This is interesting.Goldman fired its head of European block trading, Dr. Alexandre Harfouche, at the end of last month.
Apparently – he’s not the only one. Someone at the firm tells us:
“This isn’t first compliance issue to surface. There have been plenty of high profile employees being fired or disciplined lately.”
But Harfouche’s firing is a big deal.
And the FT has an impressive account of one of his accomplishments:
Harfouche has worked on some of the biggest European stock trades in recent years, including Renault‘s sale of a $4.2bn stake in the Swedish carmaker Volvo last month. The deal was a coup for Goldman – the bank was the sole bookrunner on the year’s largest block trade – propelling it to the top of the industry league table for such deals.
So the question is, what’d he do wrong?
The Financial Times, who first reported the story, say the London trader was fired for “compliance reasons:”
[He] was sacked for failing to make proper disclosures to the bank’s compliance department, according to people familiar with the matter.
Harfouche’s job, block trading, happens to require a lot in the disclosure department.
Block trading is basically just trading anonymously. Block traders buy or sell large blocks of stock or thinly traded securities confidentially, so that other investors aren’t aware of it until after it’s done.
This is just speculation, but Harfouche might have been fired for something like… somehow allowing another investor to become aware of a block trade he was making.
Goldman is particularly touchy about front-running because there are so many suspicious claims against it.
Reports came out earlier this year that said Goldman’s CDO prop trading desk was right next to its CDO client trading desk. (They were also run by the same manager, Jerry Ouederkirk, who was later taken off the prop desk.)
And a former Goldman employee remembers that everyone at Goldman, when he was there, could see every trade on its book.
Goldman quickly hosed both of those fires, so perhaps something like that is what happened with Harfouche. Pure speculation of course.