Sometimes, abundant early success is derailed by the silliest things. Dan Michalow was very, very successful at a very young age. Not only did he manage to get through DE Shaw’s notoriously rigorous selection process straight out of Harvard, but within a few years he founded (at the age of only 25) their structured credit group and made so much money through the Global Financial Crisis that he was made their youngest ever partner. He was on the firm’s risk committee, represented them at Davos and ran a $6bn macro fund. Michalow is basically a smart guy when it comes to money. But he has been knocked off course.
The catalyst for Michalow’s derailment was a joke to a colleague that he wanted an assistant he could call “sugar tits” in the style of Mel Gibson. DE Shaw came to be aware of this and, aged just 35, Michalow agreed to resign. This was followed by a statement from DE Shaw to the effect that Michalow had been found guilty of, “gross violations of our standards and values”
The Financial Times has been talking to Michalow, who is suing DE Shaw for defamation. He wants to make it clear that “sugar tits” was spoken in the context of the Mel impersonation, not a #MeToo moment. Other alleged violations include removing his shirt in the office (it was inside out) and asking someone for a hug, might seem comparatively minor alongside Michalow’s allegations that DE Shaw itself was partial to, “lavish, alcohol-filled parties” and visits to strip clubs. DE Shaw isn’t commenting, but doesn’t agree with Michalow’s version of events.
The disagreement between the two parties seems to be snowballing. In the latest development, Michalow, who presumably has plenty of time to play golf now that he’s not working, was expelled (and later reinstated) from the posh Hudson National Golf Club. The club says there were ‘several breaches of the dress code’ and ‘conduct unbecoming’ a member, including the fact that his golfing partner once received and read an email on the green.
While it’s quite possible that Michalow wore the wrong sort of shoes and a hoody, he himself detects the hand of DE Shaw in HNGC’s move and is arguing that the club was pressured into ejecting him by a DE Shaw executive. Both parties deny this.
The defamation case will be heard in a private arbitration next year. For the moment, Michalow might have to take his caddy elsewhere. Even if he adheres to all future sartorial requirements he might have a few foibles to overcome. Michalow himself admitted to being an “abrasive boss” who “perhaps deserved to be fired for my style.”
Separately, it’s often easy to forget that although Zurich is a byword for wealth and high finance, it’s also a city of 400,000 people with districts like Oerlikon and Seebach where the working class live. This seems to be the Zurich in which private detection firm Investigo GmbH mainly operates; cash collection, security service and investigating fraudulent sickness claims for the benefit authorities of Zurich and Aargau cantons.
But they also do higher-end work, like tailing Iqbal Khan for Credit Suisse, and the detective assigned to that task has now given his own statement about last week’s contretemps. The Investigo man denies having attempted to grab the phone out of Mr Khan’s hand and says he was on his own rather than in a group (that included someone with a tattoo). This is presumably the basis for CS talking about “significant inaccuracies” in “sensationalised” media accounts.
Could it all have been a horrible misunderstanding? A confrontation in the street is not an ideal communication situation, after all. With adrenaline flowing, a raised hand to block a photograph can quite conceivably be perceived as an attack. What we might have seen here is the kind of misunderstandings that can proliferate when the two versions of Zurich bump into each other.
In some background to the Iqbal Khan surveillance scandal – the underlying story is that the wealth management market is getting more saturated, and the big banks are therefore paranoid that their competitors will try to maintain growth by poaching. Credit Suisse has drawn up a list of “flight risks” (Finews)
Citadel’s new machine learning hire, Nicolai Meinshausen, says that statisticians are lured to quant firms by “unparalleled amounts of data” and “the opportunity to take on the thorniest problems”. (Quartz)
Softbank executives (possibly including some of the many Deutsche veterans who have shown up there) are encouraged to take out loans to invest in Softbank funds, in some cases up to ten times their salary. Some of them are less keen on this than they used to be. (FT)
New heads and co-heads of all sorts of things as David Solomon makes a round of senior appointments, including the first female Chair of Goldman Sach’s investment banking division. (Financial News)
Deutsche’s James von Moltke says that the cost cutting plan is going ahead, but agrees that “the key is to keep the front office as unaffected as possible” (Euromoney)
Once upon a time, Jamie Dimon might have been pleased to have the WeWork CEO refer to him as “my personal banker”. (Business Insider)
“Barry” is a virtual reality model of a human being whose purpose is to help managers practice firing people. He simulates getting upset, and the experience is apparently quite emotionally draining for the managers being trained. (Reuters)
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