Morning Coffee: "Pathological megalomaniac" deprives ex-banker of $50m bonus. British government’s bankers resign together
If you thought you had $50m in deferred compensation, and ended up on a conference call being told “deferred comp is zero … it no longer exists”, then you’d probably be pretty angry too. Brendan Sullivan, a former investment banker and private equity tech analyst who went to work for Bill Hwang’s Archegos in 2014, is suing Hwang (and his “Grace and Mercy” charitable foundation, a plan administrator and a number of Archegos executives) and he has allowed his lawyer to use some pretty tetchy language.
So far, we only have the plaintiff’s complaint, and the defendants’ lawyers don’t appear to have commented on any of the press stories, so it ought to be borne in mind that we’re potentially only seeing one side of the story here. But it’s certainly worth a coffee break’s worth of time to scroll through the complaint, as it is absolutely full of events and behaviour which, if they happened as described, ought to be noted as massive red flags for any employment relationship.
Sullivan claims that Hwang suffers from "pathological megalomania" dating back to his time at Tiger Asia. The whole basis of the complaint is that Sullivan claims that he had his arm twisted to reinvest his bonus into a “Deferred Compensation Plan” where the money would be managed by Archegos. He alleges that employees who tried to defer less than the maximum amount would be berated and accused of lacking loyalty, and that Archegos often made people say how much they were planning to put into the Plan before deciding on their compensation.
That’s a bad sign if true, and will remind old hands of the way that Dick Fuld at Lehman Brothers got personal with people who he felt weren’t buying enough company stock. It’s natural for hedge funds and even banks to want their employees to have “skin in the game”, but when it turns into a loyalty test, it ought to be a sign that the bosses might not have your best interests at heart.
An equally bad sign is a boss who doesn’t share credit. Sullivan alleges that Bill Hwang used to be unable to tolerate anyone having ideas apart from him, and that in good years he would say things like “I’m the reason for this result” and “you should be paying me to work here”. The complaint also says that he wanted employees to demonstrate they shared his religious beliefs, and that Hwang made personal comments about their weight if he was in a bad mood.
There are dozens more points in the lawsuit; with the knowledge we have now of how Archegos ended up, it makes pretty hard reading at times. But the real story here is probably the one that starts on page 13, at the very beginning of Sullivan’s account. He was an ambitious analyst who wanted to manage capital. All through his time at Archegos, the possibility of his being given a pot of money – even his own deferred comp – seems to have been held in front of him but it never quite arrived. In any employment relationship, the question to always ask yourself is whether you’re actually developing toward your career goals, or whether you’ve got a boss who knows exactly what bait to dangle in front of you to keep you hooked.
Elsewhere, the headline news in London is that there’s been a bit of political turmoil. What’s noticeable, though, is that the two Cabinet ministers who resigned, Rishi Sunak and Sajid Javid, are both former bankers (Sunak was at Goldman and then went into hedge funds, Javid sold Asian equity derivatives for Deutsche Bank).
That probably isn’t a coincidence. The two men are friends – Javid is slightly older, and has been referred to as the “Jedi Master” by Sunak, who is very much richer. And people in the financial industry tend to have a bit more experience of how to handle a controversial resignation than politicians from other backgrounds.
They seem to have handled it well; their letters arrived within minutes of each other, and without any hint that something might be about to happen ahead of time. Presumably there was no headhunter involved, but if the former Chancellor and former Health Minister put the whole thing together while hiding at a back table in an obscure branch of Costa Coffee, they might have found the experience curiously nostalgic for their banking careers.
Nikolaos Vasilatos has gone from JP Morgan’s strategic investments unit, buying stakes in emerging tech companies, to do a similar job as head of venture capital at Elysium Management, the family office of former Apollo boss Leon Black (Bloomberg)
If the ages of the millennials profiled in BI’s latest “up and coming analysts” feature don’t already make you feel old, have a look at the sectors they cover – internet games, cannabis and clean tech. (Business Insider)
Serving rich people is still a growth market – as well as banks, private equity firms are now looking for bankers with experience of raising capital from the ultra-high net worth community. (Financial News)
Is he trying to save crypto, like John Pierpoint Morgan saved the stock market in the Crash of 1929, or is he trying to squeeze out competitors and pick up some undervalued assets … also like Morgan in the crash of 1929? A profile of Sam Bankman-Fried concludes that if you’re asking the question, the answer is unlikely to be good news for competitors. (Economist)
Careful with fine print – some companies are “catfishing” employees with scarce skills, by advertising jobs as being suitable for remote work, but then requiring you to come in a few days a week or be available for meetings nearby. (WSJ)
If you look at actions rather than words, it’s good news for UBS’ commitment to its work-from-home policy. The bank now has two floors of “grey space” at its headquarters building in London which it’s planning to let out to another tenant. (FT)
Barclays has signed a lease on a new, bigger building in Paris, underlining the extent to which it’s scaling up European trading. They’ll be moving into the new premises in 2024. (Financial News)
Have a confidential story, tip, or comment you’d like to share? Contact: email@example.com in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)