The shares of Goldman Sachs dropped 3.4 percent in New York trading Wednesday, wiping $2.15 billion off its market value following allegations made by a former company executive that the firm took little interest in the clients and was also involved in exploiting them.
This is third-biggest decline in the 81-company Standard & Poor's 500 Financials Index, according to the report by Bloomberg.
In fiscal year 2011, Goldman Sachs reported net earnings of $2.51 billion or $4.51 per share. The net earnings for the fourth quarter were $978 million or $1.84 per share.
Greg Smith, a Goldman executive director, wrote to the New York Times, stating that the firm was involved in extorting highest fees from clients by getting rid of unsuitable investment products. Smith, who headed Goldman's equity derivatives business in Europe, added that the environment now was as toxic and destructive as he had ever seen it.
Smith had written that he was quitting after 12 years at the company following the decline in the firm's moral fiber and becoming more and more profit driven.
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In a reply to the allegations by Smith, an internal memo to Goldman Sachs employees was sent out by chief executive Lloyd Blankfein and chief operating officer Gary Cohn. We were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients, Blankfein and Cohn wrote.
In the letter, they mentioned a recent People Survey which, according to them, provides the most detailed and comprehensive review to determine how people feel about Goldman Sachs and the work they do.
Quoting the survey, Blankfein and Cohn stated that 89 percent of people said that the firm provided exceptional service to them. Just two weeks ago, Goldman Sachs was named one of the best places to work in the United Kingdom, where this employee resides. The firm was the highest placed financial services company for the third consecutive year and was the only one in its peer group to make the top 25, they added in the letter.