The Globe and Mail, Tara Perkins, 8 August 2007
Five former senior investment bankers at Bank of Montreal, who say they earned millions of dollars in fees for the bank between October and January, are suing it, alleging they were not paid bonuses they say they are owed.
The five men worked in BMO's Chicago office and left the bank earlier this year. Within about a month of leaving they started their own hedge fund, Six Degrees Capital Management LLC, which is based in Chicago.
The group was led by Pete Walsh, who is now Six Degrees' managing partner.
In the lawsuit against BMO, the men claim Mr. Walsh wanted to start a hedge fund at BMO but disagreed with the bank over how he would be paid.
Mr. Walsh was a managing director of BMO's investment bank and co-head of origination and structuring in the securitization group for about seven years until January.
None of the allegations in the suit have been proved.
In the lawsuit, which was filed in an Illinois district court two weeks ago, the five men say that Mr. Walsh approached Ellen Costello, who is the chief executive officer of BMO's U.S. bank, and Jeff Phillips, the executive managing director of BMO's U.S. securitization group, in mid-2005 and told them he wanted to start a new line of securitization business within BMO.
He wanted BMO to create a new fund that he and Mr. Phillips would manage, and he put together a formal proposal for his bosses at BMO.
Mr. Walsh says he told Mr. Phillips that investors in the fund would require that its managers have their pay directly tied to the fund's performance, as is common among hedge funds and private equity funds.
By early this year, the bank's senior management had told Mr. Walsh that the bank would not allow its employees' compensation to be directly tied to the fund's performance, Mr. Walsh says in the lawsuit.
On Jan. 25, Mr. Walsh said he was preparing for a business trip when he went to Mr. Phillips and told him he was eager for BMO to decide whether it was going to pursue the fund, according to the court documents. He said Mr. Phillips told him they should deal with it when Mr. Walsh returned.
The next day, Mr. Walsh says he was informed by a senior member of BMO's securitization team that the bank had told employees in the Chicago office that Mr. Walsh and a number of his colleagues had resigned.
But the men say they had not resigned. They say they were forced out of their jobs on Jan. 29 and told that they would not be paid any remaining amounts in their long-term incentive plans.
Mr. Walsh claims he is owed about $1.39-million. The other four plaintiffs are each claiming smaller amounts ranging from about $52,000 to $595,000.
;
Five former senior investment bankers at Bank of Montreal, who say they earned millions of dollars in fees for the bank between October and January, are suing it, alleging they were not paid bonuses they say they are owed.
The five men worked in BMO's Chicago office and left the bank earlier this year. Within about a month of leaving they started their own hedge fund, Six Degrees Capital Management LLC, which is based in Chicago.
The group was led by Pete Walsh, who is now Six Degrees' managing partner.
In the lawsuit against BMO, the men claim Mr. Walsh wanted to start a hedge fund at BMO but disagreed with the bank over how he would be paid.
Mr. Walsh was a managing director of BMO's investment bank and co-head of origination and structuring in the securitization group for about seven years until January.
None of the allegations in the suit have been proved.
In the lawsuit, which was filed in an Illinois district court two weeks ago, the five men say that Mr. Walsh approached Ellen Costello, who is the chief executive officer of BMO's U.S. bank, and Jeff Phillips, the executive managing director of BMO's U.S. securitization group, in mid-2005 and told them he wanted to start a new line of securitization business within BMO.
He wanted BMO to create a new fund that he and Mr. Phillips would manage, and he put together a formal proposal for his bosses at BMO.
Mr. Walsh says he told Mr. Phillips that investors in the fund would require that its managers have their pay directly tied to the fund's performance, as is common among hedge funds and private equity funds.
By early this year, the bank's senior management had told Mr. Walsh that the bank would not allow its employees' compensation to be directly tied to the fund's performance, Mr. Walsh says in the lawsuit.
On Jan. 25, Mr. Walsh said he was preparing for a business trip when he went to Mr. Phillips and told him he was eager for BMO to decide whether it was going to pursue the fund, according to the court documents. He said Mr. Phillips told him they should deal with it when Mr. Walsh returned.
The next day, Mr. Walsh says he was informed by a senior member of BMO's securitization team that the bank had told employees in the Chicago office that Mr. Walsh and a number of his colleagues had resigned.
But the men say they had not resigned. They say they were forced out of their jobs on Jan. 29 and told that they would not be paid any remaining amounts in their long-term incentive plans.
Mr. Walsh claims he is owed about $1.39-million. The other four plaintiffs are each claiming smaller amounts ranging from about $52,000 to $595,000.
