GAM increasingly is under fire for its handling of the suspension of star fund manager Tim Haywood – and its reaction is thin-skinned.
The suspension of Tim Haywood, the investment manager at Swiss asset manager GAM, has prompted more questions than the company provided answers for. The cold removal of the British star employee by GAM and the way the company chose to inform the public and – maybe more to the point, the clients – about it was recently commented upon by finews.asia in a much-read story.
Numerous investors and analysts have expressed their concern about how the asset manager got itself into a fragile position by removing the fund manager, a point noted by «Financial News» in London (behind paywall).
Change of Management
GAM Chief Executive Alex Friedman is the main focus of the criticism. «The pressure on Alex has risen,» said Daniel Regli, an analyst at Mainfirst. «I know that several (investors) are unhappy and would welcome a change of management.»
As CEO of GAM, Friedman is ultimately responsible for the fact that the abrupt decision to suspend Haywood, who hasn’t gone public since his removal, led to the liquidation of nine absolute-return-bond funds with 7.3 billion Swiss francs ($7.3 billion) in assets.
A Tumbling Share Price
The share price of GAM, already under pressure due to wobbly markets, following a profit warning and a write-off stemming from the expensive acquisition of Cantab, plunged another 20 percent.
Analysts said that the reason for the drop was GAM’s way of handling the suspension, which was seen as heavy-handed given that Haywood had seemingly violated certain guidelines. Why show him the red card, an analyst told the «Financial News», adding that they had no idea what downward spiral they would set in motion. The analyst added he feared clients would remove assets from other funds too.
Only «Bullshit»
The misdemeanors that GAM listed following an investigation with the help of an external adviser seem rather week compared with the drastic action and the no less drastic result. A spokesperson for GAM rubbished the questions raised by finews.asia as «BS» («bullshit») when asked about a comment.
Diana Mackay of MackayWilliams, a consultant, told the «Financial News» that GAM had improved its reputation in recent years by strengthening the sales team. Now however the firm faced a damaging loss of reputation and it all depended on how GAM handled the future communication of the case.
