This is a first. Usually, when someone leaves Goldman Sachs – or any bank – they sign a compromise agreement ensuring their silence upon pain of forfeiting their stock.
Not Greg Smith, former head of US EMEA equity derivatives at Goldman in London.
Smith has written a long article, just published on the New York Times’ website, titled ‘Why I am Leaving Goldman Sachs.’
It seems sure to become a hit and is the first PR failing for the firm in the post Lucas Van Praag world.
Smith, a South African, joined Goldman 12 years ago. During his time, he recruited and mentored graduates and is one of 10 people to appear on the firm’s student recruiting video (which may now need to be redone).
Toxic, destructive, callous and ‘ripping out eyeballs’
He describes the environment at Goldman as, “toxic and destructive,” and says the interests of the client are being sidelined in the interest of making money for the firm. It’s all become about encouraging clients to, “trade whatever will bring the biggest profit to Goldman.” Goldman staff are callously ripping clients off, he alleges, “it’s purely about how we can make the most possible money off of them.” And senior managers have been referring to clients as ‘muppets’ in emails and referring to “ripping eyeballs out.”
It wasn’t always like this. When he joined as a summer intern back in 2000, Greg says Goldman was a place of: “teamwork, integrity, a spirit of humility, and always doing right by our clients.” Lloyd Blankfein and Gary Cohn are behind the subsequent moral dissolution, he suggests.
Will this hasten Blankfein’s exit? Maybe, although he will apparently be replaced by Cohn, so the culture alleged by Greg seems unlikely to change much.
And what will Greg do next? Is this his parting shot from the industry, in which case he won’t care about the notoriety that will undoubtedly result from this. Or does he intend to resurface elsewhere (in which case he may have had all his stock bought out)? According to the FSA register, he’s only been registered in London for a year. It has been pointed out that Greg may be peeved that, having spent 12 years at Goldman, he still hadn’t been made MD.