Entitled Ass of the Week

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Entitled Ass of the Week

Postby gnaruki » Thu Jun 19, 2014 8:48 pm


Ex-Goldman Trader Calls $8.25 Million Bonus Unfair, Told Mom He'd Get More
By Michael J. Moore Jun 19, 2014 1:28 PM PT 16 Comments Email Print

June 19 (Bloomberg) –- Bloomberg’s Michael Moore discusses Deeb Salem, a former Goldman Sachs trader who said his bonus was unfairly docked because of a written warning he received about his 2007 self-evaluation. He speaks on Bloomberg Television's “Market Makers.” (Source: Bloomberg)
Ex-Goldman Trader: Bonus Unfairly Cut to $8.25M

Deeb Salem, a former Goldman Sachs Group Inc. (GS) trader who said he helped the bank earn more than $7 billion, wants to be paid the almost $5 million difference between his 2010 bonus and what he told his mother to expect.

Salem said in an arbitration hearing that he was led to believe that his 2010 bonus would be $13 million, down from a $15 million award for 2009 when he was paid more than Chief Executive Officer Lloyd C. Blankfein. Instead, Salem said his bonus was unfairly docked because of a written warning he received about his 2007 self-evaluation.

Salem, 35, said the $8.25 million bonus for 2010 didn’t reflect his contributions, while Goldman Sachs argued he was aware that the firm could pay him whatever it wished and that the company considered his conduct in determining compensation. Salem said promises from executives kept him around for another year before a $3 million bonus led him to jump to a hedge fund.

“Let’s be very clear: I was one of the most sought-after investment professionals in the mortgage industry,” Salem said during the Feb. 25 hearing. “I had the opportunity throughout the course of my career and throughout -- from that day, from almost every month that I was at Goldman, to leave for other opportunities.”

Photographer: Eugene Gologursky/Getty Images for Gotham Magazine
Former Goldman Sachs Group Inc. trader Deeb Salem.
‘Utterly Ridiculous’

A transcript of Salem’s arbitration hearing before the Financial Industry Regulatory Authority was included as an exhibit to his petition filed last week in New York State Supreme Court. Today, Justice Eileen Bransten ordered the documents sealed pending a hearing in September on Goldman Sachs’s request to keep them confidential. A copy of the transcript was provided by Salem’s lawyer earlier this week.

“These claims are utterly ridiculous, which is why they were rejected by a Finra panel, and unworthy of any further response,” said Tiffany Galvin, a spokeswoman for New York-based Goldman Sachs.

Salem asked the court to throw out the arbitrators’ ruling against him in part because he said they showed bias, with one member of the panel calling his case “bulls---” during the hearing.

While Wall Street banks tout the flexibility that year-end bonuses gives to their expense line, employees often expect pay to closely track what they produce. Blankfein has said he would make discretionary bonuses 100 percent of compensation if he could.

Christmas Fire

Salem sought a total of more than $16 million in additional pay from Goldman Sachs in arbitration. That included almost $7 million in deferred stock that Salem said he was led to believe he would get as long as his exit from the company wasn’t akin to the departure of Greg Smith, who announced it in a New York Times op-ed that criticized how the firm treated clients.

Photographer: Scott Eells/Bloomberg
Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc.
In January 2011, Salem told his mother, who was staying with him because her house had burned down on Christmas, that he expected at least $13 million for 2010, according to the transcript. That was based on the fact that his mortgage-trading desk generated about the same amount of revenue in 2010 as it did the previous year and that Justin Gmelich, a credit trading executive, told him at a cocktail hour that he was a “steal” at $15 million, Salem said.

Average Bonus

Salem received an $8.25 million bonus after getting the warning for “extremely poor judgment” in discussing a short squeeze in his self-evaluation. Goldman Sachs executives told him the firm would make it up to him and encouraged him to stay, he said. That came after President Gary Cohn persuaded him to remain in 2008 rather than leave with colleague Josh Birnbaum to start a hedge fund, Salem said.

No promises were made, Andrew Frackman, a lawyer at O’Melveny & Myers LLP who represented Goldman Sachs, said at the hearing. The company’s policy clearly states that all bonuses are discretionary and Salem acknowledged as much when he signed the firm’s employment offer, Frackman said.

Salem was highly paid even by Wall Street standards, as the average managing director in the areas of mortgage-backed securities, structured credit and proprietary trading received a 2009 bonus of $750,000 to $1.1 million, according to an Options Group report at the time. Still, banks are competing for top talent with hedge funds that more often pay a direct percentage of what the trader generates.

The median household income in New York City from 2008 to 2012 was $51,865, according to the U.S. Census Bureau.

Toaster Ovens

Salem said his group put on a large short bet against the housing market, reaping billions of dollars for Goldman Sachs and helping it weather the financial crisis better than peers. He said Blankfein told the desk to cover its bet in early 2007, forcing the group to sell almost $5 billion of positions to Harbinger Capital Partners LLC, the hedge-fund firm run by Phil Falcone that made billions betting against subprime mortgages.

While the move cost the group profits, it once again went short in the middle of 2007, generating gains of $2 billion to $3 billion, Salem said. The group made almost $2 billion in 2008 and then changed its view of the market to positive in 2009 and 2010, reaping more than $1 billion in each of those years, he said.

Salem said he and other traders in his group didn’t mind getting paid a lower percentage of their produced revenue than other parts of the firm. Salem said he did find it “a little bit insulting” that Jeff Verschleiser, a trading executive who was hired from Bear Stearns Cos. in 2008, kept a box of toaster ovens at his desk that he would award to employees who made notable trades.

Verschleiser and Gmelich didn’t respond to phone messages seeking comment.

Highly Paid

Frackman said that while “there is no dispute that he is very good at trading,” Salem was paid better than peers. He was awarded more than $35 million of compensation over six years and was the second-best-paid managing director in the mortgage department in 2009 and 2010, and third-best in 2011, Frackman said.

“He made a ton of money,” Frackman said at the hearing. “He’s not entitled to more simply because he would like to have been paid more. If that were the case, you’d have traders and bankers in here every day of the week.”

In 2011, the U.S. Senate Permanent Subcommittee on Investigations said Salem and other Goldman Sachs traders tried to manipulate prices of derivatives linked to subprime home loans in 2007 for their own benefit. The subcommittee’s assertions were based in part on Salem’s self-evaluation, in which he wrote “we began to encourage the squeeze with plans of getting very short again after the short squeeze caused capitulation of these shorts.”

Michael Jordan

“The translation of that sentence is, you know -- is very different than it was, at times, made out to be,” Salem said at the hearing. “There’s no wrongdoing in that sentence.”

Goldman Sachs denied any attempted manipulation. Traders “shorting” the mortgage market were betting that securities tied to homeowners’ ability to repay loans would decline. A “squeeze” describes efforts to move the price against short investors, driving them out of their positions.

Salem said the bank raised no objection to his discussion of trading at the time of his self-evaluation. He said he was told to be “a little bit more professional” in future evaluations after writing, “I am as competitive as Michael Jordan. I don’t just want to win; I want to win every time and I want to steamroll the opposition.”

Trader Scapegoated

Salem’s lawyer, Jonathan Sack of Sack & Sack, said in an interview that his client was scapegoated as other executives who were criticized by the Senate went unpunished. Salem joined Goldman Sachs after attending Phillips Academy in Andover, Massachusetts, and Princeton University, where he graduated Phi Beta Kappa.

While Salem’s claim originally sought more than $20 million of unpaid compensation, Sack said in the hearing his client was now seeking $9.5 million plus 41,000 shares of deferred compensation, worth about $7 million at yesterday’s closing price. Frackman said the numbers were “pulled out of a hat.”

Salem left for hedge-fund firm GoldenTree Asset Management LP in 2012 after his 2011 bonus fell to $3 million. His group made $260 million in a difficult market that year, he said.

“Everyone at Goldman took a beating in 2011 because it was a terrible year for the firm,” Frackman said.

Salem said he expected to receive unvested shares from previous years’ bonuses after a conversation he had with Michael Swenson, a senior trader whom Salem described as a father figure. According to Salem’s account, Swenson told him that if he left the firm, there would be at least one positive consequence from Smith’s public resignation: “You are guaranteed, basically, to get your deferred compensation.”

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Steven Crabill
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Re: Entitled Ass of the Week

Postby gnaruki » Fri Jun 27, 2014 6:10 pm

Man Sues Airline After Landing in Grenada Rather Than Granada


It was a booking mistake off by one letter but nearly 4,000 miles.

When a North Bethesda, Maryland, dentist planned a trip to Portugal for a conference last September, he decided he'd quickly swing by Granada, Spain, to see the famed Alhambra and other historical sites.

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But carrier British Airways had other ideas, and instead sent Edward Gamson and his partner to Grenada — with an E — in the Caribbean, by way of London, no less.

Gamson, who said he clearly told the British Airways agent over the phone Granada, Spain, didn't notice the mistake because his e-tickets did not contain the airport code or the duration of the trip. It was only 20 minutes after departure from a stopover in London that he looked at the in-flight map and asked the flight attendant, "Why are we headed west to go to Spain?"

“His response was: 'Spain? We’re going to West Indies,' ” Gamson said.

Man sues after flying to Grenada (instead of Granada)TODAY

After nearly three days of transit, Gamson just barely made it to the conference, but his vacation was ruined: He's out the more than 375,000 frequent-flier miles he had used to book his first-class tickets, and he said the airline was less than helpful.

British Airways offered him and his partner $376 each and 50,000 miles, Gamson said. But he figured the pre-booked hotels, trains and other tours they had planned cost upward of $34,000. So he sued the airline, and he's representing himself.

"I have no legal background; I’m a dentist, but I know right from wrong — I don’t know if that does you any good in this world," Gamson told NBC News.

"I really thought they would just want to settle with me, because it’s so apparent that it’s just a stupid mistake," he said.

But British Airways fought back, first trying to get the lawsuit moved to a federal court, where international aviation rules apply, and then trying to get it dismissed completely.

Michelle Kropf, a spokeswoman for British Airways, said, "As this is active litigation, we are unable to make any comment at this time."

The lawyer representing the airline did not return calls for comment.

"This was a long awaited vacation that didn’t happen."

Earlier this month, U.S. District Judge James Boasberg denied British Airways' request to have the case moved to federal court, saying that it was an issue with booking rather than the international travel itself.

In a humor-laced, eight-page ruling, Boasberg noted the case highlighted the Mark Twain saying that the "difference between the right word and the almost right word is the difference between lightning and a lightning bug."

The flight crew was very accommodating and tried to help as much as possible, Gamson said. He said they told him the same thing had happened a week before. But the original crew had to disembark at St. Lucia, and when Gamson and his partner got to Grenada, he said support staff on the ground there were less friendly.

“This was a long awaited vacation that didn’t happen,” he said.

First published June 23rd 2014, 3:54 pm
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Re: Entitled Ass of the Week

Postby AztecDave » Sat Jun 28, 2014 7:09 pm

how can you possibly make ends meet on a mere $8 mil?
The real Army, composed entirely of young enthusiasts in camouflage uniforms, from whom impossible efforts would be demanded and to whom all sorts of tricks would be taught. That's the army in which I should like to fight.”
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