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The Shocker- Changes Continue

The Shocker- Changes Continue

December 5, 2016

Chapter 34 in the exclusive series for Dynamic Commodities- becoming a commodities trader

Ray Nessim did not get the job as the top man at Philipp Brothers. It was apparent that he was not only unhappy but angry with the decision to put Marty Kaufman and Henry Schachar in charge of the division. Meanwhile, Salomon ‘experts’ began to descend on Philipp Brothers. John Gutfreund charged his deputies with dissecting and auditing each commodity business so that Salomon could gain an understanding of the risk and reward potential. With the oil business gone and a separate entity, Philipp Brothers lost a huge chunk of potential earnings. This would have to be made up by the remaining business units.

The Precious Metals Department was a crown jewel of the new Philipp Brothers division because of the earnings in 1979-1980. Ray did not appreciate Salomon putting him under a microscope after turning him down for the top job. It was very quiet in the department in the days following the reorganization of the firm. The traders and traffic staff continued with their daily tasks but there was a constant parade of strange faces from downtown at Salomon headquarters. Marty and Henry spent a great deal of time with Ray Nessim.

A few weeks later came the shocker. Ray was out. I heard that Salomon took a look at the Puerto Rican gold business and flipped out. The chief counsel for the parent company thought it was a tax dodge. This left the company open to unwanted scrutiny. I always thought that Puerto Rico was only an excuse. Ray’s dismay was probably evident to Gutfreund and company, which meant he had to go.

Ray’s departure happened so quickly, as all departures from the firm did in those days. It started as a rumor that the traders on the desk quickly confirmed. Ray called a meeting of all his traders and my boss, Elias. Ray Nessim left that very same day. John Gruen,  the chief gold trader and Ray’s second in command, was immediately appointed the global head of precious metals trading. It was a sad day. It appeared the homeostasis of the department would go with the boss who protected all from the Salomon invasion. However, in the end, it turned out to be the best day ever for me.

 

Post Series: Origin Of A Commodities Trader

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