Greg Smith, a 12 year veteran of Goldman Sachs who held the rank of executive director until today, has tendered his resignation and penned a NYT op-ed explaining his disillusionment with the firm. Smith describes a "toxic," "destructive" company that puts its own bottom line ahead of its customers' best interests, the result of a "decline in the firm's moral fiber" under CEO Lloyd C. Blankfein and president Gary D. Cohn. In modern Goldman Sachs, customers are described internally as "muppets," and are pushed to trade in complex products that make big commissions for Goldman, even when they earn less for the clients compared to simpler products.
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.
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
Why I Am Leaving Goldman Sachs
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