Exiting Goldman Sachs exec blasts firm’s ‘toxic,’ greedy culture

Until now, the most scathing words ever written about Goldman Sachs Group Inc. came from Matt Taibbi, the Rolling Stone reporter who famously labeled the Wall Street giant a “vampire squid.”

A new piece by Greg Smith avoids such oratorical bombast, but the accusations he levels at Goldman are just as damning. And Smith’s screed may have deeper import given where he worked until Wednesday.

As a top executive at Goldman Sachs.

In an op-ed piece in the New York Times, Smith, the head of the firm’s U.S. equity derivatives business in Europe and the Middle East, alleges that the firm has lost its moral compass. He decries a corporate ethos that he says “is as toxic and destructive as I have ever seen it.”

The reason, he writes, is that Goldman has become so single-mindedly focused on making money that it routinely sacrifices the best interest of its clients. Goldman and the rest of Wall Street exist, of course, to turn as large a profit as possible. But years ago that was done by helping customers – recommending, for example, the best potential investments.

Now, however, the firm lines its pockets at their expense, Smith alleges. It pushes clients to “trade whatever will bring the biggest profit to Goldman.”


Even by today’s standards, such bare-knuckle greed is considered verboten.

“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 of them,” Smith writes.

“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 in internal e-mails, he writes.

Smith adds: “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.”

The bad behavior will eventually damage the firm, as the greed becomes even more craven and clients eventually figure out that they’re being played, Smith says.

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

Smith won’t be able to witness the repercussions inside Goldman. His piece is headlined “Why I Am Leaving Goldman Sachs” and it ends by saying he is resigning Wednesday.


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