Karma is indeed a beyotch. Some public breakups go better than others, but the resignation of one exec from Goldman Sachs has turned into a very costly kiss-off for the company.
Goldman Sachs lost more than $2 billion after “low drama” exec Greg Smith thrust himself into the global spotlight Wednesday with a very public resignation letter that scathingly denounced his employer.
In the trading hours after the op-ed began circulating, the firm’s shares dropped 3.4 percent, the third-biggest decline in the S&P, Bloomberg reports.
Smith’s take-that-(high-paid)-job-and-shove-it missive – published as an Op-Ed piece in The New York Times – blasted what he termed Goldman’s “toxic and destructive culture.”
The executive director said the storied investment bank is indifferent to the interests of clients, who high-level bosses referred to as “muppets.”
He said he attended meetings where the topic of how to help clients never came up.
“It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of those meetings, you would believe that a client’s success or progress was not part of the thought process at all,” Smith, 33, wrote in his caustic goodbye note, titled “Why I Am Leaving Goldman Sachs.”
He said that in the last year, “I have seen five different managing directors refer to their own clients as ‘muppets.'”
He added: “Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.”
Smith, who had worked at Goldman for nearly 12 years and said his clients had a trillion dollars in assets, wrote: “I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
“I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-term survival.”
The no-holds-barred missive was quickly trending on Twitter and triggered an uproar in financial circles.
Goldman CEO Lloyd Blankfein and President Gary Cohn responded in a plainly worded internal memo. “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,” the memo read.
The Op-Ed stunned those close to Smith, who described the ex-Goldman vice president as an unassuming political junkie. “Doing something as publicly as this is quite a surprise,” said a source who knows Smith. “He’s a low-drama type person.”
Smith, a Ping-Pong whiz from South Africa, is single. He interned for Goldman at Stanford University, then scored a full-time position with the firm in 2001.
As he climbed the ranks at the investment bank, Smith, whose dad worked as a pharmacist, lived a lifestyle true to his roots, a source said. He rented an apartment and never bought a car.
In 2010, he moved to London to work as the head of the firm’s U.S. equity derivatives business in Europe.
“He doesn’t fit the stereotype of a Wall Street type,” said a person close to Smith. “He was more concerned with having enough money for people in his life who were important to him than spending it on luxury items.”
Experts estimated that Smith, a mid-level executive, probably was paid modestly by banking standards – less than $750,000 a year.
Wow, this is legendary stuff. And to think, he said all that and he wasn’t even Goldman “sacked.”
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