The high-octane egos of Wall Street and the future income of David Bowie have turned into a combustible mix.
Two investment bankers have gone to court in a bitter dispute over authorship of the celebrated "intermediate term" securitization of the rock star's royalties.
David Pullman, senior vice president of Fahnestock & Co., captured the attention of MTV as well as the business press in February by selling the novel $55 million issue.
David Van Dam, who was fired last October from Gruntal & Co., where Mr. Pullman was his boss, and now works as managing director in KeyCorp's capital markets unit, is seeking $250,000 because he claims he originated the Bowie deal and brought other work to Gruntal.
"Pullman essentially took Mr. Van Dam's clients," said Mr. Van Dam's attorney, Lawrence M. Sands.
But Mr. Pullman isn't buying that. He said Mr. Van Dam should submit to arbitration to settle his dispute with Gruntal.
Fahnestock, meanwhile, will ask the U.S. District Court for the Southern District of New York to dismiss Mr. Van Dam's claim.
Technically speaking, Mr. Van Dam is seeking his compensation by joining Fahnestock in a breach-of-contract suit against SeaWest Financial Corp. A hearing is scheduled Aug. 12 on Mr. Van Dam's complaint.
Mr. Van Dam "was never in any way involved with the Bowie deal," Mr. Pullman asserted. "I took him to one meeting, and that was it. We precluded him from anything after that because I knew he'd be leaving."
Indeed, it was Mr. Pullman who fired Mr. Van Dam, a move he insisted was "for cause." The reasons cited in an office memo included insubordination, failure to arrive at work on time, and "deceitfully rifling through confidential files of the managing director's office."
Mr. Van Dam joined Gruntal in February 1996. The firm, under Mr. Pullman's leadership, had carved a niche underwriting exotic classes of asset-backed securities. In one example, paper was backed by campground membership dues.
Among Mr. Van Dam's contacts was Legacy Benefits Inc., which engaged in viatical settlements-buying the life insurance policies of terminally ill patients who needed cash to pay their medical bills.
According to Mr. Van Dam's affidavit, Legacy shareholders in March 1996 told him they wanted to raise capital by having one of the shareholders, Bill Zysblat, liquidate his stake. Mr. Van Dam contended that due to his contacts at Legacy, Gruntal was enlisted to carry this out in April 1996.
Mr. Pullman "added a clause to make the engagement letter personally assignable at his whim," the affidavit said. Mr. Van Dam claimed he was unaware of this and began working on the transaction as if it were under his domain.
Through his work for Legacy, Mr. Van Dam learned that Mr. Zysblat was involved in music management and that one of his clients, David Bowie, might be interested in some innovative financing.
"I presented David Pullman at Gruntal with the opportunity and asked if he would be willing to entertain such a proposal," Mr. Van Dam's affidavit said. Mr. Van Dam, Mr. Zysblat, Mr. Pullman, and another Legacy shareholder met a week or two later, according to court documents. At this meeting, Mr. Van Dam said he suggested asset-backed securitization to Mr. Bowie.
Sometime shortly thereafter, Mr. Zysblat and Mr. Pullman signed an engagement letter. Gruntal stood to collect a 2% fee for the securitization, plus a $100,000 nonrefundable retainer.
Mr. Van Dam was dismissed from Gruntal three months before the "Bowie bonds" came to market. By that time Mr. Pullman had left Gruntal for Fahnestock.
To collect what he believes he is owed, Mr. Van Dam is taking a curious course: Rather than suing Mr. Pullman and Gruntal, he is seeking to join the existing suit Fahnestock has against SeaWest Financial.
Paramount, Calif.-based SeaWest is a subprime auto lender that granted Gruntal exclusive rights to sell its debt. Those went to Fahnestock with Mr. Pullman. Mr. Van Dam said SeaWest is another of his clients stolen by Mr. Pullman.
After SeaWest placed some debt in February and April through other agents, allegedly violating an exclusivity agreement, Fahnestock sued for $3.5 million.
Mr. Van Dam's lawyer, Mr. Sands, said that if Fahnestock is going to collect on that suit, his client should get a piece of it.
Mr. Bowie has kept his distance from this squabble of Wall Street operators. But he seemed to know what he was talking about when he sang: "Fame, makes a man take things over/Fame, lets him loose, hard to swallow."