Vermont's Dwight Asset Management to Shed Jobs After Goldman Sachs Takeover

Several money managers are likely to lose their six-figure Vermont jobs in the coming weeks when Goldman Sachs [1], aka Wall Street’s “vampire squid,” completes its takeover of a Burlington-based investment firm. 

Some lower-level employees will also be let go. The anticipated layoffs at 29-year-old Dwight Asset Management [2], one of Vermont’s few finance-sector powerhouses, will diminish the Queen City’s standing in the industry and deal a blow to Burlington’s economy.

The region’s housing market would likewise feel the effects of the potential departure from Vermont of highly paid professionals. Many of those workers currently contribute volunteer labor in their communities. Dwight actively encourages civic engagement among its employees.

Some of the individuals Goldman Sachs views as redundant had earned half-a-million dollars or more in years when bond markets were booming, says a source well acquainted with Dwight’s operations who wishes to remain anonymous.

State officials have been seeking to gauge the extent and the impact of the coming purge ever since the pending takeover was announced in February. “I’ve had talks with Dwight, but I haven’t been given anything definitive,” says Lawrence Miller, secretary of the state’s Agency of Commerce and Community Development [3]. “They’ve made clear there is a transition plan in place, but that there are no details available at the individual level.”

Frank Cioffi, president of the Greater Burlington Industrial Corporation [4], describes Dwight as a locally unique business that “has really carved a niche for itself” in the nation’s finance sector. “There’s lots of expertise in that company,” notes Cioffi, who works on behalf of the state to help preserve and create jobs in Chittenden County. “That isn’t the kind of human resource that firms like to part with.”

The best-case scenario for Burlington, adds Community and Economic Development Office [5] chief Larry Kupferman, is for Goldman Sachs “not only to maintain a presence here but hopefully to expand their operations.”

That isn’t going to happen, according to a finance-industry newsletter, as well as the source familiar with Dwight’s inner workings. Back in February, Asset-Backed Alert [6], a weekly publication focused on securities transactions, reported: “Many of Dwight Asset Management’s structured-product professionals will be out of work once the investment shop is sold to Goldman Sachs.” The New Jersey-based newsletter specifically forecasts “broad layoffs that are expected to encompass about 40 members of Dwight’s 100-person workforce.”

The cuts could ultimately go even deeper, slicing the business to the bone, warns the person knowledgeable about Dwight’s prospects. Within a year or two, as few as 10 people might be working in Burlington for the firm about to be swallowed by Goldman Sachs Asset Management, this source suggests.

Andrea Raphael, a spokeswoman at Goldman Sachs’ corporate headquarters in Manhattan, offers assurance that the investment behemoth “will be maintaining a presence in Burlington.” She declines, however, to discuss projected employment totals, saying “I don’t have those numbers at this time.”

Dwight CEO David Thompson and two other senior Dwight executives did not respond to requests for comment on the sale. John K. Dwight, a Charlotte resident who founded the company in 1983, also did not reply to a query regarding his views on the firm’s pending takeover by Goldman Sachs.

The business that Dwight established was sold in 1994 to a company that was itself purchased in 2000 by the Old Mutual Group [7], a British-South African investment conglomerate. Dwight Asset Management profited as one of the pioneers in what’s known as the stable-value investment market. The firm specializes in low-risk instruments designed to provide consistent returns for its clients, which include corporate retirement plans, insurance companies, foundations, endowments and public funds.

Dwight today oversees $42 billion in such investments from its top-floor offices at 100 Bank Street, which offer dramatic views of Lake Champlain and the Adirondack peaks of New York.

The usually steady and safe assets on which Dwight is focused are attractive to many middle-class Americans preparing for retirement. And that’s precisely why the Burlington company became attractive in turn to Goldman Sachs. The Wall Street bank’s assets-management unit is seeking a bigger share of the U.S. retirement-investments market, which is growing rapidly as legions of baby boomers approach what they hope will be their golden years.

What did Goldman Sachs pay Old Mutual for the company? Dwight’s purchase price was not disclosed. But the source familiar with Dwight’s business profile estimates less than $50 million. Old Mutual was eager to unload Dwight as part of a corporate retooling, according to reports by Reuters and Bloomberg News.

Goldman Sachs comes to Vermont with a tarnished reputation as one of the chief culprits in the Wall Street meltdown that caused the Great Recession. In a lengthy 2009 analysis of the investment bank’s behavior [8] over its 140-year history, Rolling Stone writer Matt Taibbi branded Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Taibbi’s colorful description has stuck. The New York Times made note of the “vampire squid” reference as recently as May 3 in a story about Goldman Sachs’ efforts to resurrect its image. As part of a new PR counter offensive, CEO Lloyd Blankfein has been calling attention to Goldman’s support for gay rights.

That may not be enough to dissuade local class warriors from targeting the Burlington branch of Goldman Sachs Asset Management. “It’s something I think we should get involved in,” says Occupy Burlington spokesman FaRied Munarsyah.

One of the most painful casualties of the takeover, says the source familiar with Dwight, is the loss of a distinctively Vermont way of doing business in the assets-management field. “One thing Dwight had going for it was a unique culture in the financial-services industry,” the source remarks. “Being in Burlington, Dwight attracted a certain type of individual who perhaps thought differently than would be commonplace in New York, Boston or Chicago. This type of individual has a different set of values. He or she isn’t motivated only by financial gain.”

Many Dwight employees regularly volunteered in community groups and took part in company-supported charitable events such as the Lake Champlain Dragon Boat Festival and the Penguin Plunge. The firm also trained dozens of interns from the University of Vermont, St. Michael’s College and Champlain College.

Most of the soon-to-be jobless Dwight money managers will have to leave Vermont if they want to remain in the industry, the insider predicts. “There’s nothing equivalent for them here.”

Commerce and community development agency chief Miller points out that there could still be some happy endings. Vermont companies that get purchased by bigger companies can be a source of start-ups. He cites a possible parallel between Dwight and IDX, the former medical-systems software company founded by Burlington-area entrepreneurs that was sold to GE Healthcare in 2006. Some ex-IDXers went on to launch their own local ventures, Miller says: Marathon Health, which provides businesses with a suite of health-related services; and PureWellness, a South Burlington company that supplies similar assistance to health systems and corporate clients.

When local companies get taken over by out-of-state giants, “some former employees go out to start their own firms,” Miller says. “That’d be the best outcome” in the case of Dwight Asset Management, he adds.