Goldman Sachs in hunt for 'muppet' email
Published 23/03/2012 | 11:13
GOLDMAN Sachs has started scanning emails for the term "muppet" as the Wall Street bank investigates allegations made in an explosive public resignation letter by a former employee last week.
Greg Smith, who sold European equity derivatives for the bank in London, last week used the New York Times newspaper to publish a resignation letter in which he alleged he had seen managing directors refer to clients as "muppets" five times on internal email.
The letter, which was published on the newspaper's opinion pages, also branded the bank's culture as "toxic".
Lloyd Blankfein, Goldman's chief executive, and Gary Cohn, Goldman's president, rejected the characterisation of the bank in a memo to Goldman's 30,000 staff last week, adding that when employees make complaints "we examine them carefully and we will be doing so in this case." The review of internal emails was disclosed to the bank's partners in a conference call this week.
The allegations by Mr Smith, a South African who had worked at Goldman for just over a decade, refocused attention on a bank that has been a lightning rod for public anger against Wall Street since the financial crisis. Goldman paid $500m (£316m) in 2010 to settle allegations from US regulator the Securities and Exchange Commission that it misled clients over the sale of a mortgage-backed security.
The chief executives of other Wall Street firms, including JP Morgan Chase and Morgan Stanley, were last week quick to rally around a bank they compete fiercely with.
Mr Smith, who spent most of his career with Goldman in New York, has gone to ground since the publication of the letter last week. Goldman Sachs has not been able to make contact with him, neither have many publishing executives who are eyeing an insider's account of life at a bank envied by competitors. Although Goldman's shares fell on the day Mr Smith resigned, wiping more than $2bn from the bank's market value, it remains unclear what damage the public relations storm has done.
Like the rest of Wall Street, Goldman releases its first-quarter results next month, and analysts are expecting an improvement from the final three months of last year. Goldman was among the banks who had their profit forecasts for the first quarter raised by analysts yesterday, following stronger-than-expected results from Jefferies this week.
Shares in Goldman were 0.8pc lower at $125 on Wall Street.
Goldman declined to comment.
The plan to scan emails was first reported by Reuters.