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TheStreet Open House

Goldman's Armor Shows Some Cracks

NEW YORK ( TheStreet) -- Goldman Sachs' (GS - Get Report) shares have mostly been immune to the negative press coverage of the past year, but a recent story from Vanity Fair writer Bethany McLean may have done a little damage.

The stock was one of the hardest hit in a tough day for financial stocks Tuesday, the first trading day after McLean's article went live on the Vanity Fair site. Goldman's stock fell $2.03, or 1.20%, on volume of nearly 13.5 million shares, well above the trailing three-month daily average volume of 9.7 million shares.

Morgan Stanley (MS - Get Report), Citigroup (C - Get Report), JPMorgan Chase (JPM - Get Report) and Wells Fargo (WFC - Get Report) were among the big financial names that traded lower Tuesday, but JPMorgan was the only one of those that saw higher-than-average volume. American Express (AXP - Get Report)'s stock took a slightly bigger hit than Goldman's, but on lower-than-average volumes.

McLean's article was notable because it includes stinging attacks from former senior Goldman executives, including "someone close to" John Thornton, a former chief operating officer at Goldman who, according to the article, was an "heir-apparent" to former Goldman boss Hank Paulson. The Vanity Fair article says Thornton was "discomfited by what he felt was a change at Goldman: a newfound obsession with making money first and foremost."

Thornton could not be reached for comment, and Lucas van Praag, Goldman Sachs' head of PR, responded with a one-word "no" when asked via e-mail if the Vanity Fair story was responsible for the selloff. Van Praag did not respond to a follow-up email asking what he thought was responsible.

Thornton's comments, or those of the person "close to" him, may seem minor to the legions of Goldman haters on the Internet, but they are a big deal. Goldman has done a formidable job of maintaining loyalty among former executives, and the suggestion that Thornton, and others who aren't named, are breaking ranks may encourage others to do the same.

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