Business • Executive slams Goldman Sachs as he quits: Environment ‘tox
Executive slams Goldman Sachs as he quits: Environment ‘toxic’
Globe and Mail Update
Published Wednesday, Mar. 14, 2012 7:53AM EDT
Executive slams Goldman
Oh, to be a fly on the wall today in the corner offices at Goldman Sachs Group Inc. (GS-N124.547.556.45%).
Greg Smith, who heads Goldman’s U.S. equity derivatives business in Europe, Africa and the Middle East, is resigning today after almost 12 years with the Wall Street Journal. He started as a summer intern, he says, and worked his way up to the position of executive director in London.
Mr. Smith chose to go out with a bang, and is the talk of Wall Street today with a scathing indictment of the firm on the Op-Ed pages of The New York Times. The link to his article is flying through cyberspace.
"I can honestly say that the environment now is as toxic and destructive as I have ever seen it," Mr. Smith writes.
"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. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for."
A company spokeswoman told me today that Goldman disagrees with Mr. Smith’s views, and that his comments don’t reflect the way the bank runs its business.
"In our view, we will only be successful if our clients are successful," she said in a statement that I assume is what Goldman is releasing to all reporters who ask. "This fundamental truth lies at the heart of how we conduct ourselves."
Mr. Smith discusses his career and how he mentored interns, advised big hedge funds and sovereign wealth funds, and amassed a client base with assets of more than $1-trillion (U.S.).
"I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work."
Mr. Smith laments the loss of Goldman’s teamwork, and its "spirit of humility and always doing right by our clients." The culture at the time was the "secret sauce" that made Goldman great.
"It makes me ill how callously people talk about ripping their clients off," he writes.
"Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail … 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 also recounts the proudest moments of his life, including his scholarship to Stanford, his slection as a Rhodes Scholar finalist, and his bronze medal at ping pong in the Maccabiah Games in Israel. He doesn’t say how much money he made in his dozen years at Goldman.
Statistics: Posted by yoda — Wed Mar 14, 2012 6:03 am
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