Goldman Sachs lost $2,2 billion of its market value yesterday after Greg Smith – a South African-born Goldman “big shot” in Europe – chose to resign and write an opinion piece letter about Goldman’s corporate culture to the New York Times.
Greg Smith was a Goldman Sachs executive director, and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.
Yesterday, he handed his resignation to his employers, and then 15 minutes later, his opinion piece was published in the New York Times.
After nearly 12 years of service, Greg said the place was as “toxic and destructive” as he had ever seen it.
He goes on to attack the culture under Lloyd Blankfein, the chief executive of Goldman Sachs, saying that the firm prefers to put making money before its clients.
Smith could “no longer in good conscience” stay there and recruit people to work for the firm:
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
I particularly enjoyed the way Forbes wrote about Greg’s move:
With Greg Smith’s resignation letter in the opinion pages of the New York Times, the world has a front row seat to watch the midlife crisis of a
high-levelexecutive at Goldman Sachs. Smith, who apparently was not very high-level, is obviously disappointed about where his promising life has taken him.
Did you see what they did there?
Blankfein responded by trying to quell the situation as the letter began to make its way around the world:
Needless to say, we were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.
Roy Smith, a former Goldman Sachs partner who is now a finance professor at New York University’s Stern School of Business, joined many other critics voicing opinion on the matter.
Roy says that Wall Street’s general non-disclosure culture doesn’t like whistle-blowers like Greg:
Who’s going to hire someone who would do that? The industry will close ranks on such things as whistle-blowing in this context.
Bloomberg explains a little more:
Smith was an executive director in London, a title equal to vice president in New York. The firm employs almost 12 000 vice presidents. Seven former Goldman Sachs partners and managing directors, positions that are more senior than vice president, said in interviews that Smith shouldn’t be taken seriously because he was a junior employee and may have been disgruntled about his pay or career. [They] all asked not to be identified because they didn’t want to risk ruining their relationship with the firm.
You can read Greg’s letter HERE.
Whether you’re on Greg’s side or not, the most telling phenomenon to come out of the latest Goldman PR disaster is the fact that it shed $2,2 billion of its market value as a result.
What a way to go, Greg.
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