John Gutfreund
John H. Gutfreund (born September 1929[1]) is the former CEO of Salomon Brothers Inc, an investment bank that gained notoriety in the 1980s. Gutfreund turned Salomon Brothers from a private partnership into a publicly traded corporation, the first Wall Street firm to make this move.[2] He became the icon for the excess that defined the 1980s culture in America. In 1985, Business Week gave him the nickname "King of Wall Street".
Gutfreund was featured prominently in the 1989 book Liar's Poker by Michael Lewis, a former employee of Salomon Brothers. Gutfreund would later tell Lewis that "Your fucking book destroyed my career, and it made yours." Lewis also reported in 2008 that "I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept."[2]
Gutfreund attended Oberlin College and majored in English Literature. He became managing partner of Salomon in 1978[3], later its CEO, and left the company in 1991.
Since January 2002, Gutfreund has been Senior Managing Director and Executive Committee Member of C. E. Unterberg, Towbin, investment bankers. He is also President of Gutfreund & Company, Inc., a New York-based financial consulting firm that specialized in advising corporations and financial institutions in the United States, Europe, and Asia.[4][5]
When Gutfreund was CEO of Salomon Brothers, a major scandal took place regarding the way Treasury bond trading was done by Salomon Brothers. A rogue trader was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund he took no action to suspend the rogue trader, presumably because he was a very good producer for Salomon Brothers. This however did not sit well with Warren Buffett who had just acquired Salomon Brothers for Berkshire Hathaway. Mr. Buffett and Mr. Gutfreund worked out a "deal" that promised a fair deal for Mr. Gutfreund if he would resign. After he resigned in 1991, it was revealed that there were several more incidents of criminal behavior by the rogue trader. An SEC investigation ended in a settlement involving a $100,000 fine for Gutfreund and barring him from serving as a chief executive of a brokerage firm. Both Mr. Munger and Mr. Buffett informed Mr. Gutfreund that any financial payment to Mr. Gutfreund would damage the image of Salomon further. Mr. Gutfreund however insisted that he should be given a sum of $35 million right away since he had resigned on the promise given by Mr. Buffett. A lawsuit ensued which resulted in mediation. At that point Mr. Buffett offered $18 million, but Mr Gutfreund rejected that offer and asked for $53.5 million. The mediation panel then awarded Mr. Gutfreund nothing.[1]
References
- ^ a b Ex-Salomon Chief's Costly Battle, The New York Times, August 19, 1994
- ^ a b Michael Lewis, The End, Portfolio.com, 11 November 2008
- ^ TOO FAR, TOO FAST; Salomon Brothers' John Gutfreund, The New York Times, January 10, 1988
- ^ John H. Gutfreund
- ^ John H. Gutfreund's bio
External links
- John Gutfreund is the former CEO of Salomon Brothers
- John Gutfreund's video interview
- Nightly Business Report Interview -- John Gutfreund of Gutfreund & Company Examines The Financial Crisis
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