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If GAM ekes out a turnaround or not, CEO Alex Friedman has proven the wrong person to run the asset manager. Where does his departure leave the Swiss company?

Neither investors nor clients will have been especially surprised when GAM CEO Alex Friedman headed for the exit on Tuesday. The former UBS investment chief had been under fire for the past 14 weeks over his handling of a whistleblower which has brought GAM to the precipice.

The Zurich-based company’s shares surged by as much as 6 percent at opening following the news, only to teeter lower in late-morning trading. The moves reflect the fact that GAM is a bundle of uncertainties, despite Friedman’s exit.

Keeping the «Talent»

His departure and temporary replacement in director David Jacob can be seen as a concession to potential buyers of GAM as much as it is to the firm’s big-name asset managers.

«There is a huge amount of talent in this business and there is much to be proud of in the way in which we serve our clients, our differentiated range of product offerings and the skill of our portfolio management teams in delivering excellent investment performance,» Chairman Hugh Scott-Barrett said.

Translated: GAM’s chairman is desperate to keep the «talent», or the managers of GAM’s individual fund boutiques on board. British rival Schroders reportedly already wanted to nab systematic boutique Cantab, putting GAM on the defensive.

Necessary Divorce

Friedman leaves GAM in an extraordinarily fragile state, as potential acquirers circle. «GAM needs to resist individual pieces being lifted out as long as possible. You wouldn’t want to squander an opportunity to stabilize GAM as a whole by going piecemeal,» an investment banker told finews.com.

The stock price has collapsed, and clients have withdrawn in droves. Friedman, who was ill at ease in the CEO role from nearly the start when he had to slash spending, didn't appear certain how to right GAM. Meanwhile, problems like the whistleblowing scandal surrounding bond fund star Tim Haywood and a major write-down over the Cantab acquisition two years ago piled up.