Photo: Christian Haugen via Flickr
Citigroup has hired the man who spilled the beans on a big bank merger JPMorgan was advising on, Thomas Woodley Heath III, to be a managing director in its North American financial institution group.According to Citi, he’ll be “leading the coverage effort for U.S. banks.”
Here’s a key bit of background on Heath’s work with U.S. banks.
In 2005, Heath had lined up his employer, JPMorgan, to advise on the merger between Hibernia and Capital One, according to a filing with the NYSE.
A short while later, Heath was offered a job at Bank of America — a job he took (the “head of banks”). During the hiring process, Heath had a phone call with Eric Corrigan from Bank of America, during which he let Corrigan know that he was a “good partner,” and a “decent guy” who “wasn’t going to stomp all over him” — typical pre-hire stuff, but then Heath *told* Corrigan that Capital One was buying Hibernia. (Thus why there’s a filing with the NYSE.)
Heath also told Corrigan that Capital One’s price-to-earnings ratio was at such a low that it gave Hibernia a “degree of comfort with the stock” and the fact that the deal was 45% cash.
Heath swore Corrigan to secrecy, but Corrigan, who was Bank of America’s head of depository institutions group, and pretty upset that Heath was getting the job he wanted, told his colleague (also at UBS) Tom Chen, the head of BofA’s diversified financial services group.
Corrigan and Chen promptly tried (unsuccessfully) to get in on the deal. They called Capital One and tried to get Bank of America listed as an advisor.
When that didn’t work, Corrigan asked Heath if there were room for other advisors on the deal.
Heath responded “don’t even go there… I can’t believe you’re even saying that.”
Heath freaked, told Ursano what was going on, and got top management involved. Eventually the NYSE was brought in to deliberate and Heath was found to have disclosed material information and fined him $100,000, even though he would not testify that he disclosed material information.
Heath says he didn’t give the information on “bad faith,” but to further “the whole purpose” of his conversation with Corrigan: “to build trust and — and build . . . collegiality.”
A filing with the NYSE (click here to download it) says that Heath’s –
“reasons for making the disclosures — while certainly lacking any malevolent or deceitful quality — were, in the final analysis, self-serving in that they were intended to gain the trust of, and thereby smooth things over with, a soon-to-be colleague.”
This whole thing appears to have really blown up in his face. It doesn’t seem like he got the job with Bank of America, and he might have lost his job with JPMorgan, too. If he didn’t it’s only because his connections with Hibernia got JPMorgan the advisory role in the first place.
Maybe Heath’s connections at Citi lined up his new job.