Stephen Foley: Griffin's dreams have fallen short


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The Independent Online

US Outlook: When you make a fortune trading bonds from your Harvard University dorm room, and then build one of the world's most powerful hedge funds, you probably think there isn't anything you can't achieve.

Ken Griffin's notorious arrogance was on display when, in 2008 at the depths of the credit crisis, he declared a plan to build a full-service investment bank from scratch and take on the likes of Morgan Stanley and Goldman Sachs.

It hasn't turned out so well. Mr Griffin has just fired the equity research team he built for Citadel Securities, and word is the rest of the nascent investment bank is up for sale, too. A few parts, including the high-frequency trading business, will be rolled into the Citadel hedge fund business.

Investment banking is more collegiate than it is often portrayed, in contrast to the dictatorships of the hedge fund world, so it ought not to have been a surprise that Mr Griffin clashed with his star hires and suffered crippling staff turnover.

It ought not to have been a surprise either that potential clients were wary. Goldman Sachs is forever having to soothe clients suspicious that the firm puts its trading interests before serving their needs. Yet here is Citadel Securities asking customers to ignore the whopping conflicts of interest inherent in its being an offshoot of the Citadel hedge fund business.

Mr Griffin wanted to be an investment banking rainmaker. In the end, the best he could manage was a light drizzle.