The resignation letter printed as an op-ed in The New York Times on Wednesday by Greg Smith, a London-based executive director for Goldman Sachs that oversees equity derivatives, has stirred up a lot of trouble for the firm. Smith claimed that the environment now is as toxic and destructive as I have ever seen it.
The former employee went on to state that The firm has veered so far from the place I joined right out of college that I can longer in good conscience say that I identify with what it stands for. Smith claims to have overheard employees talking about ripping off their clients, and referring to them as muppets.
This upset is far from the first for the firm. Goldman Sachs has been involved in a string of controversies ranging from involvement with Greek debt to insider trading.
Goldman Sachs Involvement In Greek Debt
In 2010 it was uncovered that Goldman Sachs helped to hide billions of dollars in debt from budget overseers in Brussels. The bankers had previously helped the Greek government obscure billions back in 2001. According to the New York Times, in order to meet Europe's deficit rules, Goldman made a deal with Athens that allowed spending to continue. In 2001 Goldman made a currency trade which resulted in the sale of $15 billion (£9.8 billion) of Greek bonds. The trade allowed the government to mask the true extent of its budget deficit, wrote the UK Telegraph.
Goldman Sachs, among other American groups, was blamed for having a hand in running-up Greek debt. In 2010 a spokesman for Goldman told the UK Telegraph that As a matter of policy, we don't comment on legal or regulatory matters.
Programmer Involved In Trading Code Theft
In 2011, Sergey Aleynikov, a former computer programmer for Goldman Sachs was sentenced to eight years in jail for stealing source codes from the firm. The computer code that Aleynikov stole had earned Goldman $300 million in 2009 said the New York Times. I never meant to cause Goldman any harm, Aleynikov said in court. His conviction was thrown out in Feb. 2012.
In 2008 the firm had urged big clients to invest in bets against California bonds. A strange twist is that Goldman Sachs had collected millions of dollars in fees after helping California sell some of those same bonds, wrote the Los Angeles Times. According to FierceFinance.com, California believed that the firm could have informed them of their doings first.
In 1986 David Brown, vice president of Goldman Sachs mortgage securities department was caught for his involvement in an insider trading scandal with Dennis B. Levine, a former executive at Drexel Burnham Lambert. Levine made a reported $12.6 million through the illegal profits. A spokesperson for Goldman Sachs said that they were shocked and dismayed at this development. Neither he (Brown) nor the SEC has informed us of the nature of the investigation except that it is allegedly related to the SEC's recent proceedings against individuals at other firms on insider trading activities.