Winners & Losers: Shopify goes public, the banks get shamed

“If you aint cheating, you aint trying” would fit nicely on a business card, actually

 

▲ Shopify

“Nortel who?” —Ottawa

Management of Shopify ringing the opening bell at the NYSE on May 21
(Richard Drew/AP)

The current darling of the Canadian tech community went public this week. Ottawa’s Shopify started trading in New York and Toronto with a list price of $17 per share on Thursday, and it more than doubled to $31 by the end of the day. That means co-founder and CEO Tobias Lutke essentially doubled his net worth in just a few hours; his 14.6% stake in the company amounts to more than $300 million. A handful of venture capital firms are doing a lot of back-slapping this week, too. Bessemer Venture Partners controls 30% of Shopify, while OMERS Ventures—which seems to invest in every worthy Canadian tech company these days—has a 6% stake. Why so much excitement around Shopify? The Canadian equities landscape is pretty small. There are banks and resource companies, but not much in the way of technology stocks. Shopify offers diversification and a growth story. It’s also raising hopes that other fledgling Canadian tech firms will find success and reinvigorate the sector until they crash and burn like Nortel and BlackBerry in a sadly predictable orgy of creative destruction.

▼ Barclays, JPMorgan, RBS, Citigroup

$2.4 billion? Yawn

Royal_Bank_of_Scotland-Winners&Losers-Andrew_Cowie-AFP-Getty_162821712-670x447
(Andrew Cowie/AFP/Getty)

Regulators in the U.S. and the U.K. fined six global banks roughly US$6 billion for trying to manipulate foreign exchange rates between 2008 and 2013. Of those banks, Barclays was slapped with the equivalent of the biggest fine: $2.4 billion—about 3% of its market cap. Four of the banks, including Barclays, JPMorgan, Royal Bank of Scotland, and Citigroup, pled guilty to criminal charges. In a new twist, the U.S. Justice Department successfully pushed for the parent companies—rather than subsidiaries—to enter the guilty pleas. Even though the traders responsible for this scheme should feel guilty about further destroying the public’s faith in the financial system, they should feel just as embarrassed by the brazen stupidity with which they operated. The traders were known as “the cartel” or “the mafia” and met daily in an exclusive chatroom. “Mess this up,” wrote one, “and sleep with one eye open.” They coordinated their movements in foreign exchange markets for their own benefit, at the expense of clients. “if you aint cheating, you aint trying,” wrote a Barclays vice-president in 2010, much to the delight of investigators. The banks won’t face any practical consequences from having admitted to committing felonies, however. It’s business-as-usual. At most, according to the New York Times, the banks will endure “symbolic shame.” We’re not exactly sure what that means, but we’re definitely sure that no one who works on Wall Street is familiar with the concept of shame.

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