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UPDATE: Most of the Internet (Slate included) had plenty of fun with Greg Smith's blistering op-ed announcing his retirement from Goldman Sachs on Wednesday. As one would expect, however, things weren't so cheery for his former employer.
Bloomberg reports that the Goldman Sachs Group Inc. saw $2.15 billion of its market value disappear during Wednesday trading on Wall Street as shares dropped 3.4 percent, the third-biggest decline among the 81 companies in the Standard & Poor's 500 Financials Index.
But don't feel too bad for the firm. Its stock price rebounded in early morning trading Thursday, climbing a little more than 2 percent.
Wednesday, March 14: A Goldman Sachs director has quit after publishing an open letter in the New York Times Wednesday that called the investment firm a "toxic and destructive" place.
Until resigning publicly, Greg Smith worked in London as the executive director in charge of the Goldman Sachs' U.S. equity derivatives business in Europe, the Middle East and Africa. He'd been at the firm for 12 years, working in both New York and London. Smith charges CEO Lloyd C. Blankfein and president Gary D. Cohn with "[losing] hold of the firm’s culture on their watch."
In the letter, published as an op-ed in the Times and titled "Why I Am Leaving Goldman Sachs," Smith distills his central reason for leaving as "in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money."
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact. It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
The full letter is available here.
The Times also published a news story about Smith's resignation, which contains the firm's statement denying Smith's claims about the culture at Goldman Sachs: "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."