The many lives of Goldman's partners Giles Turner

In the world of banking, being made a partner at Goldman Sachs is the "golden ticket". But what happens when these gilded roosters decide to fly the coop and join the wider world? The title harks back to the halcyon days of Wall Street, when partners were also owners of their firms. This meant making money in the good times, and putting up money when things were not going so well.

After Goldman's IPO in 1999, partners still had to worry about making money, but less about losing it (at least not personally), and being made a partner lost some of its lustre. The chief executive of one headhunting firm said: “It certainly isn’t what it was before the IPO, but it is still a golden ticket.”

Another City of London headhunter said: “It’s a smaller yacht. But hey, it’s still a yacht.”

Today, being made partner is more like a form of Masai initiation ritual, albeit it in a Brooks Brothers button down. Goldman staffers with roughly 10 years at the firm under their belt will, every two years, hope to become one of approximately 90 freshly-minted partners joining the 350 to 400 existing partners. Those lucky few can expect immediate increases in pay, bonus and career prospects.

But what happens after that?

Financial News has looked back over a decade of bankers who became partner over the five rounds of promotions between 2000 and 2010. Of the 610 bankers the overwhelming majority, just under 60%, stay on at Goldman. The second largest group, around 16%, either retire, drop off the Wall Street radar, or are between jobs.

The most popular alternative to working at Goldman, aside from not working, seems to be the hedge fund industry. Of the approximately 40% of bankers who have left Goldman, 17% now work in hedge funds. High-profile names include Pierre-Henri Flamand, who was made partner in 2004 and became global chief of Goldman’s principal strategies group in his thirties. He left the firm in 2010 to start London based Edoma Capital Partners, raising just under $1.8bn.

Morgan Sze, now in his mid-forties, was made partner in 2006 and ran Goldman’s principal strategies team in Asia before stepping into Flamand’s shoes. Sze soon left in 2010 to launch Azentus Capital Management, bringing 13 Goldman traders with him.

The private equity industry has also been successful in luring former Goldman partners. Of those who have left since 2000, 10% have become barbarians at the gates. These include Richard Ong, made partner back in 2000, who rose to become co-head of investment banking in Asia. He launched China-focused Hopu Investment Management in 2008, raising $2bn, and is now launching a new multi-billion dollar fund.

Others, shocking as it may seem, joined Goldman’s rivals on Wall Street. The class of 2002 was a vintage year for creating future high-powered rivals. That year saw Carsten Kengeter, now co-head of investment banking at UBS, and Christian Meissner, head of investment banking at Bank of America Merrill Lynch, both made partner at Goldman.

Goldman also has a reputation of filling the chairs of public office with its alumni. Kengeter’s and Meissner’s classmate in 2002 was William C. Dudley, chief economist at the bank, who is now the 10th President of the Federal Reserve Bank of New York.

But while pre-IPO Goldman executives such as former Treasury Secretaries Rob Rubin and Henry Paulson receive numerous column inches about their links to the bank, just nine Goldman bankers made partner between 2000 and 2010 now work in the public sector.

Last month, Jin Yong Cai, partner in 2006 and formerly chief executive of Goldman’s Chinese arm, joined the World Bank to head its private-sector investment arm. And last year, Eileen Rominger, made partner in 2004, joined the SEC to run the regulators investment management division.

Careers in trading and technology have also been popular with Goldman bankers. Leading the way is class of 2000 star Duncan Niederauer, who rose to co-head of the equities execution, before becoming chief executive of NYSE Euronext in 2007.

In a few months, the latest round of Goldman partners will be announced. However, a number of sources close to the bank have indicated that the intake might be slightly smaller than in previous years.

But for those who gain entry to this elite bunch, prepare to set sail on a slightly

The 10-point plan for reforming Libor
Martin Wheatley, chief executive-designate of the UK's Financial Conduct Authority, today published the findings of its review into Libor and identified 10 key reforms needed to restore trust in the benchmark rate in the wake of the scandal over the rigging of submissions. Wheatley's recommendations for comprehensive reform of Libor span procedural and regulatory aspects of the benchmark rate, and will be examined by the UK Government, which will respond once Parliament returns from recess, the UK Treasury said today in a statement accompanying the report.
The report's main recommendations follow below:
Regulation of Libor 1) The authorities should introduce statutory regulation of administration of, and submission to, Libor, including an Approved Persons regime, to provide the assurance of credible independent supervision, oversight and enforcement, both civil and criminal.
Institutional reform 2) The BBA should transfer responsibility for Libor to a new administrator, who will be responsible for compiling and distributing the rate, as well as providing credible internal governance and oversight. This should be achieved through a tender process to be run by an independent committee convened by the regulatory authorities.
3) The new administrator should fulfil specific obligations as part of its governance and oversight of the rate, having due regard to transparency and fair and nondiscriminatory access to the benchmark. These obligations will include surveillance and scrutiny of submissions, publication of a statistical digest of rate submissions, and periodic reviews addressing the issue of whether Libor continues to meet market needs effectively and credibly.
The rules governing Libor 4) Submitting banks should immediately look to comply with the submission guidelines presented in this report, making explicit and clear use of transaction data to corroborate their submissions.
5) The new administrator should, as a priority, introduce a code of conduct for submitters that should clearly define: • guidelines for the explicit use of transaction data to determine submissions; • systems and controls for submitting firms; • transaction record keeping responsibilities for submitting banks; and • a requirement for regular external audit of submitting firms.
Immediate improvements to Libor 6) The BBA and should cease the compilation and publication of Libor for those currencies and tenors for which there is insufficient trade data to corroborate submissions, immediately engaging in consultation with users and submitters to plan and implement a phased removal of these rates.
7) The BBA should publish individual Libor submissions after 3 months to reduce the potential for submitters to attempt manipulation, and to reduce any potential interpretation of submissions as a signal of creditworthiness.
8) Banks, including those not currently submitting to Libor , should be encouraged to participate as widely as possible in the Libor compilation process, including, if necessary, through new powers of regulatory compulsion.
9) Market participants using Libor should be encouraged to consider and evaluate their use of Libor , including the a consideration of whether Libor is the most appropriate benchmark for the transactions that they undertake, and whether standard contracts contain adequate contingency provisions covering the event of Libor not being produced.
International co-ordination 10) The UK authorities should work closely with the European and international community and contribute fully to the debate on the long-term future of Libor and other global benchmarks, establishing and promoting clear principles for effective global benchmarks.