In an op-ed piece published in the New York Times on Wednesday, a Goldman Sachs executive, who made a very public exit, referred to the firm as “toxic” and disrespectful to its clients. On his last day at Wall Street’s golden firm, former executive Greg Smith wrote, “I can honestly say that the environment now is as toxic and destructive as I have ever seen it.” Smith resigned as a Goldman executive director and head of U.S. equity derivatives business in Europe, the Middle East, and Africa. Smith’s key objection is that Goldman cares more about making money from its clients than making money for them.
Smith wrote, “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.” Expressing the disappointment with the firm for failing to repair its cultural decline, Smith wrote, “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.” The S.E.C. is the Security Exchange Commission that investigated the firm for its role in underwriting subprime mortgages in 2006, which helped unravel the housing market. To counter Smith’s criticism, Michael Duvally, Goldman’s (GS, Fortune 500) spokesman, released a statement saying, “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.” Smith was with the firm for 12 years.
