Succession curveballs on Wall Street

Regulators go after Musk to start: US securities regulators have sued Elon Musk for allegedly failing to make timely disclosures on his purchases of Twitter shares in 2022, helping him achieve a discount of at least $150mn on his additional stock acquisitions.

A massive French deal: French company Bureau Veritas and its Swiss rival SGS are in talks to combine the two companies in a deal that would create a €32bn specialist in testing and certification services for industry.

And an antitrust lawsuit: The US has sued private equity group KKR, alleging it repeatedly flouted requirements to provide antitrust regulators and enforcers with standard pre-merger filings during a wave of deals in 2021 and 2022.

In today’s newsletter:

• Wrenches in Wall Street’s big succession plans

• Meet the ‘Donald of Dubai’

• The hazards in private credit

Wall Street’s most-watched succession sagas

BlackRock and JPMorgan Chase are two of the most closely watched succession sagas on Wall Street.

With full-year earnings looming, the world’s largest asset manager and largest bank were both roiled by major changes to their long-term succession planning on Tuesday.

At BlackRock, Mark Wiedman, who was seen as one of the most likely candidates to replace founder and chief Larry Fink, will soon leave the firm, sources told the FT’s Brooke Masters. His departure threatens to disrupt the delicate and stately succession planning under way at the firm.

Wiedman had been discussed as a potential successor to Fink for more than a decade. Last year, the firm identified him in a proxy as one of three “senior leaders who we believe will play critical roles in BlackRock’s future”. Not any more.

Meanwhile, JPMorgan had its own shake-up on Tuesday. It announced a management change that potentially rattles the race to replace Jamie Dimon — the 68-year-old chief executive who has sat at the bank’s helm for almost two decades.

First off, the bank said that Daniel Pinto, its chief operating officer and four-decade veteran, was retiring. That move was somewhat expected, as Pinto and his allies had lost out in a management shuffle at the bank a year ago.

Jenn Piepszak, who is taking over JPM’s chief operating role, has long been thought to be a potential successor to Dimon.

But in an announcement that took many JPMers by surprise, Piepszak, through a spokesperson, told the FT and other media outlets that she didn’t want the bank’s top job. Or at least not now . . .

Sources told the FT there are two ways to read this: One is that Piepszak bowing out leaves the JPMorgan succession race even wider open than before.

Retail banking head Marianne Lake is the most likely candidate, but others, such as co-chief of commercial and investment banking Troy Rohrbaugh, are also in the running.

The second theory is that this is just a bit of reverse psychology. The best way to be picked by Dimon to be his successor is to perhaps pretend that you don’t want the job.

“If you go and look back at all the people who had the inside path to Jamie’s job, they are all gone,” said one former JPMorgan executive.

Golfing in the Gulf

About a decade ago, Donald Trump was adjusting the position of trees on his organisation’s first branded golf course in the Middle East, the Trump International.

His business partner in Dubai was the self-made Emirati billionaire Hussain Sajwani, fellow real estate mogul and chair of Dubai property heavyweight Damac.

Hospitality is all about sweating the small stuff, and Sajwani shares Trump’s focus on details like vegetation placement, he told the FT during an interview last week.

Fast forward to 2025, Trump is president-elect and the two business partners are thinking big picture, and big numbers.

Last week, they shared a podium at Trump’s Florida resort Mar-a-Lago to announce that Sajwani planned to invest a cool $20bn in the US through his data centres venture Edgnex.

The plan helped Trump burnish his business-friendly credentials and gave Sajwani a moment in the international spotlight. But as is often the case with such big-ticket pronouncements, the nitty gritty details of the investment are not yet fully planned out.

Sajwani said he expected banks to finance a large part of the projects once contracts have been signed with prospective tenants, but those deals haven’t been struck yet.

Data centre experts said the market was crowded and it could be a tough task.

But such details are unlikely to bother Sajwani, whose appetite for risk and ability to survive the entrepot’s volatile property market has earned him the moniker “Donald of Dubai”.

Trump himself already has a foothold in Middle Eastern real estate, and his presence there is only expected to grow. Among the plans: a new Trump Tower in Dubai and a five-star luxury hotel in Oman.

Private credit warnings mount

Whenever an asset class explodes at the blistering pace that private credit has, sceptics inevitably emerge.

The multitrillion-dollar market’s direct loans and financing have surfaced as serious competition for banks.

Wall Street’s top brass, including JPMorgan’s Dimon — possibly talking his own book — have flagged potential problems that could arise in a market that’s decidedly under-regulated compared with traditional banks.

This week, another vocal sceptic has emerged.

Nick Moakes, the chief investment officer of the world’s largest charitable foundation, Wellcome Trust, said there were “accidents waiting to happen” in private credit.

The sector’s looser lending standards paired with a vast amount of new capital was a precarious combination, he added.

As long as the US economy and the stock market continues on a tear, private credit borrowers are likely to fare just fine. But the main risk is that the sector’s biggest investors could suffer “very substantial” losses if the US economy does take a turn for the worse.

Wellcome Trust manages £37.6bn, and while it doesn’t invest in private credit directly, it has a window into the market because about a third of its portfolio is allocated to private equity.

In an interview with the FT’s Harriet Agnew, Moakes said: “If there is an issue within that whole ecosystem, there will be some quite high-profile investors, many of whom do have some kind of systemic importance, that will be quite badly damaged.”

While not as dire of a warning, the rating agency KBRA also published a report on Tuesday that raised some concerns about the sector.

Private credit borrowers that struggled to pay off their debts last year might finally “face the music” in 2025 as interest rates are expected to stay high, KBRA analysts wrote, which would ultimately weigh on corporate balance sheets.

Most loans will be paid off without a hitch. But for the slice of private credit borrowers that haven’t been able to adjust to higher interest rates, there could be a “reckoning”.

Job moves

• OpenAI has named billionaire investor Adebayo Ogunlesi, co-founder of Global Infrastructure Partners, to its board as it advances efforts to become a for-profit company amid rising AI competition. 

• Clifford Chance has hired Bruce Embley as a partner for its private equity practice based in London. He previously worked for Skadden.

• IVP has hired Kevin Egan as a partner. He most recently worked at Atlassian, and before that, Dropbox.

Smart reads

PIGS no more With Germany’s economy stalling, tentative growth in Portugal, Italy, Greece and Spain is some good news for the Eurozone. The FT asks: will it last?

Boss is back As the labour market softens, companies are enforcing return-to-office mandates, reducing bonuses and cutting perks such as “pet sick days”, reports The Wall Street Journal, reflecting a shift in workplace dynamics and employee benefits.

True crime bankruptcy Private equity-backed Prospect Medical exemplifies the troubling trend of hospital embezzlement harming patients and communities, writes The American Prospect. But the judge overseeing its bankruptcy offers a surprising twist to the story.

News round-up

China discussing using Elon Musk as broker in TikTok deal (FT)

US sues KKR for allegedly shunning antitrust filings requirements (FT)

EU reassesses tech probes into Apple, Google and Meta (FT)

KPMG readies challenge to US law firms (FT)

Goldman’s David Solomon says US economy is in ‘fragile place’ (FT)

US activist Boaz Weinstein wants to be ‘white knight’ of UK stock market (FT)

Robinhood to pay biggest fine among more than $100mn imposed by SEC (FT)