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.
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