According to the media this week, Goldman Sachs, the infamous investment banking and securities firm has recently had its reputation damaged. This is arguably due to the resignation of Greg Smith Goldman Sachs executive director and head of its equities derivatives business in the EMEA area. It can also be argued that the reputation damage was caused by the deteriorating practices within the firm which lead to Greg’s resignation after years of service.
Almost as soon as the article written by Greg Smith for the New York Times hit the shop shelves the company’s stock price dropped (Link), as shown in the chart below.
(Red point is the day the NY Times article by Greg Smith was published and the yellow point is the day after the article)
As soon as this happened Mayor Bloomberg of New York USA among others attempted to come to the rescue of the reputation of Goldman Sachs the next day.
It seems as though despite the disgust and disapproval of the alleged practices of Goldman Sachs by some, they [Goldman Sachs] are still holding strong. They may have escaped the “Muppetgate” scandal so long as there are no more high profile resignations in the near future. The only ways to decrease the likelihood of that occurring is through the improvement of the culture within the firm, putting more of a positive focus on the clients and giving the media the opportunity to see and understand these improvements. As the saying goes “Those who don’t learn from their mistake are destined to repeat them”.