Six months after John Duffield left Jupiter – the fund mana ger he founded 14 years ago – in a storm of controversy, his dispute with parent company Commerzbank has been settled out of court.
On Sunday, November 19, hours before Duffield's claim for unfair dismissal was due to be heard in the High Court, he met Jupi ter chief executive Edw ard Bonham Carter in a Knights bridge restaurant to work out a solution.
Having been granted two 24-hour adjournments by Mr Justice Buckley, the two legal teams spent the small hours of the Wednesday morning eating Thai curry at solicitor Clifford Chance's off ices in an effort to stay awake.
Negotiations broke at 5am and resumed at 9am, with a further 90 minutes' postponement of the trial being given at 10.30am.
At 11.58am, a deal was fin ally struck – just two minutes before the trial was due to begin. If it had gone ahead, 15 Jupiter fund managers were lined up to take the stand, as well as Duffield himself, in what would have been one of the highest-profile trials in City history.
The deal sees Duffield take £2.5m in cash, with a further £2.5m being donated to a new char ity called the John Duff ield Charitable Trust. Both sides will pay their own legal costs, which could amount to more than £1m each. But Duffield has had to resign from the boards of Jupiter's investment trusts.
Although both sides are claiming victory, it is arguably Duffield who will have the big gest smile on his face. Despite accepting £10m less than the £15m he was reputed to have filed for, he has walked away with alm ost £180m from the sale of his Jupiter shares to Com merz bank.
Furthermore, Duffield has won the right to approach special situations fund manager Alan Miller for his new company, New Star Asset Man agement, although he cannot poach any other Jupiter staff or cli ents until the end of next May. Some have argued that enf orcing such an emb argo will only give Duffield the chance to cause Jupiter more discomfort when the deadline is up.
Plan Invest director Mike Owen says: “It still puts Jup iter in an uncertain position. We still have a question mark over whether Duffield will go and poach more Jupiter staff in six months time. We will not really know how things stand until that six months is up.”
Fund managers Tony Nutt, Richard Pease and Philip Gibbs, were said to be set to testify both for Duf field and for Jupiter.
But perhaps the upside of the six-month deadline for Jupiter is that it has some time to tie these managers in. Since Duffield's departure last May, Jupiter has been working on the development of a new payment incentive package to deter staff from leaving.
Bates Investment senior analyst James Dalby believes Jupiter has good reason to be pleased with the settlement. He says: “I think the settlement is fair. From Jupiter's perspective, at least Duffield has resigned from the board of all its investment trusts.
“Commerzbank will know there is a threat of him poaching more staff and it will create a pay scheme that is attractive enough to make the managers stay. I do not think we will see fund mana gers jumping ship in six months time although it is definitely a threat.”
Duffield's new company is set to launch in the spring. Once the £10m acquisition of fund manager World Invest has gone through, New Star Asset Management will be kickstarted with £1.2bn of institutional business.
On the retail side, Duffield will be able to offer a range of Jupiter offshore funds which he has acquired as part of the settlement with Commerz bank. These amount to £300m and will be added to by a retail unit trust range to be laun ched later next year.
Duffield claims already to have a number of customers prepared to sign up for his funds at launch.
Und oubtedly, his new business will not be one which the rest of the industry can afford to ignore.
With the resources to compete with the highest salary payers in the industry and a strong legacy of success, Duff ield is certain to be able to attract the best fund mana gers, whether from Jupiter or elsewhere.
The IFA sector appears to be eagerly anticipating New Star's arrival but it seems unlikely to spark a mass exodus of Jupiter cli ents.
Michael Philips partner Michael Both says: “We were impressed with Jupiter generally and, clearly, whoever set that up is a man to watch. It will probably be worth buying shares in too.”
Although Duffield has liked to keep his distance from the media, the events of the past week coupled with the forthcoming launch of New Star have seen him allow the press closer than ever before. Last we
ek, he agreed to have a new set of pictures taken for the media for the first time in more than five years and he also gave his first interview for at least as long.
For the next few months, however, he is likely to disappear back into the background. Imro approval for New Star is still being awaited while the acquisition of World Invest is also likely to take some time to process.