Top Goldman Sachs executive quits over culture of 'toxic' greed
A senior executive at Goldman Sachs has attacked a “toxic” and “destructive” environment at the leading investment bank in as resignation letter published in the New York Times.
Greg Smith, who leaves Goldman Sachs today after 12 years at the company, rising from summer intern to executive director and head of its US equity derivatives business in Europe, the Middle East and Africa, slammed colleagues who “callously” talk about ripping their clients off, stating he had also seen five different managing directors refer to their own clients as “muppets”.
In an article titled ‘Why I Am Leaving Goldman Sachs’, Smith said: "I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money."
"I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all."
Smith says that when he joined Goldman Sachs, a culture of teamwork, integrity, humility and doing right by clients was “the secret sauce” that earned trust for 143 years.
He added: “These days, the most common question I get from junior analysts about derivatives is, 'How much money did we make off the client?' It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave.
"Now project 10 years into the future: 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.
Smith singles out the firm’s decline in morals as the most serious threat to its long-term survival and wanted his resignation letter to serve as a wake-up call to those who remain at the company.
Directly addressing the board of directors he said: “Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons.”