Goldman resignation letter. Judge's critique. Now, the fallout?

Goldman resignation letter blistered Goldman Sachs for putting its interests ahead of customers. A state judge nearly kills Goldman deal over conflict of interest. Firm now says it will try to strengthen conflict-of-interest controls, but doesn't tie review to Goldman resignation letter.

|
Richard Drew/AP
Traders work in the Goldman Sachs booth on the floor of the New York Stock Exchange Thursday. Greg Smith, an executive director at Goldman Sachs, resigned with a blistering public essay that accused the bank of losing its 'moral fiber.' Stung by the Goldman resignation letter and a judge's comments last month, the firm said it aims to strengthen internal controls to prevent conflicts of interest.

Goldman Sachs, the investment bank blistered by a resigning employee this week for how it does business, said Friday that it will try to strengthen internal rules to prevent questions about conflicts of interest.

A U.S. judge almost killed a deal between two energy companies last month because Goldman had ties to both parties: The bank collected a fee for advising one company, and a Goldman banker owned stock in the other.

Goldman was stung Wednesday by an Op-Ed article published in The New York Times by a young banker who was quitting the company. The Goldman resignation letter accused the firm's executives of privately insulting clients and not acting in customers' best interest.

The bank did not offer specifics Friday on the review of its policies.

The energy deal was a $21 billion buyout of El Paso, a Houston natural gas and oil company, by Kinder Morgan, a Houston natural gas pipeline company. The judge ultimate allowed the deal.

Goldman collected a fee for advising El Paso on the deal. The judge criticized Goldman for failing to disclose that one of its lead bankers on the team, Steve Daniel, personally owned $340,000 of Kinder Morgan stock.

People like Daniel "get paid the big money because they are masters of economic incentives, and keenly aware of them at all times," said the Delaware judge, Chancellor Leo Strine.

Goldman had disclosed other conflicts: Its private-equity arm owned a stake in Kinder Morgan, and it controlled two seats on Kinder Morgan's board.

"We regret that El Paso's board wasn't aware," said David Wells, a spokesman at Goldman. "We are reviewing our policies and procedures with the goal of strengthening them."

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Goldman resignation letter. Judge's critique. Now, the fallout?
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2012/0317/Goldman-resignation-letter.-Judge-s-critique.-Now-the-fallout
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe