Goldman's Luster May Be Fading

"The idea that Goldman is somehow different doesn't work for me," said Tim Ghriskey, president of Ghriskey Capital. "Clearly they were involved in this as much as anybody."

Goldman's Mystique

Up until it became a public entity in 1999 -- after a rancorous internal debate among the rarefied ranks of Goldman partners -- much of the firm's dirty laundry was kept secret. Its role as lone "partnership" among publicly traded rivals added to the mystique around Goldman. With the company's flaws and inadequacies now in the public domain, along with its aggressive role in the Internet IPO boom, that mystique appears to be fading.

In recent months, Goldman had made an effort to distance itself from allegations of wrongdoing. Back in June, CEO Henry Paulson made a speech in which he called for reform within the financial system to restore public confidence in business principles and practices.

"Integrity is the cornerstone, if not the bedrock, upon which all financial markets are based. I am confident we can move beyond finger-pointing, to attain real progress on meaningful reform," he said.

Goldman also has claimed that because it caters to high net-worth individuals, not retail investors, it was never guilty of hurting the little guy during the Internet craze of the late 1990s. At the same time, however, the firm has appeased lawmakers by saying it would create a research ombudsman and a committee to review analyst compensation. It also simplified its stock-rating system.

All That's Goldman Does Not Glitter In the late-1990s, Goldman was one of the most-active underwriters in the Internet IPO market. Its imprimatur on an offering had cachet. Here's a look at some of its offerings
Company IPO Date	Offering Price	Opening Day Percentage Gain and Closing Price	Current Status
eToys May 1999	$20	$76.5625 283% gain	Went bankrupt in early 2001.
WebVan November 1999	15	$24.875 66% gain	Went bankrupt in 2001
iVillage March 1999	24	$80.125 233% gains	Trades at 60 cents a share.
Inktomi June 1998	18	$36 100% gain.	Trades at 27 cents a share
EBay September 1998	18	$47.375 163% gain	Trades at $52 a share. Factoring in stock splits, shares are up 606% since IPO.
TheStreet.com May 1999	19	$60 216% gain	Trades at $2.10 a share.
Source: Yahoo Finance.

Goldman helped underwrite dozens of Internet IPOs during the height of the bubble, many of which subsequently fell to pennies a share. Along with Morgan Stanley, Goldman executed the most Internet deals at the height of the Web IPO boom in 1998 and early 1999, according to CommScan. Meanwhile, the firm reaped hundreds of millions of dollars in fees.

Despite its protestations to the contrary, some argue that individual investors were seriously hurt by the firm's unscrupulous investment banking practices. A survey by analyst tracker Investars in May showed that average investors who followed the recommendations of Goldman's analysts would have lost 85% of their initial investment over the past year.