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Gam calls truce with sacked star manager Haywood

Gam has called time on a bitter dispute with star bond manager Tim Haywood (pictured) who was sacked for “gross misconduct” due to events which led to the liquidation of his multi-billion-euro fund range which racked up losses and sent assets toppling.

The Zurich-based fund group confirmed on Tuesday it had buried the hatchet with the former absolute return bond fund (ARBF) manager at the end of an employee tribunal and that neither party would pursue the matter further “based on current facts”.

“Gam is focused on the future of the business, and while it stands by its finding of gross misconduct, it has agreed with Tim Haywood that neither party will pursue the other based on current facts.”

Haywood had vowed to fight back against his dismissal in February arguing that Gam was making him out to be a “scapegoat”. He was suspended from the firm in July 2018 as Gam investigated his risk management procedures and record keeping, a move which triggered the gating of his ARBF range. Weeks later Gam announced it was liquidating the nine funds in his ARBF range, which at the time held €9.5bn (CHF10.5bn).

Haywood believes case still has ‘merit’

A representative for Haywood confirmed that the former Gam manager would not be pursuing the matter further due to a cost issue but said he still “believes in the merit of his case”.

“Tim Haywood declines to proceed with the employment tribunal because, in this particular case, the expected minimum legal costs for exceed the maximum possible financial award. Mr Haywood still believes in the merit of his case for unfair dismissal,” the representative said.

In a statement sent to sister publication to Portfolio Adviser Haywood said he was pleased the ARBF saga had drawn to a close.

“I am very pleased to learn that clients of the Absolute Return bond fund range will see a return of the money, and for some fund share classes more than 100%,” Haywood said. “I am extremely grateful to all parties, inside and outside Gam, who worked so assiduously to create such a positive outcome for clients.”

Blackrock vet takes helm

The ceasefire with Haywood was confirmed in Gam’s interim results where it unveiled an €12.3m loss and a shake-up of senior management.

The H1 loss, which had been anticipated, compares with profits of €23m (CHF 25.4m) a year ago. Half of the losses or roughly €6.3m was chalked up to costs related to the ARBF matters and restructuring in the business.

The reputational fallout from the ARBF scandal continued to weigh on the investment arm which recorded outflows of €6.8bn over the six months to 30 June 2019, taking assets under management down to €47.3bn (CHF 52.1bn) from €50.9bn (CHF 56.1bn) at the end of 2018.

This came alongside an announcement that Gam’s board had decided to replace current acting CEO David Jacob with Blackrock veteran Peter Sanderson.

Sanderson has spent the last decade at Blackrock in various roles, including serving as the co-head of its EMEA multi-asset solutions and COO for Blackrock Solutions in EMEA. He will become Gam’s CEO from 1 September 2019.

In the reshuffle Jacob is set to become Gam’s new chairman, replacing Hugh Scott-Barrett who has been on the board for over 10 years.

Gam silent on takeover rumours

The Swiss fund group also announced it had agreed to sell its precious metals and money market funds to Swiss cantonal bank ZKB.

ZKB is expected to pay €12.6m (CHF 14m) in cash in exchange for the precious metal division’s €1.9bn (CHF 2.2bn) in AUM. Day to day management of the funds will fall to ZKB though Gam will continue to provide management company services through its private labelling business.

“We believe that, given ZKB’s already strong position in this business, clients will benefit from this transaction which is expected to close during Q3 2019,” the fund group said.

Gam declined to comment on whether it was pursuing any other M&A opportunities.

Rumours have also been swirling of a potential takeover, with US fund giants Columbia Threadneedle and Legg Mason, as well as Schroders all reportedly circling various parts of the business.

News that Gam hired investment banking advisers to explore its next steps and that George Soros purchased a stake in the flailing business have added yet more fuel to the fire.

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Kristen McGachey

Kristen joined Last Word Media and the world of financial journalism in April 2016, leaving behind a career in a legal publishing firm as a senior researcher turned assistant editor. This native Angelino...

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