Jilting Jefferies Said to Cost Credit Suisse Bankers $10 Million

  • Five said to sign contracts that left them on hook for damages
  • Claim could spark legal case between Credit Suisse, Jefferies

A talent war between Jefferies Group LLC and Credit Suisse Group AG is threatening to escalate.

Five Credit Suisse bankers who reneged on agreements to join Jefferies this month may face demands that they pay more than $10 million to their scorned suitor, according to a person with knowledge of the matter.

The bankers signed contracts with Jefferies that left some of them on the hook for payments of at least $1 million -- and others much more -- for backing out of the agreements, said the person, asking not to be identified because the discussions are private. Representatives for Credit Suisse and Jefferies declined to comment on the payments, while none of the bankers responded to requests for comment.

“This is an unusual and aggressive structure,” said Mark Lerner, a lawyer at Kasowitz Benson Torres & Friedman, who frequently represents banks and employees in recruitment disputes. He said he doesn’t have direct knowledge of this case. 

“It’s not like a business transaction,” he said. “In hiring of individual employees it’s not very common.”

Legal Skirmish

The firms had already been locked in a legal battle over talent in some of the most lucrative areas of finance. Zurich-based Credit Suisse took legal action against a group of bankers hired by Jefferies in May. The hirings also sparked a Financial Industry Regulatory Authority case against Jefferies, according to court filings and people with knowledge of the matter.

The latest issue emerged after the Swiss bank thwarted Jefferies’ efforts to lure away a group of eight bankers by retaining the five, including Jonathan Moneypenny, who was promoted to lead the U.S. loan capital markets team at Credit Suisse.

Besides Moneypenny, the Credit Suisse bankers facing the payment include Jeb Slowik, New York-based co-head of leveraged finance origination and restructuring. Dean Decker, who works in the investment-banking unit as head of gaming globally, and two members of his team, Michael Kamras and Teddy Swigert, are the others, according to people with knowledge of the matter.

Damages Questioned

Credit Suisse is likely to defend any claim from Jefferies over the payments even though the money is owed by the bankers personally, according to Laurence Moy, co-head of the financial services industry practice at law firm Outten & Golden, which represents employees in recruitment cases.

“Typically, the bank on the other side of these agreements -- in this case Credit Suisse -- would indemnify individuals with respect to defending against these claims,” he said.

Nicole Sharp, a spokeswoman for Credit Suisse, said the bank remains “committed to investing in its market-leading businesses now and going forward.”

Jefferies would need to show in any legal case that it indeed suffered damages from the failed hirings, Moy said.

Such recruiting attempts, where a bank is seeking to hire an entire team of rival bankers, can be costly and difficult, said Jeanne Branthover, managing partner at executive-search firm DHR International’s global financial services practice.

“You are spending a lot of money trying to do it,” she said. “You do find that the firms that are aggressively growing like Jefferies, that are not the big firms, are trying to protect themselves more.”

The three Credit Suisse employees who made the shift to Jefferies are Joseph Kieffer, who will head the U.S. part of the leveraged finance capital-markets division, John Bown, who will lead loan sales, and Brad Capadona, a loan trader, the people with knowledge of the matter said.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE