A new trend is overtaking Wall Street. Traders who excelled at the biggest banks are finding their way to hedge funds and investment firms that can afford to compensate them the way they want.
Nearly two dozen of the top-producing credit traders over the past 13 months have fled Wall Street's banks, Bloomberg reports. Increased regulation, tightened risk appetites and lower compensation packages are the culprits for this latest exodus. John Silvetz, for example, a trader who made $700 million for Deutsche Bank over five years, left to go to hedge fund BlueCrest Capital last September. The portion of his bonus paid in cash had decreased to 20% from almost 70%.
While bonuses have been capped at some firms, hedge funds are luring away traders with heady options, like $200,000 salaries and bonuses that could reach up to 12% of traders' profits. Hedge funds are willing to pay as much as half of bonuses in cash. It's no surprise then traders are willing to move on to smaller firms.
It's not just hedge funds that are profiting. Jefferies Group has brought on at least seven corporate debt traders.
Where there's a will, there's a way. And the way leads directly to hedge funds' doors, it seems.
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1. Get recommended by somebody on the inside.
2. Show up ready to talk to several people.
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