GFI chief loses control of his destiny but ends up $285m richer

Mickey Gooch set up GFI from scratch

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The Independent Online

An Essex-born City trader has lost his battle to keep control of the broking giant he created in the swashbuckling 1980s, but he was able to console himself yesterday with a deal netting him and his family $285m (£185m).

Mickey Gooch set up GFI from scratch, building a firm trading foreign exchange, bonds and other assets in London and New York. Last year, the company arranged a sale to the Chicago Mercantile Exchange. Mr Gooch and his fellow executives agreed with the exchange that they would buy out the wholesale and telephone broking divisions, leaving  the CME with GFI’s two successful electronic trading platforms.

However, his arch-rivals at another broking firm, BGC, swooped with a higher offer. Mr Gooch made an impassioned plea to his shareholders to reject it and accept the lower offer; he even cited the fact that his ex-wife – who had 15 million shares in the company – was backing him.

But Mr Gooch’s shareholders voted against the lower offer, and yesterday GFI  agreed to accept the $778m bid from BGC.

As part of the deal, Mr Gooch’s business will retain its brand under the BGC umbrella, while he and his chief executive Colin Heffron are expected to stay on as directors of a GFI sub-board.

His ex-wife Diane’s shares are valued in the deal at over $90m – which is $10m more than she would have got from Mr Gooch’s preferred deal with the CME.

The new entity will combine two of the biggest inter-dealer brokers in London, where GFI alone had 530 staff, including 360 traders.

Mr Gooch first became interested in the sharp-elbowed foreign exchange trading world while chatting to a group of currency dealers in his local pub in the 1970s. Soon after, he left for New York to seek his fortune.

Turning down a job at Goldman Sachs back in London, he stayed in New York, eventually joining the commodities and futures broker Refco. While he was there, two colleagues on his trading desk managed to lose $30m on government bond options.

The firm shut down his desk, gave him a six-figure bonus and made him redundant – even though  he had nothing to do with the losses.

That was in 1987. Unbowed, Mr Gooch decided to set up on his own with $150,000 of the Refco bonus, rapidly building up the first brokerage specialising in government bond options and promoting electronic broking in an industry dominated by personal contacts.