British-born commodities trader Andrew Hall a man who professes to hate publicity now finds himself in the eye of the US bonus storm over a $100m payout and looks set to be the next "marquee villain" of the financial collapse. There is little doubt that Hall who heads operations at the trading boutique Phibro is owed his money under contract.
The problem is that his contract is with Citigroup, which was saved from collapse by nearly $45bn of taxpayers' money. To make good on the deal, Citigroup needs the blessing of the Obama administration's pay czar, Kenneth Feinberg, says Slate.com. He has powers "to claw back" excessive compensation and is currently mulling over Hall's case.
The "added wrinkle", says The New York Times, is that Hall works in a corner of the trading world that appears "headed for its own infamy" following probes by regulators. One of Phibro's strategies was to store oil in chartered supertankers until the price went up. That may be a legitimate tactic, says TheBigMoney.com, but given the anger at the pumps when gas hit $4 last summer, "it doesn't look good". You can imagine the headlines: "Citi's $100m man bought oil and kept it off the market."
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Oxford-educated Hall, 58, is an intriguing figure, says The Guardian. Tall, athletic and bearded, he reportedly leaves his office most afternoons to go rowing "or engage in callisthenics with a ballet teacher". Most on Wall Street are unstinting in their admiration of a legendary trader renowned for his gimlet eye and the steely nerve with which he carries through huge bets. Hall's discipline is extraordinary, observes The New Yorker: he has the "fanatical dedication of an oarsman" and it shows. Profits from Phibro, which operates out of a converted dairy farm in Connecticut, account for an uncomfortably large chunk of Citi's revenues.
So how did the son of a British Airways pilot trainer come to scale such heights? Hall's first piece of luck, after graduating in chemistry, was to be taken on by BP to trade in its US operations. There he caught the eye of Phibro, a century-old commodities house that had been incorporated into Salomon Brothers. By 1987, he was running the operation.
He made his fair share of mistakes, says The Guardian: he lost $100m in the first Gulf War when he was wrong-footed by a plunging oil price. But, more often than not, his long-term gambles pay off spectacularly, most notably when he bought every single oil future he could find in 2003 and rode the wave as prices rose to top $150/barrel. When Phibro came under the Citigroup umbrella, the bank was happy to honour bonus contracts of "stratospheric proportions", even by Wall Street's standards.
Now Hall is determined to fight for his pay-out on grounds of legal principle alone, he says even if that entails a "divorce" from Citigroup, says The New York Times. That puts everyone in an awkward spot. "It is hard to say which is worse: the inevitable outcry if Hall is paid $100m, or the risk that he might take his talents to a firm in which the public has no stake." Bail-out politics is proving a remarkably tricky game.
The other traders making waves
The resignation last month of Roger 'the Dodger' Jenkins the Barclays rainmaker reportedly on a £40m pay packet was considered a timely PR move. Maybe, says Tracy Corrigan in The Daily Telegraph but news that the bank's investment chief, Bob Diamond, has been dangling bonuses topping £30m to lure four commodity traders from JPMorgan shows an astonishing lack of restraint. Besides politicians and the public, JPMorgan has launched a complaint with the Financial Services Authority, arguing the package could "distort the market".
Is the gang of four's lead trader, Todd Edgar, worth the fuss? On past form, he is, says Trader Monthly, which awarded him its Commodities Trade of the Year in 2007. That was for a "Fort Knox-sized heist" on the gold market, yielding JPMorgan $250m. To have the guts "to stick with a trade like that in a year when everyone is selling is unbelievable," remarked a fellow trader.
No wonder Diamond is prepared to pay big for the "golden surfer", who gets his kicks wrestling the "gnarly" surf in Sumatra, Indonesia. "Todd... got the perfect storm. And he rode it out perfectly. Sometimes a year-round surfing habit can sure come in handy."
Another big player causing waves is star bond dealer Antonio Polverino, who has been lured from Merrill Lynch to state-controlled RBS on a £7m "guaranteed bonus", notes The Times. If Polverino pulls in the deals he may turn out to be worth his salt. RBS chief Stephen Hester is certainly banking on Polverino: his own £9.6m bonus depends upon him delivering.
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