Just because people work together, doesn’t mean they like each other.On Wall Street, just because people work together, doesn’t mean they don’t want to stab each other in the back.
When that happens between two people at the top of the heap, you have an epic breakup on your hands.
Steve Kaplan, a professor at the University of Chicago Booth School of Business, comments on the cutthroat environment that exists in the upper echelon in finance:
“What happens is people spend time politicking, which has some costs. It’s the CEO’s or the board’s job either to try to get them to stop feuding, or you remove one.”
We’ve collected the nastiest, most embarrassing breakups from the world of finance to show just how ugly things can get.
Whether it’s due to gross misconduct, oversized egos, strategic differences, or poor performance, these executive exits have become the stuff of legends.
Once CFO at Citi, Krawcheck received a public demotion and became chairwoman of wealth management at the firm in 2007. It became clear she and Pandit did not share the same corporate vision, and a decision to accelerate stripping Krawcheck of further responsibilities prompted her to leave Citi in 2008. According to the New York Times, she lost seven pounds shortly thereafter and told friends it felt like she got a divorce.
But this one incident didn't keep Krawcheck down. Less than a year later, she was hired by Bank of America to integrate Merrill Lynch into the firm. When Krawcheck left, she received a golden parachute of $6 million in 2011.
Peter Lewis was ousted from HSBC over allegations of lewd behaviour in the changing room of the company gym.
Lewis, who had been in a monogamous homosexual relationship for a decade prior to the incident, lasted just eight weeks as HSBC's Global Head of Equity Trading. He denied any inappropriate acts and sued the firm for wrongful termination, claiming he was fired due to his sexual orientation.
Gundlach, who served as CIO, was allegedly caught plotting to start his own firm , DoubleLine Capital, after a falling out with CEO Marc Stern and subsequently fired in 2009. The firm accused him of stealing proprietary information, and revealed that it found pornography and drug paraphernalia in offices that he was leasing (not TCW's). In return, Gundlach countersued for unpaid wages.
Gundlach felt that TCW was simply going through with a months long plan to fire him and stop him from starting his own firm.
After a jury awarded Gundlach and some colleagues $66.7 million in unpaid wages but also found him guilty of breaching his fiduciary duty, the two sides reached a confidential settlement in early 2012.
It's clear Gundlach hasn't lost his magic touch. His recent trade recommendation (short yen, long Nikkei) has performed fabulously.
There were definite personality issues between Corzine and Hank Paulson, with Paulson disparagingly saying that Corzine reminded him of Bluto from Animal House. But the straw that broke the camel's back was when Corzine entered into preliminary negotiations about merging with Mellon Bank without informing the board. Paulson threatened to leave, and management voted Corzine out in 1998.
Corzine's garnered even more notoriety since leaving Goldman.
As you might know, Corzine went on to become a U.S. Senator and the Governor of New Jersey, then served as CEO of MF Global. A Congressional report blames Corzine for the firm's 2011 collapse, as he continued to bet on European sovereign debt even as its value was plummeting.
After Cayne fired co-President Warren Spector while the firm was hemorrhaging cash, loyalists from the fixed income and equity divisions lined up to take out the struggling CEO. To make matters worse, the Wall Street Journal released an article alleging that Cayne frequently smoked marijuana.
Cayne chose to resign instead of getting fired.
Since then, Cayne has stuck to what he does best: bridge.
Cayne was often criticised for playing too much bridge and not devoting enough time to the firm. He currently ranks 20th on the American Contract Bridge League's 'Player of the Decade' list.
John Duffy became co-CEO in 1999 after McDermott resigned.
In 2011, while in the midst of a messy divorce, his ex-wife alleged that he was carrying on a trio of extramarital affairs. He bought his three supposed mistresses a plethora of gifts, like houses, cars, and jewellery, which he claims were 'investments'.
Soon after the news broke, Duffy dropped the title of CEO to become Vice Chairman. He cited prostate cancer, not the embarrassing revelations, as his reason for stepping down.
For a while, the worst-kept secret at Morgan Stanley was the feud between Colm Kelleher and Paul Taubman, formerly co-Presidents of Institutional Securities. Taubman announced his retirement effective 2013 in November, prompting GMI Ratings to report 'political infighting...reportedly cost Mr. Taubman his job.'
Kelleher now has sole control over Institutional Securities at Morgan Stanley.
But don't feel too bad for Taubman.
On the day when Citi announced a Q3 earnings beat, Pandit was reportedly 'blindsided' by Chairman Michael O'Neill, who had been building a case with board members to get the CEO ousted. Reuters reports that O'Neill wanted the CEO 'to get in line soldier-style.' Allegedly, Pandit was given three choices: resign effective immediately, effective 2013, or be fired without cause.
O'Neill reportedly told Pandit the board had lost confidence in him.
Since resigning, he's chosen to serve as a co-investor with Indian private equity fund GTI Capital with a group that includes former Morgan Stanley CEO John Mack.