Goldman Sachs announced today that Marty Chavez is leaving. In a memo published on CNBC the firm said its ex-global co-head of Securities Division Strats, ex-global co-chief operating officer of the Equities franchise, ex-chief information officer, ex-CFO, ex-global co-head of the Securities Division, ex-member of the Management Committee is 'retiring.' It's been an inevitability for some time.
Chavez nemesis seems to have been David Solomon. His career was actually going pretty well until Solomon took over, but once Solomon was in place Chavez was deposed as chief financial officer (CFO) after just sixteen months in that role. Since then he's been 'languishing' as one of the three co-heads of Goldman's trading division. Given that Chavez has done just about every job conceivable at GS, even this looked a demotion. - CFO was the pinnacle of his career, from there it was CEO or nothing.
By all accounts Chavez himself was startled to have been made CFO in the first place. At the time of his promotion he described his surprise at being chosen for the role by Lloyd Blankfein. In subsequent interviews, he said the CFO role involved the "steepest learning curve" he'd ever encountered, but that his history as a "strat" and data-guy brought a different dimension to the job. "We’re able to get much better actionable insights that make the firm a less risky business because we’re able to go much further out into the future,” he told the New York Times. Chavez' execution of the CFO role was to be underpinned by objectivity derived from data.
Unfortunately, circumstances were against him. Chavez' ascension to CFO was marked by an historic slump in revenues from the firm's securities business. The rot began in 2016 and continued throughout last year. It wasn't Chavez' fault, but many in securities weren't happy with the way the neophyte CFO fielded questions about their enfeeblement. "He was too condescending and evasive," says one senior member of Goldman's securities business. The Wall Street Journal blamed Chavez for the unimpressive performance of Goldman's shares, which remained flat over the past 12 months while the KBW Nasdaq index rose 14%. Chavez was too vague, claimed the Journal; he mismanaged the ending of Goldman's share buy-backs. This wasn't entirely fair: analysts at the time were far more focused on the fact that Goldman's sales and trading revenues hadn't increased by as much as expected. KBW's analysts praised Chavez for offering, "improved disclosure and commentary."
Chavez' real problem at Goldman seems to be that he had few influential friends - save Blankfein, who left the firm in July and is now seen on yachts with Oprah Winfrey. Salespeople and traders at the firm took affront to Chavez' intimation that their jobs could be automated away by algorithms. Not everyone was convinced of his strategy. "Marty’s view that most roles can be automated may be true 10 years forward but it is antithetical to what the securities division needs to do today," says another senior Goldmanite. "These are not traits that engender client confidence when we're trying to prioritize relationship-building."
In the memo announcing Chavez' exit, Solomon praises him for his, "outstanding contributions to Goldman Sachs," and for being a "strong advocate for the firm’s diversity and inclusion efforts." The firm will be a less interesting place without him - Goldman doesn't have many gay Latinos who are reformed alcoholics with sobriety dogs and Japanese tattoos up their arms in positions of power. And that's a bit of a shame really.
Chavez will be succeeded by the Marquee system he's been championing for years. Marque allows clients to access Goldman's SecDB pricing and risk system without the intervention of a human being. The man may be going, but his legacy will remain.
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