A senior Goldman Sachs executive has attacked a “toxic” and “destructive” culture at the leading investment bank that is increasingly focused on making money from clients, in an article in the New York Times.
Sorry, but I have to wonder if this isn’t about saving his own neck. ~J
Former senior Goldman Sachs executive Greg Smith
12:25PM GMT 14 Mar 2012
The Telegraph, UK
Greg Smith, who is resigning today as a Goldman Sachs executive director and head of its US equity derivatives business in Europe, the Middle East and Africa after 12 years, wrote:
“I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”
In his article titled Why I Am Leaving Goldman Sachs he writes that over the past twelve months he had seen five different managing directors refer to their own clients as “muppets”, sometimes over internal e-mail.
“I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.”
Mr Smith said that the bank was “too integral to global finance to continue to act this way”.
When he joined the culture revolved around “teamwork, integrity, a spirit of humility, and doing right by our clients”, he writes.
“The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years … I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years.
“… These days, the most common question I get from junior analysts about derivatives is, ‘How much money did we make off the client?’ It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave.
“Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about ‘muppets’, ‘ripping eyeballs out’ and ‘getting paid’ doesn’t exactly turn into a model citizen.”
Mr Smith believes the decline in the firm’s moral fibre represents the single most serious threat to its long-run survival and see his article as a wake-up call to the board of directors.
Responding to the article, Goldman Sachs said:
“We disagree with the views expressed, which we don’t think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”
- “How much money did we make off the client?”: Goldman Sachs resignation letter blasting culture of “toxic” greed goes viral (mirror.co.uk)
- Op-Ed Contributor: Why I Am Leaving Goldman Sachs (nytimes.com)
- Goldman’s head of EMEA equity derivatives has left AND written a scathing article about the firm’s unscrupulousness (news.efinancialcareers.com)