Goldman Sachs Brain Drain Reaches the Top

NEW YORK ( TheStreet) - Goldman Sachs ( GS) is parting company with two of the global co-heads of its securities division, in what may be the latest sign that Wall Street has lost its allure.

The departing co-heads, David Heller and Edward Eisler, have a combined 40 years of experience at Goldman, according to memos announcing the retirements that were signed by Goldman CEO and Chairman Lloyd Blankfein and President Gary Cohn.
Goldman Sachs CEO and Chairman Lloyd Blankfein

Staying on as co-heads of the division are Harvey Schwartz and Pablo Salame. They are joined by Isabelle Ealet, who was promoted on Wednesday in a separate memo.

Heller "was deeply involved in the restructuring of our equities business in 2003 and 2004, which laid the groundwork for its sustained outperformance in recent years," states one of the memos.

Eisler "played a leading role in developing and implementing many important aspects of the firm's global strategy. He contributed to the success of some of our most important and innovative transactions. In addition to his commercial contributions, Edward has hired, developed and mentored many of the firm's senior leaders," reads the other.

The departures were first reported by Bloomberg News, while Ealet's promotion was reported by Reuters.

Goldman has lost many top executives in the wake of the crisis. The company was initially celebrated for skating through the crisis virtually unharmed by market gyrations that caused billions in losses for competitors like Morgan Stanley ( MS) and Citigroup ( C), while driving others out of business entirely.

But Goldman soon became the object of much public scorn, as details emerged about the extent to which it relied on government support to ensure its success. Meanwhile, Goldman executives insisted for far too long that their success owed little if anything to the government.

In the wake of that criticism, new rules are being worked out that look to put a serious dent in the profitability of Goldman and other securities firms. Goldman shares are down more than 40% over the past year and trade below book value, a level once viewed as absurdly cheap for even a mid-tier investment bank, much less an industry leader such as Goldman.

Commentary in the press about the secretive firm has argued that trading-oriented executives like Cohn and Blankfein, who came up through Goldman's commodities division, are not as well-attuned to clients and the public at large as the investment bankers who used to run the institution. An internal examination of the company last year produced some organization changes aimed at addressed those issues. But Goldman's public image remains poor.

"It's kind of a universal understanding that Goldman, along with the rest of the investment banking industry has lost a lot of its stature and prestige," says Rik Kopelan, executive recruiter with the Capstone Partnership. "All the bad publicity of the past couple years has added fuel to that fire and Lloyd Blankfein is not held in very high regard."

Kopelan cites a recent survey conducted by Capstone showing that business school graduates now look to investment banking as a place to enter the business world rather than as a place to spend an entire career, a role traditionally ascribed to accounting or consulting firms.

"It's become a starter kit," Kopelan says, adding that "the caliber of work has declined, the rewards have declined, but not the hours."

There has been much speculation about whether Blankfein will be able or willing to hang on to the top job at Goldman. Shareholder proposals requesting that the Chairman and CEO positions be held by separate people have been voted down by wide margins, though top Goldman executives own many of the shares.

A Goldman Sachs spokesman confirmed the contents of the memos, but declined further comment.

-- Written by Dan Freed in New York. Follow this writer on Twitter.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Stocks

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament

Facebook CEO Mark Zuckerberg Deflects Tough Questions From European Parliament