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Goldman Executive Exposes "Toxic" Culture in Scathing Editorial

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Shares of Goldman Sachs (NYSE:GS) closed down 3.4% yesterday after a now former executive published a scathingly expository editorial in the New York Times. The London-based executive, Greg Smith, headed the firm’s United States equity derivatives department in EMEA and had been with the firm for 12 years, beginning as a summer intern.

Smith asserted that Chief Executive Lloyd Blankfein and President Gary Cohn had created a “toxic and destructive” culture in recent years whereby the firm’s profits come first, and the client comes second. He went on to describe several instances whereby senior managers referred to clients as “muppets,” and a sales culture that regularly misleads clients into purchasing complicated and opaque assets in order to turn a quick profit.

Criticism of Goldman Sachs and Wall Street as a whole is certainly nothing new, especially since the Financial Crisis. The Rolling Stone published an article in July 2009 likening Goldman to a “great Vampire squid,” the SEC investigated the firm for fraud in April 2010, and most recently, the Occupy movement put a public face to widespread discontent towards the finance industry.  However, that the latest clamor came from within surprised many in a notoriously tight-lipped industry. “He’s toast. He’s completely toast in terms of Wall Street. There’s no question about that,” said Bill Cohan, a former investment banker and author of a book on Goldman Sachs, referring to Smith’s future prospects in finance.

Since the attack yesterday, Goldman has been in damage control mode, first issuing a company-wide memo from Blankfein and Cohn, then publishing it on its website shortly thereafter. In the note, Blankfein and Cohn stressed that 89% of the firm’s clients had rated its service as exceptional, while reminding employees and clients that Smith’s assertions did not reflect its value or culture.

Industry Comments

  • The article was devastating to me. I don’t want to believe it. But it was a bitter pill, and a sad one.” – Jim Cramer, host of CNBC’s “Mad Money” and former Goldman employee.
  • It does hurt them. The perception of the firm has certainly gone down, and a lot of the winners of tomorrow are sitting back and thinking, ‘Do I want to be with Goldman?’” – Stephane Rambosson, managing partner at Veni Partners and former Citigroup banker.
  • The argument that Goldman has become increasingly profit- driven, sometimes at the expense of clients’ best interests, and that some employees use vulgar and disrespectful language, is hardly news. What’s the next ‘shocking’ headline: ‘Prostitution in Vegas!?’” – Whitney Tilson, founder of hedge fund T2 Partners LLC

Company Spotlight

Goldman Sachs is a leading global investment banking, securities, and investment management firm. Founded in 1869, the firm is headquartered in New York and maintains offices in financial centres throughout the world.



  1. ↑ Company History
  2. ↑ BBC News
  3.  Goldman Sachs’ Response to NYT Op-Ed
  4.  New York Times Dealbook

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