Steve Kohlhagen, a former University of California, Berkeley professor who built the fixed income derivatives business at Wachovia Securities, is ending his decade-long stint as head of all fixed income sales and trading for derivatives and cash at the Charlotte, N.C.-based firm. Kohlhagen, 54, said he will be leaving Wachovia in August to pursue a career writing mystery novels with his wife, Gale. "I spent 10 years at Berkeley and 10 on Wall Street: it's time to move on," he said. However, he has agreed to stay on board through the last half of 2002 to continue overseeing risk management for the fourth largest financial holding company in the U.S. and help it to find a successor for his position. "We've already started searching for a successor to head the division in Charlotte," Kohlhagen said.
Known throughout the derivatives market as the co-author of Garman-Kohlhagen: Currency Option Model, which he crafted during his tenure at Berkeley and is the model used by traders to agree on option premiums, Kohlhagen joined First Union in 1992, prior to its merger with Wachovia. "The model is the industry standard that everyone uses," said one options trader in New York.
Marc James, head of fixed income and credit derivatives at Commerzbank Securities in New York, said Kohlhagen has done an excellent job establishing the derivatives business at First Union and now Wachovia. He said the firm has a dominant middle market business.
Barnes Hauptfuhrer, co-head of the corporate and investment banking group at Wachovia, said, "Steven has been a terrific leader of our fixed income operation. It's been a professional pleasure working with him." Kohlhagen reported to Hauptfuhrer.
Kohlhagen oversaw fixed income cash and derivatives as well as equity derivatives, foreign exchange and convertibles. His time at the firm followed stints in the derivatives operations at Lehman Brothers and Bankers Trust.