The Xmas must read book – “Why I left the Vampire Squid” (sorry, Golden Sacks)
Greg Smith, Ex Goldmans salesman
An interesting read in the Telegraph today about the a accusations made by Greg Smith, a former salesman who resigned from Goldman’a in March in a letter to The New York Times and created quite a furore. His book about his 12 years at the bank was published in the US on Monday and I for one have it on order now!
The 33-year-old, who transferred from Goldman’s New York office to London in January 2011, writes that he should have worn “cowboy boots” when he arrived at the office on Fleet Street because “London really was the Wild West.”
He claims that by the time he quit, the US investment bank was only interested in trades that would make it more than $1m (£624,000) even if its customers had different needs.
Soon after he began working in London, Mr Smith says he asked a colleague to prepare materials to help him sell simpler equity derivatives to customers. Smith says the colleague declined to help, adding: “We’ve been told by management to focus on trades that could yield a possible one-million-dollar profit for the firm.”
The bank has been braced for the publication of Why I Left Goldman Sachs and says Mr Smith’s motivation in writing the book was frustration that he had not progressed more swiftly up the ranks at the bank. The South African was denied a promotion in the months before he left and his compensation did not match the $1m he had hoped for.
The book’s central allegation is that during his 12 years at the bank, it changed from being one that put customers first, to one that consistently put the bank’s profits first. Puh-lease – and he’s surprised at this?
As Europe’s debt crisis intensified during the summer of 2011, Mr Smith writes that the recommendations that Goldman’s salespeople made to clients on which European bank shares to buy and sell were driven by trades that Goldman’s dealers wanted to get in or out of.
The former salesman, who was earning $500,000 a year by the time he left, does not disguise that he enjoyed the trappings that came from working at Goldman. During his year in London, he lived in an 800sq ft flat in Belsize Park and saw the men’s finals at both Wimbledon and the French Open.
However, he claims that, despite the bank conducting a study of its own business principles in 2010 following a $550m settlement with US regulators over alleged mis-selling, the bank was not taking reform seriously enough.
“It was the corrosive atmosphere in the London office that, slowly but surely, started to wear me down,” Mr Smith wrote.
Having personally dealt with the Squid in the late 90’s, I can recall that the atmosphere was one of perceived privilege to be doing business with the bank, sort of a veiled arrogance. There are a lot of people out there gunning for “Gods bank” and all the negative publicity cannot be helping them. The issue for its critics however is that its ex almuni is so entrenched in positons of power around the globe that a serious boot (cowboy or otherwise) up it’s backside is highly unlikely.
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