Updated with quote from Goldman Sachs's memo to employees.
The investment bank has been often accused of routinely acting against its clients' interest, which it has vehemently denied.
But on Wednesday, the bank came under attack from an unexpected source. In a New York Times op-ed, Greg Smith, an executive director at Goldman Sachs and head of the firm's United States equity derivatives business in Europe, Middle East and Africa, tendered his resignation, citing a "toxic and destructive" culture of putting money first before clients.Smith, who says he worked for the firm for 12 years ever since he was accepted as a summer intern while at Stanford, said "the firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for," said in what appears to have been a "Jerry Macguire" moment. He accused CEO Lloyd Blankfein and President Gary Cohn for the "decline in the moral fiber" of the company. Goldman had become a place where leaders were chosen based on how their ability to persuade clients to invest in products the firm was trying to get rid of, or products that just brought the maximum profit to the bank or trading some "illiquid, opaque product with a three-letter acronym." Directors referred to clients as "muppets" and meetings focused on making money off clients. "You don't have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about "muppets," "ripping eyeballs out" and "getting paid" doesn't exactly turn into a model citizen," he wrote. "We disagree with the views expressed, which we don't think reflect the way we run our business," said Michael DuVally, 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."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV