Completely unknown by the outside world, this firm is arranging trades between profesional clients and market makers with the use of voice brokerage : talking all day to market makers and trading desks and try to have them trade with each other. By the way, there’s a world of difference between brokers and traders.
Spin off by IMC
beginner mistakes in negotiations
The group of six brokers told both their management and IMC to be not supportive to the deal. Instead, they opened talks with IMC’s Wiet Pot and agreed to buy IWB themselves. Wiet Pot sold the brokerage twice and was short one IWB : the managers were told their deal was void.
Anyhow, they threw some unfriendly words to IMC’s boss Wiet Pot who returned the favour and threw them out the building. Fired.
IMC lost in court
When you’ve lost it all you can try your luck in the courthouse. In the legal battle between IWB and the two former managers, the latter have won. Judge decided there is at least some ground for the managers to think they had a deal.
More important, the judge felt some pity for them. Going for a management buy-out, and losing the deal, your job and your reputation is a little harsh. The ban on communication on the matter will be lifted. Perhaps a severance package will have to be agreed upon. Guess the fresh independent firm IWB bears the risk to pay their sacked management. To be continued. Court details pretty readable here (in Dutch).
Deja vu all over again
This wasn’t the first time former Goldman Sachs banker Wiet Pot was responsible for messing up a deal during his function as chief of IMC.
Back in 2007 similar things happened with the energy trading department. Someone advised Pot to transform the energy trading desk in a sort of hedge fund.
The head of energy trading refused to do it. He wasn’t offered an attractive deal. Returning from a holiday, he was flabbergasted to learn his trading team had been secretly signed by Pot to form the energy trading fund. They moved a few desks away, and IMC suddenly had two energy trading desks.
To cut a long story short, the fund was never launched and the second energy trading desk lost money and the traders were subsequently fired.
In both deals Wiet Pot has secretly been negotiating at different levels within the same unit. Probably it is legal and allowed. But quoting Walter Sobchack, “Smokey, this is not ‘Nam. This is bowling. There are rules”. The man feels he’s omnipotent.