When your colleagues are driven by lust, greed and desire. Changes coming to Credit Suisse
It may sound like a Boney M song, but it's not: it's the opening line to Bill Gross's attempt to extract $200m from Pimco for breach of contract. And it only gets better.
“Driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency, a cabal of Pacific Investment Management Company LLC ("PIMCO") managing directors plotted to drive founder Bill Gross out of PIMCO in order to take, without compensation, Gross's percentage ownership in the profitability of PIMCO,” begins the complaint. “Their improper, dishonest, and unethical behavior must now be exposed.”
As the document proceeds, we learn, among other things, that Gross alone was entitled to a full 20% of Pimco's entire profit sharing bonus pool. In 2013, this bonus pool was valued at $1.3bn, making Gross's share $260m. This was to be paid quarterly, but with payments weighted towards the end of the year. However, when Gross was 'forced out' of Pimco on September 30th 'mere days' before the quarter ended, his third payment was withheld.
This is rankling Gross. He's of the impression that his defenestration was driven by his colleagues' urge to seize his 20% bonus share for themselves. In Gross's version of events, he was ousted by 'individuals' motivated by 'their own personal financial benefit and egos.'
There's a lot of complaining about Mohamed El-Erian, Dan Ivascyn and Andrew Balls. However, the New York Times points out that Gross's investments weren't doing too badly before his departure and that investors had begun to pull money from Pimco as a result. 'With its bold claims and theatrical language, the suit could end up playing into Mr. Gross’s reputation as a unpredictable and volatile character,' the Times suggests, quietly...
Separately, you don't want to be a co-head of anything at Credit Suisse now. The Financial Times reports that Tidjane Thiam is preparing to jettison Credit Suisse's practice of having two, or even three, heads of a business and to have single regional heads instead. It warns that Thiam may also dispense with the Swiss bank's U.S. broker dealer unit, although he's reportedly keen to perpetuate the bank's presence in the U.S market overall.
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