GAM Dismisses Bond Fund Head Following Liquidation

Roughly six months after suspending Tim Haywood, the head of its absolute-return unconstrained bond fund group, GAM Holding has dismissed him from the firm.  

Haywood was fired for “gross misconduct,” according to GAM’s full-year 2018 results released Thursday. The firm announced in August that he had been suspended for possibly failing to conduct enough due diligence on some of the firm’s investments, in addition to other policy breaches.

“I intend to appeal this decision which has been prejudged since the announcement of my suspension,” Haywood said in an emailed statement provided by his spokesperson. “I dispute many of the findings, while noting the majority of the allegations have been dropped.” 

Following the Swiss asset manager's announcement that it was investigating the issue, GAM received a high volume of requests for redemptions from its absolute-return unconstrained bond funds. In response, GAM said it would liquidate those funds.  

According to GAM’s latest earnings statement, the liquidation of the funds should be completed in the next few months. The firm said its results reflect some of the effects of the liquidations, but that 2019 will also be tough.  

“2018 was a very challenging year for the asset management industry in general and for GAM in particular, given the difficult decisions we had to make around” the firm's absolute-return bond funds, said David Jacob, GAM's chief executive officer, in the earnings statement.  

Assets in its investment management unit fell to CHF 56.1 billion (about $56 billion) at the end of last year, from CHF 84.4 billion at the end of 2017, according to the statement. The closure of the absolute-return bond funds resulted in a CHF 11 billion drop in the unit's assets.

GAM said that the restructuring it announced in December, which includes layoffs, is progressing, and that the full benefit of the savings would be seen in 2020. 

[II Deep Dive: GAM Announces Layoffs Under Restructuring Plan]

“We are repositioning GAM to build on the strong investment expertise we have in our business, with a distinct set of strategies that are relevant for client needs and a global distribution network to support our client relationships,” Jacob said in a statement. “A simplified business structure and more efficient processes will enable us to focus on areas of strength as well as allowing us to further enhance our control environment.”