I wrote a piece in March about the TD Bank double ending an investment banking transaction (TD Securities Does a Double Ender). The theme of the posting was how free the investment banks are to operate with huge conflicts of interest, usually created by their own decisions.

It isn’t my intention to pick on TD - it’s a well run consumer bank and is not alone in its investment banking practices. But their name was prominent in the Globe & Mail’s feature article on Saturday about Telus and its failure to make a bid for BCE (As an aside, I personally like Telus’, and Rogers, chances against a floundering, overleveraged franchise like Bell).

As the Globe story goes, TD was approached by Ontario Teachers Pension Plan (OTPP) to advise it on the Bell transaction. On March 30th the bank approached Telus CEO, Darren Entwistle, to ask for his blessing to take on the OTPP/Bell assignment.

Why am I writing about this? Because TD’s call to Mr. Entwistle goes down as one of the most amazing things I’ve seen in 24 years in the investment business. Prior to the call, Telus and TD were joined at the hip. TD’s retired CEO, Charlie Baillie, is on the Telus board. Mr. Entwistle is on the TD board. Telus has been a very active player in the capital markets over the last 10 years and TD has been by far its closest advisor and has reaped the rewards. I hate to think of what TD’s fees amounted to over those years...huge. If TD had a better client than Telus, I’d be surprised.

So why would TD jeopardize the Telus relationship in what was the early days of the Bell saga? Although TD’s revenues from the Bell deal would be considerably higher in the short term if Telus did not enter the fray (which on March 30 was a ridiculous presumption), they risk losing a key client by ‘blindsiding’ Telus. Perhaps TD wanted to get closer to OTPP in hopes of participating in future trading and private equity transactions. I’m sure there were lots of other reasons and revenue possibilities that led TD to do this, but I still don’t get it.

Telus is the one telecom company we know is going to be around after all of this. Whether they end up buying Bell or not, they are an ambitious, aggressive firm that will continue to be a cash cow for a well-placed investment banker. On the other hand, who knows how the OTPP/Bell transaction will play out? There is a good chance that OTPP/Bell’s first line advisors will all be American.

If Telus is indeed out of the picture for now, it’s conceivable they will soon reappear as a buyer of some pieces of the BCE empire. They are well positioned if they keep their balance sheet healthy and improve their customer service. (Another aside: Service screams out at me as a huge opportunity for differentiation given how abysmal it is from all telecom providers. Take it from someone who has been building a team of business partners to help us operate Steadyhand and is at wits end with both Telus and Bell.)

I could go on forever on this topic. Suffice to say that I find it amazing that TD has turned its back on one of the most lucrative and impenetrable investment banking relationships in this country. I think it was short sighted and short-term greedy.

I can only hope that Mr. Entwistle resigns from the TD board and tells their investment bankers to get lost. They deserve it.