Morning Coffee: Goldman Sachs VP just wanted a friend to hang out with. Hedge fund boss reveals worst hiring mistake
Brijesh Goel and Akshay Niranjan were good friends. The two men, who met while studying the Masters in Financial Technology at the University of California, Berkeley’s business school, had a mutual interest in poker, playing drunk squash, smoking weed, and attending music festivals in Belgium. Goel was at Niranjan's wedding. They'd send each other texts saying, "Wanna catch up quickly?", "U alone?" and "Wanna swim tonight?", some of which was coded language concerning their alleged insider trading scheme.
We've written about Goel and Niranajan before, but as their case comes to a close and as Goel - who says he was set up Niranjan, faces prison and possible deportation, pleas for leniency, his situation has lessons for anyone with a boundary-pushing friend.
Goel's argument is that having worked hard all his life, first at the prestigious Indian Institute of Technology, then at Berkeley's Haas School of Business (then at Goldman Sachs, where he was a VP in structured credit aged 26, then at Apollo), he didn't have many friends. He was devoted to the grind and to 'hard work and integrity.' Then he met Niranjan. “For my entire life, I had no one with whom I could discuss personal issues,” Goel said. Niranjan was that person.
However, Niranjan was also a person who allegedly engaged in insider trading on tips passed to him by Goel, who met Goel while wired-up by the FBI and who - by virtue of his cooperation with the subsequent investigation, isn't being prosecuted or punished, even though he made most of the $280k profits from the scheme. Niranjan was a bad choice of friend.
Goel also has a wife. She works as a doctor in New York and seems to have come second to Niranjan in her husband's affections. If he's found guilty, Goel may be compelled to leave this wife and his other secondary New York friends and return to India. He's arguing for leniency on this basis and saying that at the very least he shouldn't be sentenced to prison because deportation is punishment enough.
Separately, having spoken at length on a podcast about what it's like to work for his hedge fund and the sorts of people he hires, Dmitry Balyasny has been speaking again about the mistakes made by other hedge funds when they expand. Hedge funds definitely need to hire externally, Balyasny said at a Toronto Investor Conference yesterday; if they don't, they can't expand into new areas. But Dmitry said too that it's a terrible mistake to raise lots of money before you have the portfolio managers in place: "We just signed some quantitative teams that have two-year sit-outs and it takes them another year plus to build out their strategies.” Deploying capital takes time and requires planning. You can't just raise it and then rush around hiring people to manage it at short notice.
Meanwhile...
Now Credit Suisse is cutting 10% of people in its support functions. (Financial News)
UBS's success as the owner of Credit Suisse will be all about harnessing the investment bank to serve America’s ultrawealthy. (Bloomberg)
Healthcare banker Jed Brody is returning to Barclays after two years at SVB Leerink. (Bloomberg)
JPMorgan had a deep neural network for algo execution, but it won't be using it anymore because clients can't understand it. (WatersTechnology)
Greta Thunberg has been protesting outside JPMorgan in Canary Wharf. (BBC)
Citi fired a banker for posting an antisemitic comment on social media. (Bloomberg)
Blackstone's investor inflows fell to their lowest level in two years and management fees fell slightly. (Breaking Views)
Dark triad individuals with narcissism, Machiavellianism, and a measurable level of psychopathy account for one in fourteen people and you will have met one. (The Atlantic)
Learnings from Sam Bankman Fried: Don't text a load of stuff to a journalist and then say it was off the record and ask for it to be taken down. (Molly White)
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