Goldman’s Eccentric Couch-Surfing Trader Plans a Credit Fund
by Sridhar Natarajan- Ali Meli plans fundraising a year after departing Goldman
- His legend includes a $10 million paycheck as junior banker
Not many Goldman Sachs partners seek out citizenship in a tiny Caribbean island to speed through airports. Ali Meli wasn’t your typical Goldman partner.
Couch-surfing inside the investment bank, an almost $10 million paycheck as a junior trader and clashing with peers are all parts of the legend of Meli, described by colleagues as an unlikely figure in Wall Street’s most elite club: Abrasive but brilliant, subversive but successful, and above all one of its most “eccentric” figures.
Now, after exiting the investment bank last year, Meli is setting up his own venture in some of the most treacherous markets in generations. The 38-year-old plans to recreate a model of doing business that he learned in an especially profitable part of Goldman’s trading division, putting together complex financing deals.
“Everything about Ali was unusual but he was one of the most incredible people we’ve ever hired,” said Ram Sundaram, who brought Meli into his team, which went on to become the Principal Funding & Investments group. “He could think through all aspects of a deal to a degree that was abnormal. He was in a league of his own.”
Meli is now seeking the backing of many of his former mentors as he looks to raise money for a structured credit fund, ramping up at a time of severe economic disruption.
As companies seek out capital amid market distress, Meli hopes he finds himself in the center of transactions, borrowing a playbook from his Goldman days.
Passport Shopping
Born in the shadow of the Iran revolution, Meli’s earliest memories of Tehran, where he spent 20 years, was the conflict with Iraq, as his family shuttled between houses to shield themselves.
“To some extent it was awesome -- the night lights up,” Meli said of the artillery and warplanes that thundered over the city. “When you’re a kid and you see these things, you don’t feel fear. It feels like a movie and it’s so cool. You don’t have the right context.”
Meli’s ticket to escape the mandatory deployment in Iran’s army was a world physics competition. He later left the country altogether on a scholarship to the Massachusetts Institute of Technology.
After a delay in his security clearance, Meli landed in Boston on Sept. 10, 2001. Terrorists attacked the U.S. early the next morning, prompting unprecedented scrutiny of recent arrivals from the Middle East. Meli soon had to submit to a government registry tracking his movements. But it didn’t end there.
Every time he flew, the Iranian emigre was singled out for more rigorous checks. Even years later, while jet-setting with Goldman bankers to set up billion-dollar trades, the airport ordeals continued. So he solved it in a way only the wealthy would -- he went passport shopping.
Meli settled on St. Kitts and Nevis, a haven for the rich where a property investment can buy citizenship outright. When Goldman published its full list of partners last year, he was the sole member of the group professing ties to the island nation.
Ali Meli’s name is itself a bureaucratic mishap. Someone in the Social Security office misspelled the fairly common Iranian name “Melli.” He chose to live on with the new identity, not wanting to get into any paperwork battle that could jeopardize his status in the U.S.
Harvey’s Office
For Meli, the worry of being sent back to Iran was paramount. His response was insane work hours.
During his early days at Goldman, after other traders went home, Meli would sneak into one of the plush partner offices to sleep. He often found refuge on the office couch belonging to Harvey Schwartz, then a senior deputy to trading co-head Gary Cohn. Both men nearly went on to become the bank’s CEO.
Meli’s justification: “Harvey had an open-door policy.”
“I was worried about losing my job because it would have meant deportation to Iran,” Meli said. “I didn’t want to risk that. But I wasn’t stupid -- I never slept on Gary’s couch.” Cohn, known for his hard-charging ways, eventually joined President Donald Trump’s White House.
Word of Meli’s antics started making the rounds soon after his arrival.
The reception he got on the trading floor in the mid-2000s wouldn’t fly today. He was branded “Smelly Ali” -- a riff on his name, Ali S Meli -- and “Chemical Ali” -- after Saddam Hussein’s trusted adviser accused of gassing Kurds and executed in 2010. Meli said he reveled in the attention.
“I had a few nicknames and I enjoyed it,” he said.
There were also awkward moments. At one point he copied lyrics from a love ballad into a performance review of his manager, to express adoration. He was promptly told off.
Yet Meli charted quick success, becoming a pillar of Sundaram’s group. Known as PFI, it had latitude to use Goldman’s own money to take on positions that wouldn’t be easy to quickly offload. Some of its big-ticket financings around the 2008 credit crisis generated massive gains for Goldman even as the rest of Wall Street struggled.
Insulated from the rest of the trading division, PFI’s stature grew as it tackled outsize risks and generated eye-popping returns.
Meli just happened to be its quirkiest and most outspoken member, unafraid of challenging colleagues’ views. Some senior partners came to rate others based on how they fared in confrontations with him.
$10 Million Payday
Just a few years into his banking career, Meli was already eyeing big risks. He encouraged his team to pile on short positions as the housing market headed into the 2008 credit crisis.
“Bottom line: housing is in free fall,” he wrote in an email in August 2006 after poring through reports. Sundaram’s crew ramped up wagers against asset-backed indexes and bond-insurance companies. Meli said he framed a printed copy of that email after the hedges paid off for Goldman.
Meli also had a hand in another incident that reverberated across financial markets. He helped his team come up with the valuation for marking down positions in its swaps transaction with AIG, which forced the insurer to put up more cash as others followed suit. AIG insisted for years that Goldman’s aggressive move was what led to its failure.
“It’s one of those things you wish you weren’t right,” Meli said. “But what caused the marks to go down was not because we put the marks down, but a real housing recession had started to hit.”
Some of the most profitable transactions were trades Goldman designed with the likes of CIT Group and European banks. That helped Meli score his giant paycheck for 2009. But as his success mounted, so did his skirmishes. Often passionate, he wouldn’t hold back in disagreements over transactions -- incidents that sometimes left more-senior colleagues red-faced.
“He was unusually bright and eccentric,” said Joe McNeila, a former colleague in the PFI group. “It was a business of natural conflict. He could be very formidable and he was a tough guy to go up against.”
Meli was one of the youngest people in Goldman’s class of new partners in 2014, but looking back, he figures that his combativeness probably slowed him down.
“There was a period when I would get into these arguments sometimes with people more senior than me,” he said. “I was told I needed to learn to be more humble, and it was a valuable lesson.”
Days after he was named partner, he bought his first car: a second-hand Mercedes.
Over the years, people familiar with the situation said, his bosses fielded grievances that ranged from the ordinary to the bizarre.
For a stretch of time, Meli tried commuting daily from Toronto to New York, raising concerns among colleagues about his manic schedule. He launched a crusade to support higher pay for junior bankers, which raised hackles. He proposed transactions that, while legal, were so novel or aggressive that bosses would sometimes squirm, worried about the optics.
His political views on government overreach and the impact of regulation on daily life also made some colleagues uncomfortable.
He jumped on the Trump train before many on Wall Street. And since becoming a permanent resident in 2018, he’s become a prolific political operative, dispensing more than a quarter million dollars to mostly conservative and libertarian candidates.
Meli gave up butting heads at Goldman and officially exited the bank last year.
This year, markets are presenting a once-in-a-century opportunity for brave credit traders. Meli’s firm has already announced a transaction, a credit line to a fintech company in Colombia. He’s named his new venture Monachil Capital Partners after a Spanish village that traces its name to the word monastery -- to try to denote inner calm, he said.
— With assistance by Shahien Nasiripour
(Updates with detail on investment in final paragraph.)