NEW YORK - Michael Kenneally's appointment in March as global chief executive officer of Credit Suisse Asset Management was not a huge surprise to the money management industry. But the manner of his appointment caused a flap, sources said.
On the surface, it looks like Mr. Kenneally's move from Banc of America Capital Management, New York, to New York-based CSAM violated the first ethics rule of executive recruiting: Thou shalt not poach from one's own clients.
Both money managers have Spencer Stuart & Associates, Chicago, on retainer for asset management staffing, said sources.
Jeffrey G. Bell was the Spencer Stuart senior director/partner who conducted the global CEO search for CSAM. He left the company in the spring.
CSAM had been without a global CEO since December 2001. It also was without a CEO for the Americas for almost a year, naming Joseph Gallagher to the post in January 2003. Mr. Gallagher had been CEO and chief financial officer for CSAM Europe (ex Switzerland).
The search for a global CEO took more than a year. Recruiters said several well-qualified candidates were presented as possible choices to Jeffrey Peek, vice chairman of CSAM's parent, Credit Suisse First Boston, but they either did not meet with his approval or would not take the job.
Sources with knowledge of the situation who asked for anonymity speculated the long search period might have prompted Mr. Bell to look for additional candidates within a "forbidden" source - another Spencer Stuart client. Mr. Kenneally was chief investment officer of Banc of America Capital Management. In fact, sources said, Mr. Kenneally was working with other recruiters at Spencer Stuart to fill a vacancy at Banc of America Capital Management for a head of fixed income.
In an interview, Mr. Bell was adamant that Mr. Kenneally was not recruited by the Spencer Stuart team and that Spencer Stuart was not paid a placement fee.
When asked how Mr. Kenneally found out about the CSAM job and got in touch with Mr. Peek, Mr. Bell answered: "market intelligence."
Officials from Spencer Stuart, Banc of America Capital Management and Credit Suisse Asset Management declined comment through their internal and external representatives. Mr. Kenneally himself declined to comment.
Sources said management officials at Banc of America Capital Management "went ballistic" when they learned that Mr. Kenneally was leaving for a rival money manager that also was a Spencer Stuart client.
A source said Spencer Stuart's response was "swift. They circled the wagons and ostracized Mr. Bell as a rogue recruiter." But even close sources said they were not aware of the exact circumstances of Mr. Bell's departure from the company earlier this spring or how Spencer Stuart placated Banc of America officials. Mr. Bell said Banc of America Capital Management and Spencer Stuart continue to have a good working relationship.
Mr. Bell said his departure from Spencer Stuart was entirely voluntary. He said he had been public in his opposition three years ago to changes in some of Spencer Stuart's internal practices. He also said he had been considering a return to his roots with a smaller recruiting firm with less rigidity, fewer political battles and the opportunity to make more money than in a large firm. Mr. Bell started his recruiting career in smaller shops, including two that he founded. He now is a managing director, member of the board of directors and head of the new Philadelphia office of the Whitney Group, New York.
But even the appearance of poaching money management staff from another client is a violation of "Chapter 1 of recruitment ethics," said one recruiter. Executive recruitment firms routinely sign agreements not to search for candidates within the client's entire firm or, at minimum, the department for which the search was conducted.
One recruiter, who declined to be identified, admitted the rules about poaching are sometimes stretched.
"It happens," the source said, "But it is very unusual to have something like this happen at a high level."