A YEAR ago today Guillaume Rambourg was sitting pretty in Gartmore’s Fenchurch Street offices. He was among the firm’s standout performers and one of the brightest stars in the City’s glittering constellation. Alongside Roger Guy, co-head of European hedge funds, he was responsible for more than 20 per cent of Gartmore’s £21bn investment portfolio.
By the end of the day he had been suspended for allegedly directing trades to favoured brokers, stunning the market. Gartmore announced a company probe, which would later lead to a full FSA investigation. His importance to the fund manager was underlined by a 30 per cent drop in its share price.
It was the start of an annus horribilis for both Rambourg and Gartmore, which suffered, alongside his shock departure, an exodus of high-flying talent and the eventual sale of the entire firm.
Rambourg yesterday said the Financial Services Authority (FSA) had dropped its probe without taking any disciplinary action. The watchdog was characteristically tight-lipped: it only confirms investigations if they result in a fine or other reprimand.
When news of the watchdog’s investigation first surfaced, the timing could not have been worse. A panicked market wrongly assumed Rambourg had somehow been caught up in a separate, far more serious, insider trading investigation, which had surfaced the same week.
It sent Gartmore into a tailspin, with clients withdrawing more than £1bn from its funds in the wake of his suspension.
A month later, Rambourg was allowed to return to work. However, he was forced to take on a far lesser role – as an investment analyst – as his licence had been suspended when the probe was announced.
During this time, things had gone from bad to worse at Gartmore. Speculation mounted that Rambourg’s former partner Guy, the star manager around whom Gartmore built much of its reputation, could quit the firm after voicing dissent over the way his friend was treated.
The pressure got too much for Rambourg when the FSA launched its own investigation two months later and he quit to focus on the case.
Spotting the potential catastrophic talent-drain, Gartmore attempted to lock in its key management. But it was too little too late. Guy – the man seen by many as the genius behind the firm’s meteoric ascendancy – announced he would quit. His team was responsible for almost half of the firm’s performance fees in recent years.
With a rising sense of panic, Gartmore put itself on the market. Fund manager Henderson quickly emerged as a buyer, eventually paying £335m – just half Gartmore’s flotation price just a year earlier.
Questions will now be asked over whether the FSA overstepped the mark by launching an investigation that finished off not only Rambourg’s Gartmore career but the firm itself and destroyed shareholder value. Rambourg plans a hasty return to the City, working towards regaining his FSA licence.
The legacy of his treatment, however, could last a lot longer.
TIME LINE | HOW GARTMORE’S DOWNFALL UNFOLDED
December 2009: Gartmore becomes the first IPO of a private equity-owned company since the credit crisis in 2007.
December 2009: Roger Guy and Guillaume Rambourg are crowned fund managers of the year.
30 March 2010: Rambourg is suspended by Gartmore for “directing trades” to his favoured brokers.
May 2010: Gartmore sees a net outflow of funds of almost £1bn as clients react to Rambourg’s suspension.
2 June 2010: The Financial Services Authority (FSA) announces it will launch its own investigation into Rambourg.
15 July 2010 : Rambourg resigns to concentrate on the FSA investigation.
18 August 2010 : Gartmore’s assets under management fall 10 per cent to £19.9bn according to its six month results.
8 November 2010 : Roger Guy sensationally resigns from the firm. Beleaguered Gartmore immediately places itself on the market. It says it will implement a strict cost-cutting drive and issue new equity representing 15 per cent of its existing share capital, in order to retain and incentivise staff.
13 January 2011: Fund manager Henderson confirms it will buy Gartmore in a deal valuing the firm at £335m – half of its year-old IPO value.