Executives justify their enormous pay plans by telling us that they have unique abilities that define the company’s actions. But when things go wrong, no one takes the blame. What is really disappointing is that in settling charges, the government does not require replacement of any executives or board members.
The mystery man behind those Citi investments was Reaz Islam, a former managing director of the bank’s fixed income alternatives group. Mr. Islam left Citi in 2008; he is chief executive of L-R Managers L.L.C., an investment firm in New York.
When Mr. Islam testified in an investor arbitration brought against Citigroup in June 2012, it emerged that Citi paid him more than $10 million during the years he ran the funds.
Mr. Islam did not respond to a telephone message and an email seeking comment. But a website featuring Mr. Islam identifies him as a “seasoned investment professional.” His “can-do attitude, inquisitiveness, sharp investment and business acumen made him an excellent fit at Citigroup from the start,” the website says.
According to Mr. Islam’s regulatory record, 46 Citi customers have filed complaints against him. Four are pending; the rest have generated civil judgments or arbitration awards paid by the bank totaling $22.4 million. In all of those cases, Citigroup denied the allegations.
Morgenson gets it just right:
How can we expect Wall Street’s me-first culture to change when regulators won’t pursue or even identify the me-firsters who are directly involved?
That question came to mind after reading the terms of a settlement struck on Aug. 17 between the Securities and Exchange Commission and two units of Citigroup. It is a deal that holds no one at the bank accountable for behavior that caused investors to lose an estimated $2 billion.
Gretchen Morgenson via S.E.C. Settlement With Citigroup Holds No One Responsible – The New York Times.