Jack B. Grubman, the former star analyst of telecommunications stocks, was such a controversial figure on Wall Street that executives of the Goldman Sachs Group had a heated debate about whether to hire him four years ago, according to internal documents and people close to the firm.
Some Goldman executives, including the head of the firm's research department, argued against hiring Grubman because he was too involved in the investment-banking side of the business, according to these people and documents. But others countered that Grubman could bring in as much as US$150 million in annual fees to Goldman, more than repaying the US$37 million the firm was considering paying him.
PHOTO: NY TIMES
In the end, Goldman did not hire Grubman. He stayed at Salomon Smith Barney, the investment banking unit of Citigroup, until he resigned in August.
But Goldman's failure to hire him was not for lack of trying, according to Republican Richard H. Baker. Late Thursday, Baker, chairman of the House capital markets subcommittee, released a statement about what he called Goldman's "months-long courtship" of Grubman.
"Goldman Sachs made a grab for Grubman," Baker said in his statement. "While Grubman's conflicts of interest are the thing that led to his downfall at Salomon Smith Barney, they were the very same characteristics that made him hot property for Goldman in 1998. Jack Grubman was the poster child of analyst conflicts, and yet Goldman pulled out all the stops to put him on the payroll."
Documents gathered from Goldman, he said, "indicate that the primary reason Goldman sought Grubman was his ability to attract investment banking business." Among them was a packet labeled "Project JBG" and marked "highly confidential."
One page of the packet outlined the debate among Goldman executives over hiring Grubman, listing concerns such as "Grubman is more a banker than a research analyst" and "Grubman will ignore the Chinese Wall."
The latter reference was to the barrier that is supposed to exist between investment bankers and analysts.
Goldman bankers who favored Grubman argued that he took pride in the integrity of his research reports and would downgrade the stock of a company even if it was a good client of the firm. Grubman always had been "investment banker friendly," his supporters argued.
Among the people the bankers were debating was Steven G. Einhorn, the partner in charge of Goldman's global investment research department. Einhorn had raised some of those concerns and adamantly opposed hiring Grubman, said people close to the firm.
Einhorn -- who left the firm at the end of 1998 for other reasons -- did not prevail. Goldman drew up a job offer for Grubman that would have paid him US$8 million in cash in his first year and promised him stock in Goldman's planned initial public offering that would have been worth US$29 million, Baker said in his statement.
But Grubman never signed on. Salomon kept him by offering him a contract that included a US$15 million bonus to stay, Baker said. That bonus was in the form of a loan that Grubman never had to repay.
In a statement of its own, Goldman said Friday, "On the subject of Jack Grubman, at the end of the day, we didn't hire him."
Einhorn, now vice chairman of the Omega Advisors investment firm, declined on Friday to comment about Grubman.
Baker's statement came in response to Goldman's reaction to a report released last week by the House financial services committee. The committee said it had found that Goldman allocated shares of sought-after new stocks to executives of companies that were investment banking clients, including Margaret C. Whitman, chief executive of eBay, and Jerry Yang, one of the founders of Yahoo.
A Goldman spokesman had called the committee's conclusions about its motives for allocating those shares "rubbish" and an "egregious distortion of the facts."
Baker said Goldman had chosen to "unfairly accost the committee's efforts." But the reaction was understandable, he said, because, "Sometimes the truth hurts."
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
MORE WEIGHT: The national weighting was raised in one index while holding steady in two others, while several companies rose or fell in prominence MSCI Inc, a global index provider, has raised Taiwan’s weighting in one of its major indices and left the country’s weighting unchanged in two other indices after a regular index review. In a statement released on Thursday, MSCI said it has upgraded Taiwan’s weighting in the MSCI All-Country World Index by 0.02 percentage points to 2.25 percent, while maintaining the weighting in the MSCI Emerging Markets Index, the most closely watched by foreign institutional investors, at 20.46 percent. Additionally, the index provider has left Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index unchanged at 23.15 percent. The latest index adjustments are to
RSS