The fintech founder who won over Jamie Dimon

One scoop to start: HPS Investment Partners has raised $12bn for a new junior credit fund, pushing the private credit firm’s assets under management to nearly $100bn as it becomes an increasingly formidable player across debt markets.

And one more thing: Jes Staley, the former JPMorgan Chase executive who is being sued by the bank for allegedly failing to disclose his participation in Jeffrey Epstein’s sex crimes, must face trial alongside his former employer, a New York judge has ruled.

In today’s newsletter:

• JPMorgan gets a lesson in due diligence

• Hong Kong’s elite under pressure

• Teck pushes back on Glencore

The connections that fuelled the rise of a failed fintech 

“It’s not every day that an entrepreneur gets her fairytale new beginning (not ending!),” Charlie Javice wrote on LinkedIn in September of 2021.

The bright-eyed founder’s student finance start-up Frank had just been sold to JPMorgan Chase for $175mn. She was in line for a $45mn payday and would be joining the bank as a managing director.

The storybook scenario turned into a nightmare when the bank sued Javice in January, alleging that she had inflated Frank’s overall users by 3.95mn during the acquisition process, or about ten times its actual users.

Last week, Javice was arrested and charged with conspiracy to commit bank and wire fraud. Javice pleaded not guilty to the criminal charges and faces a parallel civil suit from the Securities and Exchange Commission.

As the tale unfolds in court, the Financial Times’ Sujeet Indap and Joshua Franklin report on how Javice built high-profile connections on Wall Street and became a golden child on the US start-up scene who soon won the confidence of JPMorgan chief Jamie Dimon.

An important early connection for Javice was Marc Rowan, the chief executive of Apollo Global, who invested personally in Frank in 2017. He would become a mentor of sorts. The two fellow graduates of the University of Pennsylvania’s Wharton school spoke frequently, according to people familiar with the matter.

By 2019, Javice, still in her 20s, had emerged as a prominent entrepreneur. She was named to the Forbes 30 Under 30 list and began cultivating a relationship with investment bank LionTree.

Frank hired the boutique in 2021 to run a sale process and soon won the attention of Dimon.

After weeding through a target list of 100 potential buyers, Capital One and JPMorgan showed serious interest in a deal. But there were some red flags, JPMorgan contends.

LionTree, in one instance, pressed Javice to correct information on user metrics that had been shared with another bidder, the bank said in its lawsuit, causing that party to drop out of the sale process.

Ultimately, Dimon was allegedly the only person Javice needed to win over.

JPMorgan’s acquisition was a capstone by Wall Street’s most senior banker during an acquisition binge in which the bank made 80 strategic investments and acquisitions in 2021 and 2022.

Javice told colleagues that Dimon had told her that she was the future of JPMorgan, according to a person who heard her make the remarks.

JPMorgan’s fervent pace of dealmaking has since drawn regulatory scrutiny. Others have noted that Javice isn’t the only 30-under-30 honoree to be accused of fraud.

How the criminal case plays out will shine a light on Wall Street’s due diligence during a decade of exuberance fuelled by cheap money.

One can chart Javice’s rise as benefiting from her affiliation to recognisable names in finance. Though they may have opened doors and hinted at a wild business success, the reality behind the scenes appears to have been troubled.

(A spokesman for JPMorgan, whose lawsuit also targets another former Frank employee, said the dispute will be resolved through the legal process. LionTree declined to comment. Javice has denied the bank’s allegations of falsifying accounts in a countersuit. Rowan declined to comment.)

Hong Kong and China: uncomfortable elites

Four of Hong Kong’s richest families dominate its property market: the Lis of CK Asset, the Kwoks of Sun Hung Kai Properties, the Lees of Henderson Land and the Chengs of New World Development.

They are the beneficiaries of a policy established during British colonial rule, under which only a tiny group of deep-pocketed families could bid for land plots at government auctions. As property prices have risen, these families have used their growing fortunes to expand into retail, infrastructure and telecoms.

But the past few years — with protests, Covid-19 restrictions and rising rates — have not been easy for their real estate empires. Nearly $50bn has been wiped from the combined market value of the property developers owned by the four families since April 2019, the FT’s Chan Ho-him, Primrose Riordan and Andy Lin report.

On top of that comes political pressure. Victor Li, the elder son of Li Ka-shing and chair of CK Asset, was last month stripped of his role on the standing committee of China’s top political consultative body.

“Beijing has been working to reduce the political influence of HK business tycoons,” said Ho-fung Hung, a professor of Chinese political economy at Johns Hopkins University.

China’s bankers are feeling a similar pressure. Beijing’s Central Commission for Discipline Inspection has warned financiers against “hedonism” and “high-end lifestyles”, the FT’s Edward White and Cheng Leng report.

An FT analysis of more than 20 mainland financial brokerages found about three-quarters have cut management pay in the past year.

Since February, more than a dozen executives have been investigated or penalised as the CCDI began a drive to eradicate executives’ “wrongful pursuit” of becoming financial elites, as it put it.

Even in Hong Kong, bankers’ spirits are wavering. The detention of China Renaissance chair Bao Fan, and the company’s announcement that it would suspend trading and delay the release of its results, are unnerving financiers in the territory where China Renaissance is listed, one US financier based in Hong Kong told DD’s Kaye Wiggins.

“This Renaissance thing, and them having to pull their results — it’s really bugging people out.” 

Teck CEO rebuffs Glencore 

In case senior executives at Teck Resources hadn’t already made their feelings clear about an unsolicited bid from Glencore, chief executive Jonathan Price has publicly called it a “non-starter”.

He adds to the chorus of voices inside Teck that have cast the deal, which would create a natural resources giant valued at more than $90bn, as unworkable. The Vancouver-based group has reiterated that the best option for shareholders is a planned separation into two businesses — a steelmaking coal entity and metals miner.

Price, who has been in the role since September, told DD’s Ortenca Aliaj and the FT’s Harry Dempsey that there are “fundamental flaws” with the way Glencore would structure the transaction.

Teck has shot down Glencore’s offer on the grounds that it would reduce exposure to copper for its shareholders while introducing oil trading and thermal coal that would dilute the value of its metals and steelmaking coal businesses, respectively. The company says it would also go against its environmental, social and corporate governance policies.

The comments from Price come as shareholders prepare to vote on Teck’s separation at an annual meeting on April 26. While the only two options are to vote for a break-up of the company or maintain the status quo, Glencore will be watching closely.

Glencore could interpret a vote against the separation as interest in a deal between the two companies. But with shares in Teck up about 20 per cent since it made the hostile bid in late March, the mining company might have to dig deeper.

Job moves

• John Miller, who has led Nuveen’s municipal bond unit since 2007, will retire in June. He’ll be succeeded by head of taxable municipal bonds Daniel Close. Separately, Nuveen announced the settlement of litigation involving Miller.

• Bank of Nova Scotia has hired State Street’s Francisco Aristeguieta as head of international operations.

• Brett Wright, Macquarie Group’s head of client solutions for the Americas, has joined AXS Investments as a managing director and head of distribution.

Smart reads

Risk management Hedge fund mogul Paul Singer warned about subprime mortgages before 2008. He discusses whether policymakers have stepped up since the fall of Silicon Valley Bank in this Wall Street Journal interview.

A representative will be with you shortly The rise in digital payments has also brought customer service woes as users struggle to get help with issues from frozen accounts to financial fraudsters, the FT reports.

Big Tech gets bigger The Silicon Valley Bank saga illustrates how government rescues only benefit the sector’s most established companies, Rockefeller International’s Ruchir Sharma writes in the FT.

News round-up

Europe’s biggest Spac to be wound up (FT)

Options trading surges as investors brace themselves for US regional bank volatility (FT)

Boom time for boardroom raiders as activism hits record highs (FT)

Nuns urge Citigroup to rethink financing of fossil fuel projects (FT)

Russians search for bootleg solutions to overcome payments sanctions (FT)

EY given more time to resolve issues from exam cheating scandal (FT)

First batch of IPOs under new China listings rules surge on debut (FT)