Goldman 'Clients': Only Some Are Muppets

NEW YORK (TheStreet) --For Wall Street haters like French presidential favorite Francois Hollande, The Wall Street Journal's report that Goldman Sachs (GS) investment banker Matthew Korenberg is under investigation for potentially passing along inside information to now-notorious hedge fund Galleon Group is unsurprising and uncomplicated: evil Wall Street is up to no good once again.

For those of us who like to complicate matters, however, there would appear to be a contradiction between the story line involving Korenberg and the one offered up in The New York Times last month by Goldman exec-turned-stool pigeon Greg Smith.

Goldman CEO Lloyd Blankfein, thinking evil thoughts as usual.

Smith, for those who have spent the past six weeks living on another planet, informed us via a resignation letter disguised as as op-ed that during the past 12 months he has "seen five different managing directors refer to their own clients as 'muppets,' sometimes over internal e-mail."

So here we have managing director Korenberg risking jail time to help out a client, and other managing directors treating them like dirt. Which is it?

Well, as University of San Diego professor so eloquently explained in the wake of l'affaire Smith, it's both, since "the word 'client' has become Orwellian doublespeak. Goldman's leaders talk uniformly about the importance of serving clients, but the firm's salespeople know who is a client and who is a mere a counterparty."

Galleon was a real client. The 'muppets' Smith's managing directors were e-mailing each other about were fake clients or, as Partnoy put it, "fellow gamblers around a poker table. Goldman will ensure that the rules of the game are accurately described - the financial equivalent of checking to be sure there are 52 cards in the deck. But it is not obliged to act in a disadvantaged counterparty's best interests, any more than a savvy poker player is obliged to show a poor player his good cards."

Still, if you want to keep space in your brain for other matters, it is okay to ignore these subtleties. When in doubt, it is generally safe to assume Goldman is up to no good.

-- Written by Dan Freed in New York.

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