Big Four Partner’s Ski Chalet Extravaganza

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Chalets in hill stations are like yachts and racehorses, in that the only economically rational way to enjoy them is to befriend someone richer than you who owns one. that you can use. Mountain cabins share this property with the other toys of the super-rich, and people are still trying to invent fancy financial schemes to allow these objects to be owned by merely very rich people.

Investment projects like this have a history of going awry, and it seems one of them went catastrophically wrong for Graham Martin, a former KPMG partner in Singapore. Details seem to be fairly sparse in the story, and since nearly everyone involved seems deeply comfortable with the attorney, we’re hesitant to speculate. But either way, ‘something went wrong’ with an investment in three chalets in Chamonix and Mr Martin ended up with an order freezing his assets and a £3.26million lawsuit (4 $.1 million) against him by a lender involved in the deal.

Martin decided not to skimp on representation and hired Herbert Smith Freehills, a “Magic Circle” law firm to represent him. Then things started to go even worse.

Somehow, KPMG’s London office ended up being told by Herbert Smith about the case and the freezing order. The London office passed the information on to the Singapore office that Martin employed at the time, and the Singapore office (not completely unpredictable) didn’t take the news well. Mr Martin was invited to ‘a series of meetings’, at which one would guess the supply of tea and biscuits became less and less generous, until he was removed from all his leadership roles and that he finally felt he had no choice but to resign. It went bankrupt in 2018.

The lawsuit appears to be about whether Herbert Smith had permission to pass on the information – they say they did, Graham Martin says they didn’t. The court documents he filed (and which Herbert Smith says have “no basis” – again, we’re unable to say who’s right) claim the lawyer did it to do a favor in the bank with a major customer. Martin also says that if he had been able to break the news to his bosses himself, smoothly and at a time when he had managed to negotiate a settlement, he could have kept his job.

And while we’ll never know if that’s true, it’s reasonable to think that Graham Martin might have had some idea of ​​what was possible in terms of settlement. Because the really interesting detail in this whole story is that the job that Graham Martin lost in Singapore was, according to his LinkedIn, “Head of SE Asia Restructuring Practice.” He was a director of Lehman and had a career in distressed debt recovery. He has almost certainly handled more difficult debt restructurings than most of us have received bonuses.

This just dramatically illustrates one of the most important proverbs in banking – that there’s a world of difference between advising someone else on something and doing it yourself. Whether you’re a stock analyst moving to the buy side, an M&A adviser getting into private equity, or a struggling guy trying to renegotiate a loan for yourself, it all becomes a lot harder to manage when your skin is stakes.

Elsewhere, it is no longer a series of isolated events – there is indeed a sectoral wave layoffs across the tech sector. In the world of fintech, there are layoffs at Paypal, Klarna, Robinhood and Bolt. Just to confirm that this is a big trend, Sequoia Capital has circulated a presentation telling portfolio companies that they are facing a “crucible moment”. In context, that seems to mean much the same as YCombinator telling people “it’s your responsibility to make sure your business will survive if you can’t raise funds in the next 24 months”.

Not everyone has given up entirely – Wise and Revolut have taken the opportunity to point out that they’re still on the hunt for hundreds of new recruits, for example. But the weather has definitely changed. The next sign will be when dozens of LinkedIn inboxes start sending messages from former colleagues who suddenly found themselves with a free slot for a coffee and an overwhelming desire to brush up on old contacts in investment banking. old.

Meanwhile …

EY splits its consulting and audit activities. (FT)

It’s easy to be cynical about the CFA qualification, whether you passed it or not. But it’s worth remembering that sometimes things like that mean a lot to people. So let’s celebrate the wholesome joy of Daanish Hussain’s local newspaper. He was a private equity partner from a relatively deprived corner of Greater Manchester who secured his charter this week, and although the Bolton News may be exaggerating a little when referring to the “world-leading status in his field at the age of 23”, you would have had a heart of stone not to smile with them. (Bolton News)

The highs and lows of Babak Dastmaltschi’s career make a two-part headline – he’s ‘the man who helped Credit Suisse make billions’ (hooray)… ‘Russian tycoons’ (oh my) . Among the interesting details of this long read, it seems that speaking a rather hesitant Russian was considered a career advantage for him – clients trusted him more because they knew he would not be part of the gossip networks of Moscow. (Bloomberg)

The case for treating a £1000 lunch bill as a form of investment (FT)

More dark clouds from Davos over the outlook for investment banking fees. As always, actions speak louder than words; an IBD European official noted that the expected series of post-bonus departures did not occur this year. (Financial News)

It’s apparently hard to find a party in Davos that continues past 7pm. (Financial News)

“But we all have to retire eventually, or die in our seats, which I have no intention of doing.” Morgan Stanley’s James Gorman disagrees with Jamie Dimon, who said “I’m going to do this until the day I die”. On the other hand, he did not agree with the word “soon”, when it was proposed to him in the context of a departure date. (FT)

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Photo by Patrick Robert Doyle on Unsplash

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