The former Goldman Sachs Group Inc vice president, Greg Smith, who publicly accused the bank of taking advantage of unsuspecting clients, said he never intended his book to be an expose of practices at the Wall Street firm but to shine a light on the shift in priorities away from traditional finance in the industry.
NEW YORK, NEW YORK, UNITED STATES (OCTOBER 22, 2012) (REUTERS) - The former Goldman Sachs Group Inc vice president who publicly accused the bank of taking advantage of unsuspecting clients said he never intended his book to be an expose of practices at the Wall Street firm.
Preliminary reviews of Greg Smith's "Why I Left Goldman Sachs," which hits bookstores on Monday, have been lacklustre. Critics say the book contains few revelations, given that it had been hyped as a "tell all" look at the investment bank.
Smith, a native of South Africa, told Reuters on Monday (October 22) that his book was not meant to be a manual for change on Wall Street. Instead, he said he wanted to shine a light on what was wrong in investment banking and how ordinary people - not the super-wealthy - pay for it.
"My objective was not to write an expose. It was not to write a tell-all," said Smith, who sold equity derivatives at Goldman.
"My objective was actually to write this for a non-financial reader -- for someone in the middle of the country -- to show a nuance of what Wall Street does well, the positive effect of things to the society, and how the pendulum has swung completely out of control where 75 percent of money is made in the trading business."
Smith created a furor earlier this year when he resigned from Goldman, saying in a New York Times op-ed column that the firm had engendered a "toxic" culture of treating clients as "muppets" - slang in Britain for idiots - and relieving them of their money as revenues shifted away from traditional finance and mergers to trades.
Smith then promised the book about the bank, building up expectations of new insights about the culture at Goldman.
Grand Central Publishing, a unit of Hachette, planned a print run of 150,000 copies for the book. That is considered a relatively big number for a first run, although many will also be sold through e-book formats.
The publisher declined to say how much it had paid Smith for the book, but media reports said he had received $1.5 million (USD) as an upfront payment.
Smith's op-ed piece and his plans to write a book prompted a public relations campaign and internal inquiries at the bank, as it tried to avoid another hit to its image after suffering a barrage of bad publicity in recent years.
"The Goldman Sachs Mr. Smith describes is not one our employees would recognize," a spokesman for the firm said on Sunday. "Mr. Smith has asked for answers, yet he did not respond to our repeated attempts to contact him after his abrupt departure earlier this year."
Goldman has said it looked into Smith's allegations - including the use of "muppet" in emails - and turned up little. The bank says that unless Smith provides specific examples, it cannot check what he is alleging.
Although "Why I Left Goldman Sachs" does not reveal a new scandal at the firm, Smith said he believed his book shines a spotlight on a worsening culture of greed on Wall Street.
"You know, people ask 'why has no one gone to jail for the financial crisis' and the ironic truth is a lot of the stuff is still legal, you know, ripping your client off, overcharging them no matter if it's a, you know, a global charity or a hedge fund -- it's all fair game. And in my mind it should not be fair game, I think it should be more transparent. So, if readers get that sense, I think it will be a success," he explained.
Smith, who worked for Goldman in London, said the company would overcharge customers, such as charities or funds managing the pensions of teachers and firemen, or sell them products they did not need and did not understand.
In some cases, Smith said, traders would use knowledge of the clients' business to make easy bets against them.
"If everyone was equally sophisticated that would be fine, and Lloyd Blankfein when he gets called before Congress, he'll say things like 'we don't owe clients anything in terms of telling them what's really going on', but I guarantee you when a teacher's retirement fund or a philanthropy or a university endowment is not coming to Goldman Sachs or a Morgan Stanley with a buyer-beware attitude, they're coming because they actually want some advice, so I would say there's a big misconception out there," Smith said.
Smith, who quit his $500,000-a-year job at the bank, said he would do more to push for change in finance.
"Four years after the crisis, two years after what people called 'landmark financial reform' was passed, less than one-third of the laws have been implemented and more than three-quarters of the deadlines have been missed and during that time Wall Street has spent $300 million dollars lobbying against things like regulation of derivatives and barring, you know, banks betting with their own money, so I think there's a perception that we're out of the woods, but in my mind what's happened is you almost put a band-aid on a leaking damn. I think the great danger now is if you don't actually fix the problem, you know, it recedes into memory and the circumstances that led to crisis have not been fixed," Smith said.
"Why I Left Goldman Sachs: A Wall Street Story" has already started to climb the best-sellers lists for non-fiction.