Wednesday, March 14, 2012

Revenge of the muppets?

No. This guy will probably regret writing a bitter resignation op-ed.

NYTimes: ... It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

Already, the vampire squid is on the counterattack:

WSJ: ... Mr. Smith described himself as an executive director and head of Goldman’s U.S. equity derivatives business in Europe, the Middle East and Africa.

A person familiar with the matter said Mr. Smith’s role is actually vice president, a relatively junior position held by thousands of Goldman employees around the world. And Mr. Smith is the only employee in the derivatives business that he heads, this person said.

More fun at the Times Dealbook blog:

Former Goldman trader, quit last year

This guy might as well have had a microphone in the room with me during my exit interview…took the words right out of my mouth. To add to one thing he said, I had never heard the term “rip someone’s face off” until I started working at Goldman Sachs. Unfortunately, that phrase was all too often used in the context of client transactions.

Matt Levine, former Goldman employee, now an editor at Dealbreaker:

Maybe if he’d gotten the Rhodes, or won a gold medal for regular tennis at the goyish Olympics, he’d have made MD and would still have a job.


Richard Seiter said...

I think you are right.  I wonder what he is planning to do next.

David Coughlin said...

 "I wonder what is is planning to do next"

Put his Goldman Sachs tenure at the top of his resume.

Richard Seiter said...

I'm curious about whether he would go public like that without another job already lined up.  And if he does have one what his new employer will think about the article.

Hamish Johnston said...

There was a great discussion about this on BBC Radio 4 this morning, you can listen here (fast-forward to about 2:52:00).

Ken Condon said...

Interesting interview of David Stockman by Bill Moyers on crony capitalism. Well worth the 33 minute listen.

Carl Galoit said...

When people do things like this, they usually have "screw you" money saved up.  

David Coughlin said...

 I think that i agree with Carl.  Here is an alternate take on the "I'm leaving Goldman" meme.

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