The formerly huge ~$6.5 billion British hedge fund Gartmore used to have 2 star portfolio managers: Guillaume Rambourg and Roger Guy.
Then they suspended one of them. It all went downhill from there — for Gartmore.
For Guillaume and Guy on the other hand… just wait and see.
Here’s the incredible story of how Guy and Rambourg ditched Gartmore and Rambourg turned an investigation from the FSA into a launching pad for an awesome new career: hedge fund founder. UPDATE: Word is that Guy originally had plans to co-found the fund, but has not signed on. (Click to jump straight to reading more about their new plans.)
(Bonus: Rambourg is now hiring in Paris.)
Gartmore's star portfolio manager, who owns 4% of the firm (according to the Times), is accused of trying to influence his traders into using specific brokers to execute trades.
He allegedly violated a rule that banned fund managers from telling Gartmore's trading staff which brokers to use on share deals.
In a letter to investors, Gartmore's head of UK retail writes:
'We have suspended one of our leading fund managers because we suspect that he may have breached internal procedures relating to directing trades which is one of the controls that we have in place.'
They say Rambourg's 'single, isolated and inadvertent breach' did not disadvantage the relevant fund and its investors.
Investors wonder, What the heck is Gartmore doing?
April 2010: Gartmore investors rage, furious that the fund suspended a money-maker over something trivial
'If his employer has damaged his reputation for no reason, will Rambourg leave?' ask Gartmore investors.
Investors worry about losing a money-maker because despite the suspension, there is no evidence that Rambourg did anything wrong.
The only concrete evidence that suggests that he 'benefited' from using specific brokers comes from Reuters, who said that some brokers have donated money to Rambourg's charities.
Yet the fund suspends him, which looks really bad for both parties. Rambourg's reputation goes instantly from star trader to trader basically accused of taking kickbacks.
Despite being a 'single, isolated, and inadvertent' breach, Gartmore suspends Rambourg for one month.
During that month, investors redeem £1.1 billion.
The fund still has around $23.5 billion in assets under management at this point.
The FSA opens its investigation into Rambourg in June 2010, a few months after its initial inquiry.
The fund had returned him to his status as a portfolio manager, but once the investigation hits, it must suspend him again. It says it will reinstate Rambourg as a portfolio manager 'subject to a satisfactory outcome of the FSA investigation.'
November 2010: Roger Guy, the firm's other star portfolio manager, resigns. The fund hires Goldman to arrange an emergency merger.
Gartmore's star portfolio managers come out on top. A news report says the new fund they are launching together is 'expected to attract a lot of investor interest.'
Having ditched Gartmore, it sounds like they're starting their own fund.
July 2011: Guillaume hires a Goldman Sachs veteran and is said to have plans to hire ~20 more in Paris. Guy's future plans are not confirmed yet.
So far, details about Guy and Guillaume's new fund are scarce. UPDATE: We mistakenly said, like others, that Rambourg and Guy were starting a fund together. But so far, according to a source and CityWire, word is that Guy is not signed on to the fund, although as previously mentioned, word was that they had planned to. A source tells us that it had been a rumour that Guy would not join the new fund. It sounds like instead of joining Rambourg, he might do something else.
The Financial News says that the fund will be in Paris and that around 20 traders will be hired. The strategy will be long/short equity, similar to the fund Rambourg and Guy ran at Gartmore.
One new hire: Karim Moussalem, who was made a managing director in 2007 and is now head of cash trading at Goldman Sachs, is leaving the US investment bank after almost a decade for a senior investment role.
Fun fact: When Guillaume was raising money for Alzheimer's research, Moussalem donated over $300.