Reuters quotes unnamed 'market sources' and reports that Citigroup, JP Morgan and Morgan Stanley appear to have been left holding the baby, after they struggled to sell a large block trade of Deutsche Telekom shares on Monday. The news agency says that the firms may be sitting on millions of euros of shares which 'are worth less than they paid for them'.
Fund managers have apparently confirmed that they were able to obtain the full allocation of the Deutsche Telekom stock they sought and this is usually a fairly reliable indication that a deal has failed to capture the imagination of the market and struggled. One unnamed banker is quoted, saying that 'the pricing was just too tight' and that the market wasn't very interested.
Meanwhile, UK financial regulator, The Financial Services Authority, has looked over 15 brokers, investment banks and oil and gas producers and has expressed concern about poor compliance and lax risk controls in respect of energy trading. Ever wary of the possibility of another Enron-type fiasco, the regulator said that 'some market participants (still) fall below our requirements and need to improve considerably their compliance with regulation and their approach to risk mitigation'.