Odds-on there’s a hurricane brewing at 133 Fleet Street right now. Goldman Sachs ’ the house of secrets which typically palms off any press interest ’ is subject to a violent attack in today’s New York Times.
Odds-on there’s a hurricane brewing at 133 Fleet Street right now. Goldman Sachs – the house of secrets which typically palms off any press interest – is subject to a violent attack in today’s New York Times.
A leaving employee – Greg Smith, the head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa – has decided after 11 years at the firm that rather than walking out the door quietly, he’d slam it in his bosses’ faces.
‘I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity,’ he writes. ‘And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
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‘To put the problem in the simplest terms,’ he continues, ‘the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.’
Pungent headlines, and highly damaging for Goldman which – like royalty – relies on mystique for continued success.
Yet the devil is in the detail. Across the op-ed page, Smith forensically examines the culture. ‘What are three quick ways to become a leader?,’ he asks. ‘A) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. B) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. C) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.’
Ouch. Often today’s news is tomorrow’s rubbish but one senses that this will stick.
‘I hope this can be a wake-up call to the board of directors,’ Smith concludes. ‘Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.’
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