10:27 AM
Goldman Trader: So Long, Jerks!
If I were the head of corporate communications at Goldman Sachs I would take a personal day today.
Like Tom Cruise's self-righteous and showy exit from his cutthroat sports agency in Jerry Maguire, today's New York Times publishes an op-ed from a Goldman Sachs trader who tells off his bosses. In 1,300 words he unloads about how much damage his former supervisors have done to the culture of the firm and how he cannot stand it any longer. It's a beaut.
In his last day as executive director and head of the firm's United States equity derivatives business in Europe, the Middle East and Africa, Greg Smith opens the kimono to reveal an investment behemoth that is violating its reputation, no longer cares about the client, and is willing to push investment ideas that are not in the client's interest.
It's a juicy read and will be memorized by the legions of Goldman Sachs haters - you know who you are - for years to come. Even if you're familiar with Goldman's winner take all attitude, it's bracing.
Here's just one killer quote:
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. Even after the S.E.C., Fabulous Fab, Abacus, God's work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don't know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client's goals? Absolutely. Every day, in fact.
(As New York Magazine points out, 'Muppets' is Brit-speak for fools or idiots, not Elmo.)
Will this change the way Goldman Sachs does business? I doubt it. While Goldmans is notorious about shunning the press - mobsters give more interviews - they might start a whisper campaign about Mr. Smith and release a few quotes stating that they are only doing what their clients want. The only way the vaunted firm would change its practices would be if clients wised up and took their business to Morgan Stanley or JP Morgan. Sadly, some clients not only enjoy swimming with the sharks, they often seek them out.
Thanks to Greg Smith we now know to swim at our own risk.
Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio