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A whistleblower at GAM is just the latest in a series of setbacks for CEO Alex Friedman. finews.asia chronicles the perfect storm around the top executive's stint at the Swiss asset manager.

The Swiss asset manager has been roiled by an employee who first raised alarm inside the firm and then – presumably not satisfied with the outcome – went to the U.K. regulator four months later, as finews.asia reported exclusively on Tuesday.

To be clear, GAM CEO Alex Friedman's attempt to protect the whistleblower are commendable – even if investors are salty that they had to wait a full eight months after the complaint was first raised to learn that star fund manager Tim Haywood was being suspended as a result. 

What Friedman can't shake is that he nevertheless bumbled the response to the complaint, which center around Haywood's use of private email for work, shoddy filing, and failing to clinch approval beforehand for travel and entertainment expenses.

Stanch the Problem

The chaos wrought on GAM by the whistleblower's charges stand in stark contrast to their relatively harmless nature: Haywood breached no risk limits, didn't act in bad faith or enrich himself, and – crucially in the finance industry – he is actually poised to make money on the deal, two people familiar with the transaction told finews.asia.

How, then, did the whistleblowing episode tip GAM into such an existential crisis? The answer can be traced back to Friedman: the CEO failed to stanch the problem nearly one year ago when it first surfaced.

The top GAM job is one of utmost diplomacy: fund managers – and their egos – hold sway. They are paid to persuade potential clients to sign up to a particular investment case.

Wrangling Egos

A big part of Friedman's role is to accept this, and to deftly wrangle the big personalities of his star fund managers as well as the conflicts between them. In the dispute between Haywood and his former co-manager-turned-whistleblower, this skill appears to have eluded Friedman.

The complaint added to series of missteps since Friedman, an American with illustrious credentials including a stint in the Clinton White House and degrees from elite universities Columbia and Princeton, made the jump from UBS to the C-Suite at GAM in 2014. 

«Endless Cock-Ups»

Four years later, Friedman is in the hot seat: he is overseeing a withdrawal of epic proportions – $7.3 billion – in one of its flagship products. The move, sparked by a whistleblower, has raised the specter that Friedman might be ousted and the firm sold – or both.

To be sure, Friedman is widely acknowledged for asserting his strategic vision over GAM with measures including ramping up distribution and centralizing its sales army. The whistleblowing episode alone wouldn’t have been enough to capsize GAM, most analysts agree.