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October 05, 2017 at 05:57 AM
It was an unusual Wall Street formula.
Take the Los Angeles Dodgers. Add NBA Hall-of-Famer Magic Johnson. And stir in Guggenheim, one of the grand old names of American business.
Today the 2012 Dodgers takeover seems to encapsulate the growing trouble inside Guggenheim Partners, whose leader, Mark Walter, cut that winning side deal for himself and select colleagues.
Interviews with more than a dozen current and former employees and people close to the firm paint a portrait of a once-thriving partnership now riven by personal and professional rivalries.
No fewer than 60 bankers, traders and analysts have departed over the last two years. Guggenheim recently went so far as to offer some senior managers bonuses to stay on for at least a year amid frustration over money, management style and personnel.
(Related: Guggenheim’s CEO Is Said to Seek Control of Insurer in Shake-Up)
Top executives aren’t just feuding over the CEO’s outside investments, according to the current and former employees. They’re upset about the direction of the firm, which lost value last year even as assets grew. They’re also at odds over the promotion, pushed by Walter, of Alexandra Court to oversee global institutional client relations despite her lack of Finra credentials for the post.
Meantime, Court is negotiating an exit, these people say. Some Guggenheim employees wonder how long Walter, 57, will remain CEO.
The conflict reached a boil in late July, when Scott Minerd, Guggenheim’s star money manager, confronted Walter in the firm’s Chicago office.
The flashpoint: Walter’s decision to promote the South African-born Court even though she lacked key securities accreditations, including a basic U.S. Series 7 license. Guggenheim fired almost two dozen workers in her unit when she took the job.
Unsettled Clients
Minerd, a 57-year-old body-builder with a reputation for a volatile temper, told Walter that the move had unsettled employees and clients, said people familiar with the matter. Some of the people said Court received preferential treatment because of her close relationship with Walter.
Court’s attorney, Martin Singer, said her promotion had nothing to do with favoritism, but stemmed from her successful record building Guggenheim’s European business since 2010. She has brought “a disciplined, professional and efficient infrastructure” and has raised $20 billion of new assets since her April 2016 appointment to her current job, according to Singer, whose celebrity clients have included Bill Cosby, Charlie Sheen and Scarlett Johansson.
Unusual Step
Michael Sitrick, a Los Angeles-based public-relations executive representing Guggenheim, said of Walter and Court:
“There is no non-business relationship. But if there were, it was fully and promptly disclosed to the appropriate parties at Guggenheim, in accordance with established processes and procedures, which were then fully implemented, to avoid improper influence or favor.”
Court’s promotion was supported by senior management, Sitrick said. But in a January memo addressed to portfolio managers and senior executives and seen by Bloomberg, Walter called resistance to Court’s authority “pervasive” and “insubordinate.”
With tension rising, and word of the turmoil leaking out, Guggenheim’s board took the unusual step of issuing a firm-wide memo on Sept. 20.
“We issue this — a unanimous statement of Guggenheim’s Board — to set the record straight,” the memo said. The board “affirms full and complete support” for Walter and Minerd.
The memo continued: “The firm is thriving, growing, stable and strong.”
Walter, Minerd, Court and other Guggenheim executives declined to comment for this story.
It’s safe to say this isn’t quite what the Guggenheims had it mind when the family began assembling a cast of Wall Street characters to capitalize on a name that rivals Carnegie and Rockefeller.
Meyer Guggenheim
