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Is Goldman Sachs in the Business of Ripping Off Clients?

Goldman Sachs executive director Greg Smith today made public his resignation from the firm and the reasons for it in an impassioned op-ed in today’s The New York Times.

Smith charges that Goldman Sachs has given up on its traditional mandate of putting the client’s interest first and that, on the contrary, the current leadership of CEO Lloyd C. Blankfein and president Gary D. John has inculcated a culture of ripping off clients and maximizing profits earned at their expense.

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Smith said in his article, “It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.”

He goes on to say, “When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”

In the new culture, according to Smith, people in the firm callously talk about ripping off clients, and managing directors refer to their own clients as “muppets”.

Smith exhorts the board of directors to return to Goldman’s original value system by making the client the focal point of the business again – “people who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.”

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com