Greg Smith, a Goldman Sachs executive director responsible for the U.S./Americas equity derivatives business in Europe, has resigned from the Wall Street titan. Smith, who published an op-ed piece, harshly criticized his former employer.
Goldman Sachs receives a lot of bad press. On top of its criticisms from Occupy Wall Street, former Louisiana Governor and 2012 presidential candidate Buddy Roemer and Austrian Economists, a former employee, who resigned from the firm, published an op-ed piece in the New York Times where he lambasted the investment bank, which he says is “toxic” and “destructive.”
The scathing piece, which was published Wednesday, takes a look at the inside culture of Goldman Sachs through the eyes of Greg Smith, a former executive in charge of overseeing equity derivatives. He joined the company 12 years ago when it focused on integrity and “always doing right by our clients,” which was the “secret sauce” to the company’s success.
Smith called the environment at Goldman Sachs as “toxic” and “destructive” and said the company is “ripping off its clients.” Not only are they allegedly conducting such behaviour to its clients, Smith also accused the company of calling its clients “muppets.”
“I have seen five different managing directors refer to their own clients as 'muppets,' sometimes over internal e-mail,” wrote Smith.
He blamed this type of culture on the corporation’s high-level executives, including Gary D. Cohn, Goldman Sachs president, and Lloyd C. Blankfein, its CEO. Smith believes “the interests of the client continue to be sidelined,” which he noted makes him quite “ill.”
“I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival. 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,” wrote Smith.
“Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons.”
Hours after the piece was published, Facebook and Twitter lit up with remarks about the article and Goldman Sachs. There was also criticism of the mainstream media not reporting about Smith’s New York Times piece.
Goldman Sachs Responds
Following the article’s publishing, Goldman Sachs issued a brief statement to the press, in which it took issue with Smith’s piece.
“We disagree with the views expressed, which we don’t think reflect the way we run our business,” said a spokesperson for Goldman Sachs. “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.”
Blankfein also wrote a letter to the firm’s worldwide clients. The Goldman Sachs CEO apologized to its clients for permitting Smith to work at the firm and assured its clients that “one good apple won’t spoil the bunch.”
Speaking in jest, Blankfein said the firm has found Smith’s replacement and will be the new executive director and head of the United States equity derivatives business in Europe, the Middle East and Africa: Joseph Kony.
“For those unfamiliar with Mr. Kony’s resume, let me assure you that he has the character and moral standards you have come to expect from Goldman, and like the rest of us here at the bank, he has dedicated his life to doing the Lord’s work,” concluded Blankfein.