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Goldman banker's "toxic" accusations

posted 15 Mar 2012, 12:27 by Mpelembe   [ updated 15 Mar 2012, 12:27 ]

After departing Goldman Sachs employee Greg Smith called it a "toxic" place, the investment bank issued a statement. Industry analysts wonder if the allegations will damage the Wall Street giant's reputation.

WORLD-GOLDMAN LETTER - When Greg Smith resigned from Goldman Sachs - he decided not to go quietly.

The banker, who worked in equity derivatives in London, made headline news.

His highly-critical public resignation letter appeared in the New York Times.

In it he called the investment bank a "toxic" place, where managing directors referred to their own clients as "muppets".

Goldman Sachs issued a short statement in response.

"We disagree with the views expressed, which we don't think reflect the way we run our business. 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."

Goldman's CEO and COO said in a staff memo Smith's views were in the minority.

It's another blow for the Wall Street giant, dubbed a "great vampire squid" by Rolling Stone magazine.

The bank has been embroiled in the biggest-ever insider trading scandal on Wall Street.

And Angus Campbell from London Capital Group says it may be just one ex-employee's view but it could still be damaging.

Angus Campbell, Head of Sales, London Capital Group, saying

"Of course it is going to be detrimental to the bank's reputation. And the question of course is, is this isolated to just Goldman Sachs? Almost certainly not. I'm sure this sort of thing happens across the banking sector as a whole, and other investment banks as well. It's not good PR. Goldman Sachs , is a very professional outfit and such whistle blowing really isn't welcome at all."

Smith grew up South Africa, and attended the private Jewish King David's High School, before winning a scholarship to Stanford University in the United States.

The school's former headteacher remembers Smith as having strong principles, even as a schoolboy.


"He was always highly highly intelligent, highly sensitive and highly principled. It was just part of his character. He would never at any time accept or condone anything that he felt was irregular or untoward or dishonest."

Smith's comments come at a bad time for banks - still getting back on their feet after the 2008 crisis.

There's also been a lot of criticism about their high levels of pay and bonuses.

Joanna Partridge, Reuters