Goldman Sachs Exec: 'People Talk About Ripping Their Clients Off'
Greg Smith, an executive director at Goldman Sachs, is resigning today after 12 years at the firm. He has a scathing op-ed in this morning's NYT, running under the headline "Why I Am Leaving Goldman Sachs":
I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. ...
The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. ...
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. ...
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as "muppets," sometimes over internal e-mail.
Read the whole thing here.
The NYT took the unusual step of running a news story about its own op-ed. It includes Goldman's rebuttal:
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.
The op-ed has already spawned at least one parody: Why I Am Leaving The Empire, by Darth Vader.
Leadership used to be about ideas, setting an example and killing your former mentor with a light sabre. Today, if you make enough money you will be promoted into a position of influence, even if you have a disturbing lack of faith.
The WSJ's Deal Journal suggests Smith may have described his role at Goldman in inflated terms:
Mr. Smith described himself as an executive director and head of Goldman's U.S. equity derivatives business in Europe, the Middle East and Africa.
A person familiar with the matter said Mr. Smith's role is actually vice president, a relatively junior position held by thousands of Goldman employees around the world. And Mr. Smith is the only employee in the derivatives business that he heads, this person said.
Via Bloomberg, here's an excerpt from a memo Goldman's CEO and COO sent to company employees today, in response to the op-ed:
And, what do our people think about how we interact with our clients? Across the firm at all levels, 89 percent of you said that that the firm provides exceptional service to them. For the group of nearly 12,000 vice presidents, of which the author of today's commentary was, that number was similarly high. ...
We are far from perfect, but where the firm has seen a problem, we've responded to it seriously and substantively. And we have demonstrated that fact.
It is unfortunate that all of you who worked so hard through a difficult environment over the last few years now have to respond to this. But, our response is best demonstrated in how we really work with and help our clients through our commitment to their long-term interests. That priority has distinguished us in the past, through the financial crisis and today.
Read the full memo.