Memos show culture clash led to firing at Mercantile

October 06, 2004|By JAY HANCOCK

ON FEB. 19, 2002, Mercantile Bankshares Corp. announced the hiring of John J. Pileggi as president and chief executive of two important asset-management units.

Mercantile bosses praised Pileggi's leadership, aggressiveness and success in the city where, if you can make it there, you can make it anywhere. Even Baltimore.

Pileggi called himself "a crazy guy from New York." His new boss at Mercantile, Wallace Mathai-Davis, described Pileggi as "a tough-minded guy from New York - he's a Wall Street guy."

And that may have been the problem.

A trove of e-mails dredged up last week in a legal case portrays Pileggi as a hard-driving, sarcastic sort who swore a lot, glossed over procedural niceties and frequently looked after his own interests as well as those of his boss, company and clients. These e-mails give an fresh look at a culture clash that matched Wall Street go-getters with Mercantile white-shoe guys, rocking a bank long known for discretion and decorum.

Pileggi, in short, was the wrong guy in the wrong bank at the wrong time.

It would go too far to say that his previous experience at Wall Street's ING Group and other firms caused the controversy that cost him his job last March and soiled Mercantile.

There is no evidence he did anything illegal. He has sued Mercantile for defamation and breach of contract and paints the e-mail disclosures made by the bank in its countersuit as part of a campaign to ruin his career.

For its part, Mercantile alleges in legal documents that Pileggi hurt the bank through a "pattern of deception" that included failing to disclose a purported conflict of interest involving one of his employees to senior management.

Neither Pileggi nor his lawyer has responded to any of the specific e-mails or allegations in the counterclaim.

But his macho style might have eventually led to fireworks at Mercantile even if he hadn't gotten in trouble last spring. According to the bank's court filing, Pileggi was fired for approving the idea of hiring a money management firm that would pay a large "referral fee" to the mother of Mercantile employee Michael Donnell.

Both Pileggi and Donnell have conceded that the fee was proposed - Pileggi in court papers and Donnell through a lawyer in an interview with The Sun. The questions are: Did they recommend the adviser because it was a competent shepherd of clients' money? Or because of the potential payment to Donnell's mother?

Pileggi was selling funds to wealthy individuals, but in some cases he seemed more interested in nailing the sale than in making sure that the fine print was honored.

"Let us NOT let [legal] compliance (which does not understand our business) get in the way of education and understanding of the platform we are building," Pileggi said in an e-mail that was sent to a colleague on his Blackberry wireless device.

In another case, a former colleague whom Pileggi had recruited to work for Mercantile talked about the need to "build the business and pick up the dead bodies later."

In late 2003 Pileggi called the board of directors and two doubting executives "speed bumps on the road of business."

He referred to Mercantile Funds board member Les Disharoon as an "ass," "baboon" and "jerk." He belittled Mathai-Davis, the guy who hired him, describing him as somebody he had "neutered" by, among other things, keeping information from him.

When a co-worker complained about "an overabundance of misfits, freaks" and people with "substandard IQs," Pileggi replied, "Must mean you were with Wallace again."

Mercantile also alleges that Pileggi leaked confidential Mercantile details to a friend who was negotiating for a job there and pressured the computer department to hire a person whom the bank describes in legal papers as an "unqualified" girlfriend.

In his lawsuit, Pileggi asks for $240 million in recompense and blames his firing on the idea that Mercantile was about to be sold early this year.

Mercantile didn't get sold, and $240 million is a crazy number. Pileggi's shooting the moon.

But that's what Wall Street guys do.

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