The strange story of a Goldman Sachs 'whistleblower' who's taking aim at top execs' dealmaking

Retuers/ Luke MacGregorGoldman Sachs bankers walking down a London street.
  • Christopher Rollins, a 16-year veteran of Goldman Sachs, sued the bank this week over his termination.
  • Rollins claimed he was unfairly terminated over his role in a series of transactions involving an unnamed financier who had legal issues in the past. He’s seeking $US50 million in damages.
  • The lawsuit set tongues wagging on Wall Street and in the City of London, given that it names several of Goldman Sachs’ most senior staff members in London.
  • Multiple people familiar with the matter believe the financier in question is the German entrepreneur Lars Windhorst, who’s been referred to as Germany’s “modern-day Medici.”
  • Mike Sitrick, a spokesman for Windhorst, said in an emailed statement: “We strongly deny that the unnamed executive mentioned in the lawsuit is Lars.”

This story has everything.

A lawsuit Thursday sent Wall Street and the City of London buzzing, given that it mentions a “whistleblower,” an unnamed “notorious European businessman,” and a handful of Goldman Sachs bankers, one of whom is a member of the incoming CEO’s inner circle and others nicknamed by some at the firm as the Aussie mafia.

Christopher Rollins, a managing director and 16-year veteran of the bank, sued the firm over what he alleges was an unfair termination over his role in a series of transactions involving a financier that he didn’t name, according to the suit, which seeks $US50 million in damages.

The complaint names Jim Esposito – promoted this week to cohead of Goldman’s securities division– as a defendant and details involvement of the Goldman bankers Michael Daffey and John Storey, among other leaders.

The suit talks about several transactions Goldman conducted on behalf of the financier, who had legal issues in the past, the complaint says.

Multiple people familiar with the matter believe the financier in question is the German entrepreneur Lars Windhorst, though Mike Sitrick, a spokesman for Windhorst, said in an emailed statement: “We strongly deny that the unnamed executive mentioned in the lawsuit is Lars. The allegations in the suit do not support that supposition.”

Windhorst, the chairman of a firm called Sapinda Group, is said to be a protégé of former German Chancellor Helmut Kohl. In the past, he’s filed for bankruptcy and been involved in numerous legal battles. In 2012, an article in Financial News referred to him, approvingly, as Germany’s “modern-day Medici.”

The complaint says the entire affair started when Daffey and Storey met with the financier in 2015 to explore ways the firm could bring him on as a client.

The two are among the most senior members of Goldman’s equities business. The Financial Times reported that Storey earlier this year attended the infamous President’s Club dinner in London, where, the newspaper has reported, women servers were groped and propositioned. Daffey was also on the President’s Club invite list, though the firm has said he didn’t attend.

Hailing from Australia, the two are known by some internally as the Aussie mafia, according to some people who know them. Michael DuVally, a Goldman spokesman, declined to comment on the characterization, and neither exec returned phone calls seeking comment.

The complaint alleges the financier told the bankers that he had $US1 billion to invest. Rollins claims that while he had met the financier socially, he never sought to do business with him.

Here’s what we can ascertain about the timeline of alleged events, from the complaint:

  • August 2015: Daffey and Storey travel to Windhorst’s 200-foot yacht in the Mediterranean to pitch for his business. Part of the deal would be working with what the complaint called an “obscure” brokerage with ties to the financier.
  • September 2015 to August 2016: Daffey, Storey, and former Vice Chairman Michael Sherwood “used their influence within the firm” to steer a series of transactions around the firm’s compliance controls, it says.
  • The complaint alleges that Goldman:
    • Issued $US1.2 billion in bonds – $US700 million in September 2015, then $US500 million in June 2016 – structured by an unnamed broker affiliated with the financier.

      • The Financial Times has previously reported on transactions involving the sale of two bond issues totaling $US1.2 billion on behalf of several special-purpose vehicles. The funds went to loans to airlines around the world, including Etihad, Air Berlin, and Alitalia, it said. Anoa Capital, a broker in which Sapinda Group had purchased a stake in 2013, helped arrange those deals, according to the September article.
    • Opened an account in New York for the financier.
    • Opened a second account, in London, to execute a single trade worth more than $US400 million in July 2016, earning $US7 million in fees. While an internal committee initially rejected the trade, it was approved after Daffey appealed to Richard Gnodde, a Goldman vice chairman.

      • Reuters reported in July 2016 that Sapinda Group used Goldman Sachs to help it sell a 19% stake in an Austrian real-estate firm, Buwog, for about $US400 million. Exhibit 1 of the complaint mentions a Buwog transaction.
    • Goldman also executed a series of trades for securities in a second European company that were sold to some of the bank’s other clients.
  • August 2016: One of the Goldman clients who agreed to buy a stake in the second European company couldn’t come up with the money, leaving the bank on the hook for $US85 million.
  • September 2016: Goldman compliance execs interviewed Rollins and told him he should not have had any contact with the financier.

    • Rollins further alleges that the firm began “a Kafkaesque disciplinary process, pressuring Rollins to confess to violating compliance restrictions relating to the Financier – even though the Firm could never identify any actual restrictions.”

Rollins claims that Daffey, the co-chief operating officer for the equities unit, and Storey, a cohead of equity sales for the region, told him they had “arranged” for Esposito to be the decision-maker and that he would be a “friendly arbitrator,” the complaint says. Rollins alleges that Daffey told him that if he “didn’t fight the charges, and was ‘contrite,’ he’d receive no more than a slap on the wrist.” Rollins claims in the complaint that he didn’t do anything wrong.

DuVally said that “the suit is without merit, and we intend to vigorously contest it.”

He added: “As referenced in a filing the firm made in March 2017, Mr. Rollins executed certain trades involving a previously restricted party without obtaining appropriate authorization. As a result, his employment was terminated.”

That filing is part of Rollins’ employment record, known as a U5, kept by the Financial Industry Regulatory Authority. Rollins’ record also includes his rebuttal: “In March, Goldman Sach & Co filed disclosures information on my U-5 which I believe is inaccurate and plan to contest.”

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