Goldman Sachs Employee Quits Over “A Toxic Culture Of Greed.”
An executive at Goldman Sachs Group Inc. (NYSE: GS) attacked the Wall Street bank for a “toxic and destructive” culture in a scathing resignation letter published as an opinion article Wednesday in the New York Times.
Goldman, however, was quick to respond to the disgruntled executive. A spokesman at the firm confirmed for the Wall Street Journal that Smith resigned from Goldman on Wednesday morning, but added: “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.”
A person familiar with the matter told the Journal that Smith’s role is actually vice president, a relatively junior position held by thousands of Goldman employees worldwide. Also, the person said, Smith is the only employee in the derivatives business he headed.
In his essay, headlined “Why I Am Leaving Goldman Sachs,” Smith said he was disgusted at how the firm valued making money from clients over trying to help them.
“I can honestly say that the environment now is as toxic and destructive as I have ever seen it,” he wrote. “I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”
“The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for,” added Smith, whose client base at Goldman had total assets of more than $1 trillion.
“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 them. 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.
“I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. ”
Smith also described how he felt “ill” while listening to people openly trying to rip off their clients. At least five managing directors referred to their own clients as “muppets” at that meeting, he said.
Smith also criticized Goldman Chairman and Chief Executive Lloyd Blankfein and its president, Gary Cohn, saying the two executives “lost hold of the firm’s culture on their watch.”
Smith added: “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.” Source: JOSEPH BORIS for International Business Times.