Tepper's `Do What's Right' Advice Drawn From Goldman Experience

(Bloomberg) -- David Tepper’s advice to graduating Carnegie Mellon University students to “do what’s right” stemmed from his own experience at Goldman Sachs Group Inc.

The billionaire hedge fund manager, who gave the keynote commencement address at his alma mater Sunday, relayed a story from his early days at the bank, when he had to "refuse a powerful partner’s request."

The partner, who had started a new fund to invest in bankrupt firms, also controlled the list of companies that Goldman couldn’t invest in because of a conflict of interest or due to sensitive information, recalled Tepper, wearing a black graduation gown, blue sash and cap with gold tassel. The partner had asked Tepper to make a trade, buying a company that the partner had removed from the restricted list that very day.

"It didn’t seem right. In fact I went to our legal department and told them what was going on," said Tepper, who worked at the bank from 1985 to 1992.

After much back and forth, the legal team said the trade would be okay, but it still didn’t feel right to Tepper, he said. So he refused again to make the trade. A spokesman for Goldman Sachs declined to comment Sunday.

"I didn’t get fired but when I came up for partner I got shot down and I was incredibly upset," he said under the sun at the university’s Gesling Stadium. "But you know what, you know what, it turned out all right. Because I didn’t end up as partner at Goldman Sachs, I started my own company in 1993 called Appaloosa, and ended up doing something that was a lot more fun and made my life better in so many ways."

This week Tepper, whose mother was in the audience as Carnegie Mellon awarded him an honorary doctorate degree, agreed to purchase the National Football League’s Carolina Panthers for a record $2.3 billion in an all-cash deal. His Appaloosa Management, which runs about $17 billion, is among the hedge fund industry’s top performers. Tepper has donated more than $125 million to CMU.

"In life, do what’s right. Really. Do what’s right. It won’t hurt you, just keep your priorities straight," he told the students.

But childhood wasn’t easy for the now-60-year-old hedge fund manager, who was raised in Stanton Heights, Pittsburgh. Tepper said his father was physically abusive. It may have been a cycle he got from his father, and his grandfather before him, Tepper recalled.

“In my young life there was nothing more terrifying,” he recalled, fighting back tears. “There was no greater adversity. But I prayed to God that I would never be the same to my children. And I am proud to say, in what I view as the greatest accomplishment of my life, that I broke that cycle.”

He took a gulp of water while the audience stood in applause.

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