Morning Coffee: Trader with a sweary boss was happy to be investigated along with his friend. Yet another way to mess up your interview at Goldman Sachs.
Sometimes, when you think you’ve been making a contribution to your employer which isn’t reflected in your seniority, you might raise the issue informally. If you ask what sort of title you might be given and the answer comes back “F---Face”, then you’ve either got a very friendly relationship with your boss or a very unfriendly one.
Robert Gagliardi, formerly of Evolution Capital, can’t have been in much doubt as to which of these was the case with respect to him and Michael Lerch, the fund’s founder. We’ve already found out from previous court documents that the compensation negotiations that year included lines like “I’m not going to pay you the bonus, f--- you, sue me”. In fairness to Lerch, Gagliardi may have given as good as he got; he’s regularly described in proceedings as “abrasive” and as someone who “frequently fell out with colleagues”.
This is ironic, because the whole source of the problem appears to be one of Gagliardi’s friendships. He was close to Pawan Passi, the former head of US equity syndicate at Morgan Stanley. Close enough to allegedly refer to him as his “daddy” in emails, which became embarrassing when Passi was fired and Morgan Stanley fined for breaches of the block trading regulations.
Around the same time, MS appear to have cut Evolution as a prime brokerage client and, as it converted to a family office for Lerch, the founder seems to have partly blamed Gagliardi for the loss of its external business. In his view, the reputational damage of being associated with someone who was subpoenaed (but not indicted) by the SEC in the block trading investigation outweighs the fact that Gagliardi made more than 94% of the firm’s trading profits.
Gagliardi, for his part, says that he would “probably been insulted not to have been included” in the subpoena. And, without taking any position on the merits of the ongoing litigation over his dismissal and bonus, this does seem like a reasonably fair point.
After all, we’re in a world in which it’s agreed that losing $50m is a good thing, because it demonstrates that you had a strong enough track record that someone gave you a big portfolio to manage. Similarly, if you’re in the block trading business, then being named in the subpoena for the biggest inquiry into block trading in the last ten years … well, it demonstrates that you were a player, doesn’t it? If the SEC forensic analysts went through all the WhatsApps of some of the biggest and most profitable players, and didn’t find your name appearing once, then it would seem that you were not really part of the important group chats.
The litigation between Gagliardi and Evolution seems very bitter, and has been surprisingly public for a trial where reputations are so important. Perhaps some more big names will be dragged into it, particularly now it’s been suggested that to do so might be a status symbol.
Elsewhere, trick questions at banking interviews are usually just annoying. But we have to confess a sneaking regard for one Goldman MD. According to a fintech founder who was hired by GS out of business school, “He shows up all frazzled. He puts, like, this big leather binder on the desk, and he says, ‘You’re a hotshot. I see hotshots come through here all the time. See if you can set me up a meeting’”.
Apparently, the majority of candidates wanted to demonstrate what a hotshot they were and started immediately working the phones. Sharran Srivatsaa of Acquisition.com was one of the only people to ask themselves … hang on? Would a Goldman MD really hand over his contact book to an interview candidate who they had just met without even telling them what they wanted a meeting about? Simply by asking “Do you have a script or something, because I want to represent you well”, Srivatsaa managed to pass the test of being “coachable”. And with only 38 more interviews, he was hired.
Meanwhile …
Financial sponsors banker Kaan Kasedar has joined two current trends – pre-Raghavan MDs leaving Citigroup, and European dealmakers joining Evercore. (Financial News)
Jane Fraser is top of the list for the annual Most Powerful Women In Banking, but it’s also interesting to see that Jenn Piepszak (number 2) and Marianne Lake (number 3) have swapped places compared to the 2024 rankings, despite the fact that Piepszak has said she doesn’t want to succeed Jamie Dimon and Lake hasn’t. JPM has another employee in the top 5 – its CIO Lori Beer. (American Banker)
After acquiring a UK banking licence last year, Nik Storonsky of Revolut has demonstrated his commitment to British finance by doing what every other ambitious London banker seems to have done, and moving to the UAE. (FT)
It must be one of the most frustrating things about working for a family office that you have to sit there and listen to younger sons’ investment ideas. Doubly frustrating if, like the Kanoo brothers, they happen to be dead right about Bitcoin. James Burke, head of the family office, wrote a paper to prove them wrong, and if he hadn’t changed his mind, you know he’d never hear the end of it. (Bloomberg)
“Before Starlink, you could spend hundreds of thousands and not have good data”, but now it’s perfectly viable to dial into Zoom calls and run a business from your yacht. As long as you’re prepared to shake off some incredulous looks from the employees you’ve told that in-person working is compulsory because of the synergies and interactions. (WSJ)
JP Morgan’s acquisition of Frank included a clause under which the bank promised to pay any legal costs arising for Charlie Javice. Which means that, after she was successfully prosecuted for defrauding them, JPM had to write a check for $115m for her extremely expensive legal team. (Bloomberg)
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