Guggenheim Partners, a $US290 billion investment firm with ties to the family behind New York’s Guggenheim Museum, is being rocked by a leadership crisis that has now broken into the city’s tabloids.
In the past 24 hours, the company has pushed back on multiple reports that CEO Mark Walter will step down; its chief investment officer has claimed on CNBC that there’s “no tumult” at the company; and Guggenheim has denied reports on a real-estate blog and in the New York Post that Walter bought a California mansion for a younger female executive at the company.
The company’s CIO, Scott Minerd — who is credited with growing the firm’s assets to nearly $US300 billion — acknowledged that the firm faced an examination by the Securities and Exchange Commission. He didn’t elaborate, but Reuters has reported that it’s related to an investment in a London-listed business with banking investments in Africa.
Walter, who owns the Los Angeles Dodgers and helped found Guggenheim, “has no present intent to relinquish his position as CEO,” a Guggenheim representative told Business Insider in an email.
The denials came after Bloomberg News reported that the 57-year-old billionaire might step away from day-to-day management of the firm following reports of tumult among executives. The Financial Times and Reuters also published similar reports.
A key issue, according to the Financial Times, was the promotion of Alexandra Court to global head of institutional distribution a year ago. That coincided with the firing of 22 members of the executive team, the newspaper reported.
Citing “scores of employees and clients,” the Financial Times reported that the move was a “lightning rod for many staff members as her promotion led to radical changes to the group’s asset management unit that alarmed several clients and contributed to the departure of several senior managers.”
It triggered tension between Walter and Minerd, The Wall Street Journal reported, “because it meant he and his team couldn’t pick up the phone to talk to clients about investments or help raise new assets.”
The Journal also reported that Walter and Court had a “personal relationship.” The company denies that Court and Walter, who is married, have a relationship beyond a business one.
According to her LinkedIn profile, Court has been at Guggenheim for seven years. Fellow employees told the Financial Times they were upset she didn’t have a US securities licence. She’s currently on a “sabbatical” from the firm, the Post reported.
Court’s $US13.4 million home in the Pacific Palisades neighbourhood of Los Angeles is also part of the controversy. Records show it was acquired by the same entity as the one that handled the purchase of Walter’s $US85 million home, the real-estate blog Yolanda’s Little Black Book reported.
“With regard to the blog item about a Pacific Palisades house, Mark Walter does not own the home in Pacific Palisades that is mentioned in the blog, nor did he buy it for Ms. Court,” Guggenheim told Business Insider.
Here’s a memo Guggenheim’s board of directors sent to employees on Wednesday in support of Walter:
To: All Employees
From: Guggenheim Partners Board of Directors
Date: September 20, 2017
You may have read various recent accounts in the business press regarding Guggenheim and its senior management. In spite of our representatives telling the press what we summarize below, stories have been published that are, simply, wrong. We issue this — a unanimous statement of Guggenheim’s Board — to set the record straight.
1. Mark Walter, CEO and Founder of Guggenheim Partners has the full and unequivocal support of the entire Board, each and every one of its members.
2. Every Board Member affirms full and complete support of Mark Walter as CEO and full and complete support of Scott Minerd as well as the entire senior executive leadership of Guggenheim.
3. The firm is thriving, growing, stable and strong.
We trust that this clear and concise communication ends the confusion and misinformation that has characterised recent press coverage of our firm.