Greece will default in a more orderly way. Or find a new way around the new definitions, I don't know. ISDA also fixed provisions related to government "bail-ins" of financial institution debt. I guess it took a while -- Greece's default was about two years ago -- but, yeah, good work, the market found something illogical and went and fixed it.

HP has an Autonomy problem.

The saga of Autonomy Corp., which Hewlett-Packard bought in 2011 and then turned out to have a lot of what HP at least thinks were accounting problems, continues with this Bloomberg News report about the weeks after the acquisition closed. Autonomy founder Mike Lynch e-mailed then-new HP chief executive Meg Whitman "about three weeks after the sale of his company closed to complain Hewlett-Packard was putting up roadblocks to sales practices Autonomy considered standard" and you really know exactly where the story is going from that point on. Those sales practices consisted of, in HP's view, misleadingly booking revenues, and if they were standard at Autonomy, well, that is something you'd want to find out before closing the merger.

Here is a slideshow of an Arctic gold mine.

With global warming, mining for gold in furthest Nunavut will probably become more economical, which ... doesn't seem like a super-exciting benefit of global warming? But this is an enjoyable slideshow.

MBA vs. CFA.

Should you get a Master's of Business Administration or take the Chartered Financial Analyst exams? I don't know, you should probably just skip both and trade binary options with your bitcoins, but there's some tradition of arguing about the MBA vs. CFA thing, and here is a thing in that tradition. As is traditional, it is inconclusive. (Matt Levine writes about Wall Street and the financial world for Bloomberg View.)To contact the writer of this article: Matt Levine at To contact the editor responsible for this article: Tobin Harshaw at

-0- Feb/24/2014 12:20 GMT For more columns from Bloomberg View, visit

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