Author Topic: Trader sues over skimpy $8.25 million bonus  (Read 8938 times)

arebelspy

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Trader sues over skimpy $8.25 million bonus
« on: June 21, 2014, 10:00:36 AM »
www.cbsnews.com/news/trader-sues-over-skimpy-8-25-million-bonus/

It seems his bonus was cut in retaliatio, but still.. Tough to make it on only a few million...
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Thedudeabides

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #1 on: June 21, 2014, 10:23:48 AM »
Poor guy

hernandz

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #2 on: June 21, 2014, 11:20:16 AM »
but...but...but...job creators.  Why doesn't he try to sue his mommy for inflicting emotional distress after she told all her friends about his $13M bonus.  Or his drug dealer or pimp.  Don't kid yourself, every trader at his level is metaphorically a junkie prostitute.

Erica/NWEdible

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #3 on: June 21, 2014, 01:27:28 PM »
Hold on, let me get out The World's Tiniest Violin and start playing.

trailrated

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #4 on: June 21, 2014, 04:12:53 PM »
Hold on, let me get out The World's Tiniest Violin and start playing.

Ahahahaha that just made my day

CommonCents

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #5 on: June 21, 2014, 09:04:31 PM »
"He's not entitled to more simply because he would like to have been paid more."

Bummer.  This and learning I can't grow a money tree are pretty disappointing facts of life to learn.

I'm curious why he stuck around for his paltry $3 million the following year.

SpeedReader

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #6 on: June 21, 2014, 10:07:07 PM »
LOL, I didn't know arebelspy had already posted this.  I saw the article and instantly thought, "This is one for the Wall of Shame!"
« Last Edit: June 21, 2014, 10:11:04 PM by SpeedReader »

KingCoin

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #7 on: June 21, 2014, 10:29:13 PM »
I'll be contrarian here and argue that if someone promised him $13mm to stay at the firm rather than leave for a competing opportunity, perhaps he's owed some dough.

Bottom line: get it in writing. Don't give someone a look-back option if the world changes.

johnintaiwan

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #8 on: June 22, 2014, 04:28:01 AM »
I'll be contrarian here and argue that if someone promised him $13mm to stay at the firm rather than leave for a competing opportunity, perhaps he's owed some dough.

Bottom line: get it in writing. Don't give someone a look-back option if the world changes.

I'm with you. It doesn't matter how much money it was. If they had a deal then they had a deal. Everything is relative. Should you not get what was promised to you because you make 100K a year? I am sure there are minimum wage earners who would be taking out their violins for you not receiving the 10K bonus you were promised.

kyleaaa

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #9 on: June 22, 2014, 01:17:48 PM »
I'll be contrarian here and argue that if someone promised him $13mm to stay at the firm rather than leave for a competing opportunity, perhaps he's owed some dough.

Bottom line: get it in writing. Don't give someone a look-back option if the world changes.

Was it somebody with the authority to actually deliver on the promise? Promises are made daily in workplaces around the globe. Very few are ever kept. Unless the person making the promise had 100% authority to follow through without even a slight possibility of being overruled by a higher up, I'd say he doesn't have a case (in the moral sense). He MAY have a legal case, but definitely not a moral one.

A deal isn't a deal if it isn't in writing and approved all the way up the chain.

SpeedReader

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #10 on: June 22, 2014, 07:27:54 PM »
I didn't see anything in the article saying he was promised a bonus of a specific amount.  Did I miss something?

arebelspy

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #11 on: June 22, 2014, 07:42:33 PM »
I didn't see anything in the article saying he was promised a bonus of a specific amount.  Did I miss something?

I didn't remember that either, but I only skimmed the article and assumed I missed it.

I was under the impression he just felt like he deserved a bigger bonus, and had gotten bigger ones in the past, so he was suing because he felt the lower amount was a retaliation for his comments before congress.
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SpeedReader

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #12 on: June 22, 2014, 08:03:39 PM »
...which is consonant with my first impression that he was an entitled jerk.  :-)

SnackDog

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #13 on: June 22, 2014, 08:23:55 PM »
It is an interesting case. He stood up in his performance review against the things which got the company in a huge amount of trouble shortly thereafter. As a result, he was given a low rating and corresponding bonus. If GS has no other documented reason for the low rating, he should probably prevail.

arebelspy

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #14 on: June 22, 2014, 08:34:07 PM »
If GS has no other documented reason for the low rating, he should probably prevail.

Why would you think that?

Bonuses are completely discretionary, typically.  Even if the court says he shouldn't have gotten a low rating, that doesn't mean he's guaranteed more bonus money.

Surprised they aren't settling out of court though.
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KingCoin

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #15 on: June 22, 2014, 08:47:45 PM »
I didn't see anything in the article saying he was promised a bonus of a specific amount.  Did I miss something?

This article indicates he was "led to believe" he would get $13mm:
http://www.bloomberg.com/news/2014-06-19/ex-goldman-trader-says-bonus-cut-to-8-25-million-unfair.html


SpeedReader

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #16 on: June 22, 2014, 10:07:02 PM »
He stood up in his performance review against the things which got the company in a huge amount of trouble shortly thereafter. As a result, he was given a low rating and corresponding bonus.

No evidence is shown that he stood up against it.  To the contrary -- he included it in his self-evaluation, to show he was doing a smart money-making thing for GS.  The U.S. Senate subcommittee used it against the company later, but this dude was not a whistle-blower.   His beef had nothing to do with the company's tactics or ethics.  He's only complaining because he thought his bonus was too small. 

Re KingCoin's comments, it does look like he was led to believe it would be more.  I work in Contracting, so I make a distinction between being promised and being "led to believe".  I've seen the latter all too often:  people are allowed to think something false without being corrected, but nobody ever explicitly said "Do X and you'll get Y." 


dragoncar

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #17 on: June 22, 2014, 11:52:55 PM »
He stood up in his performance review against the things which got the company in a huge amount of trouble shortly thereafter. As a result, he was given a low rating and corresponding bonus.

No evidence is shown that he stood up against it.  To the contrary -- he included it in his self-evaluation, to show he was doing a smart money-making thing for GS.  The U.S. Senate subcommittee used it against the company later, but this dude was not a whistle-blower.   His beef had nothing to do with the company's tactics or ethics.  He's only complaining because he thought his bonus was too small. 

Re KingCoin's comments, it does look like he was led to believe it would be more.  I work in Contracting, so I make a distinction between being promised and being "led to believe".  I've seen the latter all too often:  people are allowed to think something false without being corrected, but nobody ever explicitly said "Do X and you'll get Y."

http://definitions.uslegal.com/j/justifiable-reliance/


SpeedReader

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #18 on: June 23, 2014, 07:27:14 AM »
Thanks Dragoncar.  That site includes, "Restat 2d of Torts, § 552, dealing with negligent misrepresentation says that
    (1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information."

Salem's assumption he'd get a bigger bonus was "based on the fact that his mortgage-trading desk generated about the same amount of revenue in 2010 as it did the previous year and that Justin Gmelich, a credit trading executive, told him at a cocktail hour that he was a “steal” at $15 million, Salem said."  In other words, based on an assumption of his own making and a compliment at a party.  This doesn't look like a negligent misrepresentation in the course of business to me.  Apparently it didn't to the Finra panel that rejected his claim, either.

warfreak2

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #19 on: June 23, 2014, 08:39:51 AM »
I make a distinction between being promised and being "led to believe".
Yeah, like Goldman Sachs led their customers to believe that those subprime mortgage derivatives weren't shitty deals.

The headline could be "Sociopath wants even more money from Sociopaths Incorporated".

TreeTired

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #20 on: June 23, 2014, 08:54:16 AM »
Institutional traders (and I was a trader that worked for several large banks)  often don't appreciate how much of their success is due to the capital and risk tolerance of the institution they are working for.  They are often presented with a one-sided risk/reward profile.  If they take huge risks and make billions for the firm they expect to be paid $15mm (not a mere $8mm)  while if they guess wrong and lose billions, it is someone else's money and worst case they lose their job (having already banked many $millions in previous years).   This environment does encourage sociopaths,  in that one of the qualities of a successful trader is a complete lack of conscience.  Most of these guys that get paid many millions at institutions couldn't trade their way out of a paper bag if they were trading their own money and risking their own financial well being.   It's easy (for some) to risk other people's money.  Also factor in the zero rate environment of the past several years. He might be a wunderkind trader, but he also might be a very lucky guy who was in a great seat at the right time.

Personally,  I vote for zero bonus for this guy. 
« Last Edit: June 23, 2014, 08:56:47 AM by NC_MJ »

warfreak2

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #21 on: June 23, 2014, 09:08:55 AM »
Justin Gmelich, a credit trading executive, told him at a cocktail hour that he was a “steal” at $15 million
Wait, this is his argument? Ha! So not only is he a sociopath, but he's also incompetent, because he doesn't understand basic economics.

Obviously his employment provides more value to the company than the cost of employing him, otherwise the company has no incentive to employ him. Worker compensation levels, like any other prices, are determined by supply and demand, not by the value provided.

Like, I enjoy chocolate cake so much I'd buy it for $30, yet the supermarket sells it for $10, what a steal! But imagine if the supermarket sued me for that extra $20 I "stole" from them.

arebelspy

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #22 on: June 23, 2014, 09:15:43 AM »
But imagine if the supermarket sued me for that extra $20 I "stole" from them.

...it's a billion dollar idea!

Patent pending!  Patent pending!

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SpeedReader

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #23 on: June 24, 2014, 07:53:03 AM »
I make a distinction between being promised and being "led to believe".
Yeah, like Goldman Sachs led their customers to believe that those subprime mortgage derivatives weren't shitty deals.

The headline could be "Sociopath wants even more money from Sociopaths Incorporated".

+100

Erica/NWEdible

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #24 on: June 24, 2014, 08:45:30 AM »
I make a distinction between being promised and being "led to believe".
Yeah, like Goldman Sachs led their customers to believe that those subprime mortgage derivatives weren't shitty deals.

The headline could be "Sociopath wants even more money from Sociopaths Incorporated".

+100

+100^100.

Slowclap.

GuitarStv

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #25 on: June 24, 2014, 09:48:26 AM »
Obviously his employment provides more value to the company than the cost of employing him, otherwise the company has no incentive to employ him. Worker compensation levels, like any other prices, are determined by supply and demand, not by the value provided.

Not necessarily.

His employment only has to provide more perceived value than the cost of employing him to the company.  It's a subtle difference but an important one . . . because perceptions can easily be out of whack with reality.  I suspect that many CEOs are profiting heavily based on this.

warfreak2

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #26 on: June 24, 2014, 11:06:55 AM »
His employment only has to provide more perceived value than the cost of employing him to the company.
This is true, but still he should know that his pay is determined by the supply of people qualified for his job, and employers' demand for such people to take other jobs - not the value he provides to the company, nor the company's perception of that value.

GuitarStv

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #27 on: June 24, 2014, 11:18:07 AM »
His employment only has to provide more perceived value than the cost of employing him to the company.
This is true, but still he should know that his pay is determined by the supply of people qualified for his job, and employers' demand for such people to take other jobs - not the value he provides to the company, nor the company's perception of that value.

Again, perceived supply of people qualified for job.  There may indeed be many capable of doing something that the company is not considering due to entrenched policies and standard practices.

johlstei

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #28 on: June 24, 2014, 11:23:12 AM »
Eh, if he feels he was promised something and it was not delivered, and he believes he has a reasonable chance of winning lawsuit(ie, E(lawsuit earnings) > E(lawsuit expenses), then why shouldn't he sue them? You can question the probability of him winning, but it makes no sense to assume that he hasn't thought about it at all, and a party to the lawsuit has way more information to go on than random forum posters here. It sounds like he was genuinely screwed out of a lot of money, regardless of how wealthy he is he should try to get what he feels he's owed.

warfreak2

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #29 on: June 24, 2014, 11:36:44 AM »
Again, perceived supply of people qualified for job.  There may indeed be many capable of doing something that the company is not considering due to entrenched policies and standard practices.
Again true, but my point still doesn't change. If it helps, just imagine that I put the word "perceived" in front of any words you want.

arebelspy

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #30 on: June 24, 2014, 11:54:39 AM »
Again, perceived supply of people qualified for job.  There may indeed be many capable of doing something that the company is not considering due to entrenched policies and standard practices.
Again true, but my point still doesn't change. If it helps, just imagine that I put the word "perceived" in front of any words you want.

Your perceived point doesn't change.  It does help with the perceived words. 
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johlstei

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #31 on: June 24, 2014, 11:58:29 AM »
Justin Gmelich, a credit trading executive, told him at a cocktail hour that he was a “steal” at $15 million
Wait, this is his argument? Ha! So not only is he a sociopath, but he's also incompetent, because he doesn't understand basic economics.

Obviously his employment provides more value to the company than the cost of employing him, otherwise the company has no incentive to employ him. Worker compensation levels, like any other prices, are determined by supply and demand, not by the value provided.

Like, I enjoy chocolate cake so much I'd buy it for $30, yet the supermarket sells it for $10, what a steal! But imagine if the supermarket sued me for that extra $20 I "stole" from them.

Not necessarily true in all cases - it's not how much value he provides for the company, but also the opportunity cost of replacing him. Even if a replacement could eventually bring them more value, they won't the first month they are there, and month six doesn't look good either. If he provides less value than he is paid, but the fixed costs of replacing him are sufficiently high, a company could reasonably choose to keep him on board until they are ready to swallow said costs.

warfreak2

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #32 on: June 24, 2014, 12:16:27 PM »
Not necessarily true in all cases - it's not how much value he provides for the company, but also the opportunity cost of replacing him.
So, illiquidity of the supply. Also, you are agreeing with me.

dragoncar

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Re: Trader sues over skimpy $8.25 million bonus
« Reply #33 on: June 24, 2014, 12:24:05 PM »
Not necessarily true in all cases - it's not how much value he provides for the company, but also the opportunity cost of replacing him.
So, illiquidity of the supply. Also, you are agreeing with me.

Let's just say there can be many market inefficiencies and leave it at that.