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Goldman’s Greg Smith Skewers Firm, Airs Dirty Laundry

Posted by Larry Doyle on March 14, 2012 8:25 AM |

Thanks to a regular reader for sharing a New York Times editorial which will captivate Wall Street today.

Our friends at FINRA who may be faced with real backlash from the news spreading of their losing 8 hours of testimony in an arbitration case might want to buy lunch and dinner for Goldman Sachs’ senior executive Greg Smith.

Perhaps I should say former senior executive Greg Smith as he admits that today will be his last day at the firm. What else does Mr. Smith have to say? A LOT and if you see smoke rising off the top of 200 West Street today it is likely the steam rising from the heads of Lloyd Blankfein, Gary Cohn, and the other chiefs at Wall Street’s dominant firm. 

Goldman is likely already on the horn to its PR firm in light of Smith’s expose about the firm. He launches these bombshells about life inside Goldman amongst others:

I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

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.

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.

I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

How did we get here? 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.

It makes me ill how callously people talk about ripping their clients off.

I am not overly surprised to see a commentary of this sort. When business declines (see my commentary, Trading Volumes Plummet, “People Choose Not to Play”), the knives come out and the environment becomes lethal. Is Mr. Smith a disgruntled junior malcontent? Not exactly. He was only the…..

…..executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.

Hopefully these appetizers will compel you to consume the entire commentary in today’s New York Times entitled, Why I Am Leaving Goldman Sachs.

Would you be in a hurry to do biz with the crowd at Goldman after reading this? Might Mr. Smith have liability for speaking so openly about the firm?

Thank you again to the reader who brought this story to my attention.

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

Larry Doyle

  • Peter S.

    I liked these gems as well

    “If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.”

    “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.”

  • David

    I think it’s something we’ve all known, but Smith puts it very eloquently. Great comment on what’s wrong with America in general, and actually a little hopeful in that he would actually do something about it.

  • DJ Cummings

    Having worked for 2 of the major banks, we all know this has been happening for quite some time. It’s refreshing to see a SENIOR insider admit this, as opposed to a 27 year old associate or a reporter who are easily dismissed. What will change? Absolutely nothing probably. Maybe we’ll go back to the “old” days(the 80’s ha!!) of their being more than 5 major banks, the pre-merger days when there was many places to work, lots of different shops and downtown was still busy. This would certainly be better for the clients -both institutions and retail (and the job market!) Time will tell.

  • John

    Mr Smith better have a great team of lawyers.

    OMG is that guy gonna have a bullseye on his back. The Evil Empire gonna go after him now. All for telling the truth

    • Peter S.

      Truth-telling is not for the faint of heart.

  • Obsvr-1

    awesome – maybe there is hope after all for a return of ethics and morality (well, at least we can wish and dream).

    Now for Mr. Smith to go to Hollywood to make an expose movie.

  • chris

    It’s the Jerry Maquire memo!

  • steve

    Good to see a top exec withe courage to say it the way its is!
    So damn obvious!

    Steal a grand from a liquor store go to jail….steal billions and they get an atta boy!!!

  • Peter Sivere

    BRILLIANT – What many believe but are too scared to admit. Money will keep many people quiet. As bonuses start to decrease, we will see what TOOLS will tow the line for these overpaid, disinterested executives to both client and shareholder alike. Let the revolt begin…..

  • stan

    this is nothing. What about pacholder high yield fund auction rate preferred securities which is managed and part of JP MORGAN ASSET MANAGEMENT . These ars I OWN AND have been frozen for four years. MY ENTIRE LIFE HAS BEEN PUT IN THIS ROACH MOTEL YET JP MORGAN CHASE HAS THE BALLS TO ANNOUNCE A 15 BILLION DOLLAR BUYBACK OF ITS STOCK AND AN INCREASE OF THEIR DIVIDEND.THERE ARE $45 million of pacholder ars frozen, peanuts yet I remain justice.Jaime Diamond has no conscience.Wallstreet is ruthless. JP morgan has no ethics. they are true thieves

  • I can only hope the main stream media will finally investigate and report about the new movie that has the Goldman Sachs evidence. The documentary shows how Goldman Sachs sold FAKE stock into pension funds. The movie is let me repeat that again. ” Goldman Sachs sold FAKE stock into the pension funds and stock market. All clearly explained in the new documentary called ” The Wall Street Conspiracy ”


  • Peter Sivere
  • Bill

    Rather like Murder, Inc. got into the investment business.

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