Five Dumbest Things on Wall Street: Jan. 15
Is it us, or shouldn't the braniacs at Goldman Sachs (GS) know better by now than to send out emails that make them look like vampire squids?
A Goldman Sachs executive said the gold-standard investment bank profited by trading ahead of or against its own clients, according to the New York Times Wednesday. Thomas Mazarakis, who leads Goldman's fundamental strategies group, informed select clients in an email that his unit regularly offered investment ideas that the firm had already traded on. The Times also reported Mazarakis as saying that Goldman sometimes takes the other side of the trade, or betting against a particular financial product recommended by the investment bank.
"We may trade, and may have existing positions, based on trading ideas before we have discussed those trading ideas with you," the Times quoted Mazarakis as writing in the email.He should have just said, "Heads we win, tails you lose." It would have sounded better. And boy, the timing could not have been worse. Not only was Goldman CEO Lloyd Blankfein grilled about the banking crisis on Capitol Hill on Wednesday, but Goldman and the rest of Wall Street's biggest banks are currently being investigated by the Securities and Exchange Commission for bundling up and selling to clients dirty mortgage bombs while simultaneously betting they will blow up. Goldman spokesman Lucas van Praag told the Times that Goldman has been "providing this disclosure, which we think is best practice, for a number of years and there is nothing new in the disclosure you were sent." Curious thing how the "best practice" at Goldman so often means the perfect storm for everybody else. Dumb-o-meter score: 90 -- Is Goldman losing its golden touch?
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