Page 2 of 2

The immediate divorce between Friedman and GAM is necessary: the CEO had lost credibility with clients as well as staff due to his handling of Tim Haywood's suspension in July.

Lost Credibility

The highest priority for Jacob, who ran fixed income boutique Rogge before selling it to insurance giant Allianz two years ago, is to salvage what remains of GAM's value. A exodus of talent would cause GAM's billion-dollar outflows to spread. The 54-year-old has to smooth ruffled feathers among star fund managers and provide reassurances to other key employees.

Friedman, who inherited the CEO job from his wunderkind friend David Solo five years ago, has fallen to earth with his ambitions to advance GAM to a leading asset manager. An Ivy League-educated American with illustrious stints in the Clinton White House as well as with the foundation of Bill Gates' family, Friedman earned 14 million Swiss francs ($13.9 million) before even starting in 2014 for leaving UBS. 

Modest Growth

He has been paid handsomely every year since then (between 5 million and 6 million francs annually). An early foray into mergers and acquisitions with the 2016 purchase of £1.78 billion ($2.31 billion) manager Taube Hodson Stonex ended badly. Many of THS’ principals left shortly thereafter.

The $217 million deal for Cambridge, U.K.-based systematic shop Cantab in the same year wasn’t much better: this summer, GAM was forced to take a 59 million Swiss franc ($58.7 million) write-down which more than halved profits.

Perfect Storm

It was against this backdrop that Haywood’s co-manager in the flagship absolute return business raised an alarm internally late last year. The timing couldn’t have been worse: Cantab and THS couldn’t be termed successful growth deals, and the Haywood absolute return bond engine was struggling with returns.

Friedman then bumbled the response to an internal complaint in November (the whistleblower appealed to Britain's regulator four months later). The move sparked a chain reaction of investor withdrawals, a slumping stock price, and key staff losses such as the departure of a former Financial Conduct Authority executive just months after her arrival at GAM.

An extremely driven CEO has explored the limits of his ambitions – and in his eagerness and naivete about what the job could entail, stumbled over his own aspirations.