Page 2 of 2

So why has Friedman’s luck apparently run out, with his tenure characterized by one detractor as «an endless series of cockups»? finews.asia will attempt a more clinical view of the main stumbling blocks in Friedman’s stormy tenure.

Bumbled Deals

GAM's former CEO, the intensely press-shy David Solo, had bolstered the asset manager with deals such as 2014’s acquisition of Singleterry Mansley, a mortgage-backed securities boutique. It was natural for Friedman to also seek deals in the fragmented specialist asset management industry.

An early foray by Friedman – the 2016 purchase of £1.78 billion ($2.33 billion) manager Taube Hodson Stonex – ended badly. Many of THS’ principals left shortly thereafter; only Ali Miremadi remains at GAM.

The $217 million deal for systematic shop Cantab in the same year wasn’t much better: last month, GAM was forced to take a 59 million Swiss franc ($61 million) write-down which more than halved profits.

Perfect Storm

It was against this backdrop that a Haywood’s co-manager in the flagship absolute return business raised alarm internally late last year. The timing couldn’t have been worse: Cantab and THS couldn’t be termed successful growth deals, and the ARBF engine was struggling with returns.

The two-step whistleblowing indicates that the informant felt hard done by with his first, internal complaint: four months later, the whistleblower appealed to the U.K. regulator, GAM disclosed on Tuesday after finews.asia's report.

GAM’s management, led by Friedman, hadn’t been able to contain the damage internally. GAM has been roundly criticized for its clumsy handling of the crisis. On Monday, the executive responsible for communications and part of an extended layer of GAM management, Elena Logutenkova, left the Swiss asset manager suddenly.

Outflows Key

Friedman has more than simply his job on the line: if GAM is found to have failed in overseeing the whistleblower’s complaint, the CEO and dozens of other company executives listed with the U.K. regulator as directors can be held responsible.

What happens next? Haywood's disciplinary proceeding will be disclosed at some point, and GAM will publish an interim asset reading on October 23. This, analysts say, will be key in gauging whether the problems in ARBF has unnerved clients in other investments. A spread of the problem would imperil GAM's future, and also likely seal Friedman's fate.

Several investors polled by finews.asia seem to have already made up their mind about the CEO: «Nope,» a sell-side analyst replied flatly when asked if they still backed him.