GAM troubles: 16 key dates as a crisis unfolded

At the end of last month Swiss asset manager GAM suspended its head of absolute return, Timothy Haywood (pictured).

While the aftermath has made the last two weeks especially difficult for the company, its troubles go back years.

We present a timeline of significant challenges the firm has had to contend with since its embattled CEO Alexander Friedman was appointed in 2014.

Alexander Friedman appointed GAM CEO

Almost four years ago GAM Holdings named former UBS Wealth Management chief investment officer Alexander Friedman as its new chief executive officer as it planned to move toward an integrated structure across asset management and investments.

It marked the second set of major changes for the Swiss group in 18 months, which saw its head of investments leave the firm in February 2013.

GAM issues profit warning as performance fees slide

Around 18 months later GAM issued a profit warning following a significant fall in performance fees. 

The Swiss-based fund firm predicted profits to decline by approximately 50% in the first half from CHF101.5 million (£80.1 million) in the first half of 2015.


Absolute return aversion drives outflows

It issued its half-year results a few months later, reporting a fall in assets under management from CHF72.3 billion in December 2015 to CHF65.5 billion to the end of June. 

Redemptions from the firm’s absolute return/unconstrained strategies totalled CHF2.6 billion for the sixth-month period

GAM said the redemptions were driven, in part, by the overhang of poor performance in 2014 but that performance was improving in 2016.


GAM integrates wealth and investment arms in restructure

In the February of the following year GAM underwent a restructure in a bid to ‘reinvigorate’ its wealth and investment business. 

The overhaul saw the firm’s private clients and charities arm integrated into its alternative investment solutions and multi-asset class solutions businesses.

Swiss hedge fund plans to shake up GAM board

A few weeks later hedge fund RBR Strategic Value, which held a 2.1% stake in GAM in early 2017, requested the appointment of three new board members.

Acting on its own and on behalf of two other RBR Capital Advisors funds, the Swiss hedge fund proposed the election of Kasia Robinski, Willian Raynar and RBR CEO and CIO Rudolf Bohli to GAM's board of directors.

GAM turnaround plan published

After announcing its intention to shake up the company board, RBR published a detailed turnaround plan for GAM to be brought before shareholders at its annual general meeting in April 2017.

The plan called for a new CEO to replace Alexander Friedman, slashing costs, potentially relocating support operations, and action to bring GAM's operating margin in line with competitors.


US firm supports GAM activist's efforts

In April 2017 US-based proxy voting advisory firm Institutional Shareholder Services (ISS) backed RBR Capital’s board member candidates for GAM, saying the firm's management was unable to achieve a turnaround.

ISS highlighted concerns regarding the asset manager's higher-than-average compensation ratio, stagnating funds under management, the 23% increase in CEO Alexander Friedman's renumeration from 2015 despite a sharp drop in profits, an alleged lack of appropriate safeguards against inappropriate pay, underperformance in its peer group, and disappointing stock performance.


GAM shareholders force group to act on exec pay

Disgruntled GAM shareholders dealt a blow to the board of directors at the firm's annual meeting, rejecting the proposed management pay.

During a consultative vote on the compensation report, a majority of 54.2% of GAM’s shareholders voted against the proposal, with only 17.6% in favour and 28% abstaining. 

However, the candidates proposed for GAM's board by activist RBR were also rejected at the meeting.

Following the meeting, GAM launched a three-year share buyback scheme to repurchase the equivalent of 10% of all its shares in response.

GAM profits and assets pick up following restructure

In its half year results for 2017, GAM reported that pre-tax profits in the six months to June rose 37% year-on-year, while assets were up 9% since December 2016, with Friedman attributing the gains to restructuring efforts.

It was reported at the time that RBR Capital had sold its estimated at 4.4% stake in the firm after its proposed candidates for the board were rejected.

GAM overhauls executive pay following shareholder revolt

Following the move by the GAM's shareholders to block the board's proposed executive remuneration in April, the firm moved to cut Friedman's pay.

In addition, the fund house detailed plans to cap its management bonus pool to 5% of pre-tax profits and force senior executives to hold shares in the company.

GAM profits rise over 40%

Things were looking up for GAM in the spring of 2018 after it posted some decent full-year results, showing a 44% rise in pre-tax profit in 2017.

In addition, GAM reported its assets under management rising to CHF158 billion on the back of yearly net inflows of CHF24.3 billion.

The firm also revealed plans to grow its range of funds with the launch of four new strategies after having axed 16 funds in 2017 and 66 funds in the previous two years.

GAM shares dive 9% on profit warning

Yet a few months later, GAM shares slumped by 9% after the Swiss-based asset manager issued a profit warning relating to a CHF59 million write down of Cantab Partners, the systematic investment manager that it acquired in October 2016.

GAM said Cantab has delivered lower assets under management and revenues than expected, blaming muted demand for higher volatility investments.



GAM shares dive 20% after it suspends £8.5bn absolute return chief

Things took a real turn for the worse at the end of July as GAM's share price nosedived by 20% after it suspended its absolute return strategy boss Timothy Haywood. 

Haywood, who oversaw £8.5 billion, was suspended following an internal investigation into his risk management and record keeping.

In a statement that coincided with a results update for the group, the asset manager said the investigation into Haywood had not raised concerns regarding his honesty.

GAM slides as £5.6bn absolute return range trading suspended

Shares in GAM took another beating after the firm was forced to suspend dealing on its unconstrained absolute return bond funds. 

The house said it was forced to act after clients requested a 'high level of redemptions' following Haywood's suspension.

GAM: bond star broke inducement and dealing rules

GAM’s subsequent internal investigation found Haywood failed to conduct sufficient due diligence on some investments and breached company policy on gifts and entertainment.

The firm said that Haywood breached its signatory policy by signing off on contracts alone, where two signatures were necessary. 

He was also said to have breached the company's gifts and entertainment policy by not asking for pre-approval and using his personal email for work purposes.

The revelations came shortly after reports the same day that traders at GAM contacted investment banks and institutions in an attempt to unwind positions ahead of Haywood's suspension.

GAM to liquidate Haywood’s absolute return fund range

Last week the saga reached boiling point when it was revealed that GAM recommended the liquidation of the absolute return bond fund range overseen by Haywood.

In a statement to shareholders, the fund board stated it had opted to liquidate all the currently-suspended funds in the unconstrained/absolute return fund range.