How JPMorgan’s PE Recruiting Crackdown Could Impact Junior Bankers

Now JPMorgan is imposing new rules on employees who choose to participate.

“We are aware that the practice of interviewing and accepting roles at other firms is accelerating and happening even earlier in your career with us,” JPMorgan wrote to new hires in a message shared on its Instagram account Litquidity and other social media accounts this week (a person familiar with the message confirmed its authenticity to BI).

“This puts undue pressure on you and puts us in a difficult position,” the bank continued, adding: “We cannot take on client business where there is a potential conflict of interest. If you accept a future-dated employment offer, you are obliged to inform your manager immediately. This may have an impact on the projects you are assigned to so that the company can properly manage any potential conflicts of interest.”

Finally, the firm added: “If you take a job at a PE firm whilst continuing your banking job, this may lead you to reconsider your employment situation.”

JPMorgan’s message has everyone from recruiters to junior bankers trying to figure out what it means for them. The bank’s ominous comments about potentially firing bankers who have taken future jobs threaten to throw private equity recruiting organizations into disarray, according to one major buy-side recruiter. A former junior banker suggested it could also make boutique banks more attractive for hire.

From private equity recruiting to junior bankers fearful of losing their jobs, here are four implications JPMorgan’s message could have on Wall Street.

Bankers in secret PE jobs are in a tough spot

The bank’s messaging about mitigating and preventing conflicts of interest seems reasonable enough — they’re simply asking employees with future job offers to disclose them in order to act ethically and avoid any real or potential conflicts of interest — but JPMorgan’s warning that coming forward could get you fired puts junior bankers in a “the more you do, the less you do, the worse it gets” situation.

“This puts a junior banker who has accepted a buy-side offer in a very bad position,” said Anthony Keizner, co-founder of Wall Street recruiting firm Odyssey Search Partners, adding: “If you’re a junior banker who’s just finished a job cycle, would you steer clear of the bank?”

The laid-off bankers also stand to lose out on private equity job offers, which are typically conditional on two years of training and trading experience in investment banking.

“PE recruitment is an afterthought, driven by the companies’ capabilities, pipeline plans and needs, but also by the desire for people to undergo training and gain deal experience before joining the firm,” Keizner said.

The suggestion that young bankers could be fired for disclosing that they plan on taking a future job in private equity could encourage the exact opposite of transparency, he said.

“These issues are likely to get swept under the rug or people are less willing to speak up,” Keizner said. “This seems to create more confusion and concern rather than resolving or easing concerns.”

This may be the “end” of cycle adoption

The first wave of private equity recruiting is called “on-cycle” and it’s becoming more and more confusing and stressful for junior bankers as firms start the process earlier each year.This happened in June this year) Buy-side firms often hire candidates without trading experience. In some cases, It’s alienating new bankersThis is as BI previously reported.

“There has been pressure on OnCycle, but I think its importance will be further diluted when you consider the impact on anxious bankers who have enough to do on a daily basis without worrying about potential legal repercussions or bank job cuts,” Keizner said.

“Probably the biggest impact will be on current and future bankers,” he said. “Issues have come up related to this OnCycle process and, frankly, this email could be another nail in OnCycle’s coffin.”

“I think candidates will be more reluctant to interview for roles in this extended format and more likely to say, ‘I’m not sure how this situation is going to play out, but this seems like a legal and employment mess, so I’m going to settle in and get through my first year and then look for an opportunity to start earlier or immediately.'”

Other banks are likely to follow JPMorgan’s lead if they haven’t already.

In effect, collective Return to office order Wall Street has tended to stick together when it comes to employee policies in the wake of the COVID-19 pandemic, so the impact of JPMorgan’s statement will also depend on whether other companies follow suit.

“I’ve never seen any other bank offer something this clear,” Keizner said. “It’ll be interesting to see if other banks follow suit or if this is really just a JPMorgan thing.”

Spokesperson Goldman Sachs Citigroup told BI it has had a similar policy to JPMorgan’s for more than a decade, requiring analysts to disclose future job offers. A Citigroup spokesperson said the bank does not have a policy similar to JPMorgan’s. Spokespeople for other banks, including Morgan Stanley, Bank of America, Deutsche Bank and Barclays, did not respond or declined to comment on their policies.

Boutique banks could become even more attractive

Boutique banks are becoming more An attractive place for young talent — and JPMorgan’s potential new policies could give them even more of an edge.

One former junior investment banker who started working in private equity this year said smaller boutique banks tend to be more receptive to younger talent joining buy-side recruiting efforts.

“Bulge bracket “They’re very backward on this,” this person said. “I understand the compliance and conflict aspects, but it’s not that big of an issue.”

They added that at the boutique investment firm where they worked in New York, senior staff were proactive in helping analysts prepare for private equity interviews and land offers.

“They want analysts to be proactive on the client side because analysts are essentially tomorrow’s customers,” they said.

They added: “I would put this in the same category as the outdated mindset held by senior management at these companies – it’s all about power and ego.”

Do you work on Wall Street? Contact these reporters. To contact Emmalyse Brownstein, email: ebrownstein@businessinsider.com Or the encrypted app Signal 305-857-5516Reed Alexander can be contacted by email ralexander@businessinsider.com Or the SMS/encryption app Signal 561-247-5758.