Morning Coffee: Ex-banker's revenge on former boss, one decade later. Andrea Orcel excluded from favorite party
As the proverb has it, “never kick a man until he’s down; that’s where your feet are”. Jeffrey Gundlach has plenty of bad blood with Société Générale as a company, and even with its CEO Frédéric Oudéa personally. So when he tweeted that “bad news keeps coming from SocGen” and that Oudéa was “determined to run it into the ground”, it was unlikely to be taken as a dispassionate piece of equity analysis. But the real clue was the acidic ending to the tweet; Oudéa’s current problems, according to Gundlach, were “foretold by his moronic actions ten years ago”.
This appears to be a reference to one of the most exhilaratingly bitter breakups in the recent history of banking; the sequence of unfortunate events which unfolded in 2009 and 2010, shortly after Oudéa was promoted to CEO. One of the new SocGen CEO’s first actions after taking over was to sit down with a group of portfolio managers (including Jeffrey Gundlach) at its U.S. subsidiary TCW and tell them “the asset management business, I don’t know if I want to be in it”. When recounting this episode at a later date in court, Gundlach adopted a comedy French accent, to make it even clearer how little mutual respect there was in this relationship.
That meeting happened in September 2008. By December 2009, Gundlach had been fired by TCW, after finding it impossible to work with a new CEO. Almost immediately, 40 members of his investment team also resigned, and two weeks later the creation of a new asset management company – DoubleLine – was announced. Then things started getting really nasty.
TCW (and thereby, SocGen) sued Gundlach personally, accusing him of having stolen proprietary investment models and client lists. While searching for evidence in his office, they also claimed to have found some marijuana and a highly embarrassing collection of “personal items”, the details of which were set out in lurid detail in press briefings related to the case. Many people at the time regarded this as quite a cheap shot. Gundlach countersued for unpaid compensation and after an acrimonious six week trial, the two parties settled for an undisclosed amount.
Whatever lies behind it, today’s tweet looks like one of the rare exceptions to the usually sensible rule that you don’t speak ill of former employers. Frédéric Oudéa was not Jeffrey Gundlach’s immediate boss at TCW, but he was CEO of the parent group at the time and it’s been made clear over the years that Gundlach blames him for the way things went. However, when the falling-out has been that public, severe and personal, it’s doubtful that there’s any real benefit in pretending that you parted amicably. And when you’ve been as unprecedentedly successful as the founder of DoubleLine has (it now has AuM of $120bn), then you can afford some luxuries. Speaking your mind when a former boss has had a bad quarter is certainly a pleasure that it would be a shame to deprive yourself of. But those of us who don’t yet have multibillion dollar businesses and who didn’t burn our bridges quite so spectacularly should probably still follow the advice and keep things professional. In the end, even Jeffrey Gundlach has decided to delete his Twitter account.
Continuing with the theme of bad break-ups, one of the consequences of Andrea Orcel’s recent career trouble is that he won’t be going to Davos this year. This might be something of a blow as he was a regular and enthusiastic attendee in the past (unoriginally nicknamed “Davos Man” by his colleagues, heavily admired for his stylish black skiwear). But having left UBS and not landed at Santander, he was always going to be short of a job title to put on his lanyard.
This might not have mattered. The World Economic Forum is notoriously stingy with its invitations, and particularly reluctant to hand them out to “business leaders” who don’t currently have any corporate affiliation, as retired CEOs are often distressed to find out. But on the other hand, most people in Davos aren’t invited to Davos; it’s perfectly normal (if you’re rich enough) to just buy a ticket to the town and wander from party to party. If it was just a matter of gardening leave, a big player Andrea Orcel could certainly find enough invitations to unofficial events to fill a calendar, in which case missing the sessions on the Millennium Development Goals might not have been much of a hardship. But under the circumstances, it must have just seemed a little bit too awkward, particularly as high executive pay is one of the areas in focus this year.
Ken Griffin of Citadel has taken advantage of temporary weakness in the London property market to pick up a bargain – No 3 Carlton Gardens, for £95m, reduced from £125m. It had previously been Charles De Gaulle’s base and had been used by MI6 to interview spies, but now it has a pool, media room and everything else a billionaire with standards might expect. (FT)
An in-depth interview with Reggie Nelson of LGIM, who decided as a teenager on an East London council estate that he needed to change his life, and so went to Kensington to knock on doors and ask the locals how they got rich enough to live their. He was lucky enough to encounter Quintin Price of Blackrock and so got the answer “fund management” rather than “the collapse of the Soviet Union” and a career began. (Financial News)
Bloomberg Opinion doesn’t mince words in giving a painfully frank analysis of the Commerzbank proposal - “A Truly Terrible Idea For Deutsche Bank” (Bloomberg)
The scale of the FCA’s investigation into culture issues at RBC continues to surprise; as many as 60 employees have made complaints to a regulator or to a whistleblower group (Financial News)
They’ve blown hot and cold on recruitment over the last year, but Nomura International has been looking after its employees’ health and has shared a healthiest workplace award with Adidas (Employee Benefits News)
And Citi has retained its Stonewall award for LGBT-friendliness (BusinessWire)
Bill Winters of Standard Chartered has likened his job to digging through “fertiliser” to uncover the great dormant franchises. According to this interview, they are buried deeper than he had expected (FT)
Central Banking magazine, the magazine for central bankers, announces its annual awards. To give an idea of the level of excitement involved, the Reserve Bank of New Zealand won “Best Financial Stability Dashboard”. (Central Banking)
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