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13 Reasons Goldman’s Quitting Exec May Have a Point

A timeline of SEC charges against Goldman and employees over the past decade.

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People walk past Goldman Sachs headquarters on March 14, 2012 in New York City. A former Goldman Sachs executive director wrote a scathing editorial about the company while resigning in today's New York Times. (Mario Tama/Getty Images)

An executive at Goldman Sachs left the firm today with a bang, penning a New York Times op-ed accusing the company of increasingly putting profits ahead of clients. Greg Smith started as an intern 12 years ago and last headed a derivatives department. Not surprisingly, Goldman quickly and strongly disagreed with his take.

There have obviously been plenty of unflattering headlines about Goldman in the past few years. We decided to look at just one aspect of their record: SEC charges levied against Goldman and its employees over the past decade.

April 2003: SEC charges Goldman Sachs over conflicts of interest among its research analysts. The company eventually settled for $110 million in fines and disgorgements.

November 2003: Former Goldman economist John Youngdahl pleads guilty to insider trading. The firm had to pay the SEC $4.2 million over profits it gained from the illegal dealings.

July 2004: Goldman settles with the SEC for $10 million over charges it improperly promoted a stock sale involving PetroChina.

January 2005: Goldman settles with the SEC for $40 million over charges that it violated securities law in promoting initial public offerings.

April 2006: Two former Goldman employees are charged with running an international insider-trading ring while they were at the firm. Eugene Plotkin and David Pajcin, both in their 20s, paid off insiders at other firms and stole early copies of Business Week to get an edge. They also tried (unsuccessfully) to use strippers to get information. Both eventually served jail time.

March 2007: A Goldman subsidiary, Goldman Execution and Clearing, settles with the SEC for $2 million over allegations that faulty oversight that allowed customers to make illegal trades.

March 2009: Goldman Execution and Clearing settles with the SEC for $1.2 million over improper proprietary trading by employees.

July 2009: The SEC charges a former Goldman Sachs trader Anthony Perez and his brother with insider trading based on information Anthony Perez obtained through his job at Goldman Sachs. He was fined $25,000 and his brother more than $150,000.

May 2010: The SEC hits Goldman Execution and Clearing with a $225,000 fine for violating a rule aimed at regulating short selling.

July 2010: Goldman settles with the SEC for $553 million over allegations that it misled investors about the collateralized debt obligation ABACUS 2007-AC1 by not disclosing the involvement of a hedge fund in its creation, or the fact that the hedge fund stood to benefit if the CDO failed. Goldman executive Fabrice Tourre was also charged.

March 2011: The SEC charges Goldman board member Rajat Gupta with insider trading. Gupta allegedly passed on information he learned as a board member to the hedge fund Galleon Group. In October, 2011, he was arrested and hit with criminal charges by the FBI. The case is pending.

September 2011: The SEC charges a Goldman employee, Spencer Midlin, and his father for insider trading based on information Spencer Midlin gained from his position at Goldman Sachs. The two men were ordered to pay $92,000.

February 2012: Goldman Sachs receives notice from the SEC that the agency may bring charges related to mortgage backed-securities.

Charlotte Lipson

March 14, 2012, 3:14 p.m.

So why is Goldman Sachs still in business and why haven’t the top execs never been criminally charged?!

None of this surprises me.  I recently read The Big Short by Michael Lewis (which I highly recommend) and this article is totally consistent with the book.  As with any corporation, it’s the bottom line and nothing else that is truly important.  Corporations exist to make money for shareholders, period.  Everything that seems otherwise is for show.

Take a look at who’s in government and that should help answer your question.

Gail R Campbell

March 14, 2012, 3:20 p.m.

So, there’s a systemic infection of greed and corruption which a strict overhaul of banking and trading regulations ought to heal.  But they never get there, do they?  Some big heads ought to roll, like the entire board of directors and senior officers.  It’s a cultural norm.  To keep the same people and expect a change in the culture is like believing that Ebola virus won’t be deadly.  We as a country need to stop being naive and wanting to believe that big business has good scruples.  Obviously, Goldman Sachs doesn’t.  Bravo to Greg Smith.  Is there a firm out there with good scruples that will pick him up?  Who was it who said, “An honest man is hard to find”?.

Just think what these guys would be doing if it weren’t for those “burdensome regulations” we always heard about. If anything, enforcement by the SEC should be enhanced!

Gail R Campbell

March 14, 2012, 3:42 p.m.

Vito Danelli is absolutely correct.  Without the regs that do exist, flimsy though they may be, these guys would be absolutely ruthless in the marketplace.  And we should hand the government back to the Republicans who want to eliminate more regulations???

http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314

organized crime is endemic throughout the banking system - goldman sachs is just one member organization - the five organized crime families have now morphed into the five major banks - aided and abetted by the federal government of the united states

only solution is their complete breakup

It’s not Goldman-Sachs that keeps getting into trouble with the SEC, it’s the regulations…....at least that’s what Faux News said about bankers. If there was no SEC, there would be no problem, in the news anyway.

donald, I think you’re right.  Banks used to be very small.  Now they’re too big.  This all started with the deregulation of the 80s.

Mr Temple: you said - It’s not Goldman-Sachs that keeps getting into trouble with the SEC, it’s the regulations


The greatest trick the Devil ever pulled was convincing the world he didn’t exist.

So why are they still allowed to be in business? They should be forced to sell out to honest businessmen.

Hello RICO!

A revelation!  In 2012!      In ‘97 a book titled F.I.A.S.C.O. by Frank Partnoy was published.  It outlined, vis-a-vis his career at First Boston and Goldman Sacks, the intentional, aggressive and ruthless swindle of the bond traders. It also painted in detail the swindle of sub-prime mortgages, the criminal nature of the rating process, and the collusion of the banks, from the local branches through the top, in selling toxic bundles of those mortgages to feed the maw of the fraudulent bond markets.  In those days,  the 80’s through the 90’s, the traders sat and whooped & high 5’d over “ripping their faces off” - ie, watching their gullible client’s ashen responses when informed that the bundle of “shit” (their term) they’d “invested” in had collapsed and they’d lost tens & hundreds of millions.    This was in 1997 -  11 years BEFORE the collapse.  And, in ‘08, “they” - the FED, the banks (Lloyd “doing God’s work” Blankfein) Hank Paulson, Larry Summers, Tim Geithner, Robert Rubin, George “Monkeyboy” Bush, and even the incoming (P)resident - Barak O’bummer, were “surprised” and “amazed” at “the sudden crisis & collapse” of the financial markets.  All O’bummer could make of it was that alot of “irresponsible risk taking” had occurred.  Not fraud! Not swindle! Not criminal activity - spread over 20 or 30 years - but “irresponsible risk taking”.  As the wags had it - Clinton & Bush pulled off the heist, and O’bummer was driving the getaway car.  Read everything by Partnoy & Michael Lewis. Listen to everything by Wm K Black. Read Catherine Austin Fitts. Watch every DVD by Adam Curtis, starting with Century of the Self. Read Shock Doctrine by Naomi Klein.  But put your rubber pants on first.

One possible non-governmental retaliatory action is to refuse to bank or invest with any institution that has CDS or any other relation with Goldman Sachs be it mutual funds, 401ks or state pension funds. It would not be an act of protest out of moral indignation but a speculative attack to bring down the firm. It would be framed as a legitimate vote of no-confidence from the international investment community. The objective would be to induce panic and generate a Lehman condition on GS where institutional investors perceive a run on its holdings and simultaneously call their bonds. GS would have to sell off all its high value shares to cover calls which would feed a vicious cycle into insolvency and triggering CDS.

Gail R Campbell

March 14, 2012, 7:13 p.m.

What a great idea, Shawn.

Thanks for all the information! Especially tsmythe. This stuff has never been anything I really wanted to get involved in, but it has become mandatory to being an educated and good citizen. I always hoped the congress would protect us. Instead it just keeps getting worse. The original S&L fiasco, Enron, Price Waterhouse, Enron, Bernie Madoff, the real estate finance scandal, etc. It is overwhelming. I am a Republican, and all the Republican candidates are against regulations. What do you think about that?

Wallis Parnelle

March 14, 2012, 7:46 p.m.

Smith went on to write that banksters at the firm “callously” rip their clients off – and routinely refer to their customers as “muppets.” Most shocking, Smith reveals that the most common question he gets from fellow banksters is, “How much money did we make off the client?”

The dangerous part of this is that banksters like Goldman Sachs now make up more than a quarter of our economy when they used to make up less than a tenth. That means one-fourth of all the money in the United States comes from banksters on Wall Street preying on their customers with things like exploding mortgages and fees, jacking up oil and food prices by gambling on them, and making a profit crashing entire nations economies.

During times of universal deceit, telling the truth becomes a revolutionary act. george orwell

Gail R Campbell

March 14, 2012, 7:56 p.m.

Mr. Wagner, I think there are several reasons for that:  I’ve noticed that Republicans are allergic to others having control, unless it’s to their own advantage. The cult of individualism is so strong with Republicans that they may have well have said that a dead regulation is a good regulation.  As a country, we have immense hubris about what we do, wanting a totally unfettered field.  At best, that has historically allowed this country to achieve great things.  At its worst, this flaw has led to self-righteous, ruthless greed, and an amoral attitude when it comes to gain.  We applaud people who make a lot of money but don’t want to hear about at whose expense that may have been accomplished, or at what public or environmental cost that may have been.  We don’t examine how hierarchy, classism, or dominance affect society as a whole.  The individualism trumpeted by Republicans seems to echo what Deborah Tannen said about males, that they’re hard-wired for dominance, individuality, and action.  What do you think?

Anyone who has seriously studied applied macroeconomics knows that crony capitalists hate free markets, with all the fairness and transparency that they imply. Competition is a serious drag on enormous profits and introduces significant uncertainty and risk.

As soon as the game is underway, successful capitalists are constantly pushing the envelope of the rules, seeking to establish rents, monopolies, unfair advantages, and debt traps to snare the bulk of the players and stifle the profit-eroding tendency of real competition.

The ‘efficient markets’ hypothesis and the denigration of regulation serves to despoil markets of their capacity to create wealth and distribute it in a meritorious fashion.

This is the basis of all aristocracies, which are merely the institutionalisation of privilege. Once they make it they bloody well want to change the rules to hang on to it, and take the risk out of their equation. They foster a culture of two sets of books, two sets of rules, and two systems of justice. They are given over in their personal and professional lives to the benefits of hypocrisy and cheating, with little conscience to restrain them. There is a predatory class that is nationless, without allegiance to anything, any principle, but their own greed and lust for power.

“The wealthy, not only by private fraud but also by common laws, do every day pluck and snatch away from the people some part of their daily living. Therefore, when I consider and weigh in my mind these commonwealths which nowadays do flourish, I perceive nothing but a certain conspiracy of rich men in procuring their own commodities under the name and authority of the commonwealth.

They invent and devise all means and crafts, first how to keep safely without fear of losing that which they have unjustly gathered together, and next how to hire and abuse the work and labor of the people for as little money and effort as possible.”

Thomas More, Utopia

Campbell, Shawn, Wagner, Parnelle, Donald, et al.  We really are - all in this together.  Anyone who doesn’t remember Michael Corleone’s statement that “the family was going legitimate”, is missing the reality that the World’s a criminal conspiracy, and the U.S. Congress (among others) are the “consiglieres”.  The banks knowingly launder hundreds of billions in drug money.  There are no laws prohibiting the laundering of drug money through the stock market. The health care bill is a sellout to the insurance industry and the financial “reform” bill is a sellout to the banksters.  Medicaid is a sellout to the drug industry. Fracking is a land swap ponzi scheme. Citizens United is the sellout of the the illusion of what was left of Democracy after the outright theft of two presidential elections.  3,000 killed in 9-11?  The projection now is that 200 million will starve to death as a result of oil & food commodities speculators on Wall St.  How;s THAT for “terrorism”?
Mr Wagner - do you understand yet, the swindle of deregulation? Do you have children or grandchildren?  Do you understand that all these “oppressive, Liberal” regulations were enacted at the demand of the general populace to stop the sociopaths and psychopaths from wrecking, literally, everything?  And the EPA was created - by Tricky Dick - after the Cuyahoga River caught fire because it was, by then, mostly petroleum?  The crooks & criminals have got us by the throats.  But - it’s Spring, and the world is mudluscious and puddle wonderful. What - ME worry?  Mitt or Rick, or Newt will fix it all. I’m just hoping for a job in one of those orbiting factories. I won’t need any two-and-a-half dollar gas up there…...  .... and there’ll be plenty of smart, articulate, Liberal “sluts & prostitutes”  to keep us drained of “our precious bodily fluids”.  As Slim Pickens said, “Yee-haw!”.

We will see more employees from Goldman Sachs, One West Bank, Bank of America and many others come forward to expose the criminal and deceitful activity which is out of control and has been allowed to continue for far to long. Now is the time we can change the way we conduct business to focus on integrity,honesty and human beings rather than greed…oh what a concept!

This is a timeline of how the _reputation_ of the firm Mr Smith left has gone downhill over the years he worked there, because it is a timeline of when the public learned about these things going on inside GS.  What is relevant to Mr Smith’s claim is how the _behavior_ of the firm changed over the years he worked there. That would require looking at a timeline of when the behavior he says caused him to leave actually occurred within the firm, not when outsiders learned of that behavior.  Something seems a little off about his story.

The last cogent description I heard of G Sacks was that, for the last 90 years or so, they’ve been fudging the line into fraud & swindle on a daily basis.  They were charter members of the FED Fraud and have been gaming the system ever since. And how much was it that Obama took from Lloyd in the ‘08 election?  But he’s GOT to be re-elected, because the alternative’s so horrific.  But SOMEBODY’S got to go to jail for the Financial Coup d’Etat…........................

I wonder, though…does the ex-Goldman guy actually have a point?  He claims that it was different, back when he was an idealistic college student being given his first job.  Somehow, I don’t think a decade is enough for a complete change in a corporation.  It’s plenty of time to open someone’s eyes, though.

The banks have been corrupt since they opened.  If I remember correctly, when Alexander Hamilton planned to recommend a Bank of the United States under the exclusive control of Congress (where it should be, with the money supply beholden to the people rather than the rich), the bankers threatened to destroy the dollar on international markets.

Today, Goldman Sachs continues to invest in “rolling longs” (I believe that’s the term) on survival-based commodities.  That means they hold an ever-increasing stake in the price of food going up AND increasing control over the food supply.  You notice how the price of staples has been inching up around the world while growers are claiming bumper crops…?

Great piece.  Now, for some perspective, let’s combine this with the recent revelation that the SEC has been actively DESTROYING investigative files contrary to the National Records Act.  In other words, if this is the official stuff that actual was kept, how many more allegations were there over the same time period that were simply avoided due to revolving door deals with SEC Bush appointees?  Where you see one cock roach, you can bet there are 100…

Goldman Sachs is a criminal organization.
The reason they are still in business is because
the US Senate and Congress are filled with shameless prostitutes
that have been bribed by Goldman Sachs via campaign donations
and Super PAC’s. The regulatory agency, S.E.C. is filled
to the brim with spineless cowards who are physically incapable
of levying a serious fine on Goldman Sachs while they simultaneously
lick Goldman Sach’s CEO Lloyd Blankfein’s boots.

whistlelblowers of all kinds are coming out of the woodwork - Obama is working diligently to supress their dissent - Manning isolation treatment is just the tip of the iceberg - they would put tons of people in jail for marginal charges if no one was looking -

we are at the end of an era - neo-fascism is now the standard and those who believe they will survive unscathed are dreaming

the cut off is not 1% it is 1/4 of 1% - you need enough to pay - the politicans, judges and regulators at multiple levels of control of a particular issue -  to create the rules, regulations and laws - and that takes very serious money - not a millionaire in assets or income but assets north of $50 million at the federal level possibly less at the state level

gingrich and santorum sugar daddys are the most visible sign but it is deeper than that

buckle up - GS acts with impunity so does dimon - that tells you the degree of control

focus on yourself forget the USA - its lost!

Barry Schmittou

March 15, 2012, 4:40 p.m.

The Obama administration is treasonous for failing to prosecute anyone.

They also allowed Wachovia Bank to launder $378 billion for the murderous Mexican Drug cartels, and no one was prosecuted. Bank of America laundered $3 Billion at one branch and no one was prosecuted !!

Obama also protects insurance companies that ignore life threatening medical conditions in four different types of insurance, and they rig bids to increase sales of these policies but no one is prosecuted !!

The Republicans seem to allow the same crimes but I was having too many surgeries during that time to document them as much.
God please help us all !!

The Obama administrations trolls who attack me should be sure to mention why it’s okay for Obama to ignore all the deadly corporate crimes they are ignoring as seen in the Federal Court filing I posted at the website linked below. I’ve had cancer burned from one eye and I’m working on better summaries, but please remember the Court told me the Attorney General is the only one who can stop the insurance companies from ignoring medical conditions; Obama’s AG will not take action :

http://www.obamadrugmurdersconnection.blogspot.com

Daniel Templeton

March 15, 2012, 6:12 p.m.

Considering this story, a similar one about the health-care and the medical industry and it’s corruption makes the financial mafia look like a bunch of 5th graders running a lemonade stand. Doctors and insurance execs are at least as corrupt as investment professionals.

Barry Schmittou

March 16, 2012, 12:10 p.m.

Thank you Daniel, your comment gives me hope !!

The following website shows the dangerous Health Care quotes that Obama’s DOL and DOJ are ignoring.

Numerous Federal Court Judges write that MetLife’s Doctors’ ignore life threatening medical conditions including Multiple Sclerosis, brain lesions, cancer and cardiac conditions of many patients, and a foot that a new mother broke in five places. 

MetLife and their independent consultant Dr. Gary Greenhood ignored three patients medical conditions, but Obama’s DOJ and DOL will not even ask them to stop !!

The Judges quotes are seen at the website below, please read all this index before clicking on any links :

http://www.deadlyorganizedcrimes.blogspot.com

To see how MetLife’s attorneys also lie in multiple courts if the patient lives to have their case heard, please see the Federal Judges quotes at :

http://www.lawyerslyingincourt.blogspot.com

(Evidence of bid rigging to increase sales of these policies, huge contributions to Obama, and numerous additional violations are seen three sentences below)

When I asked the Court to stop MetLife from ignoring medical conditions U.S. Magistrate Judge Bryant wrote to me saying I have “more than sufficiently alleged fraudulent abuse”.

Judge Bryant also wrote that the 6th Circuit Court of Appeals Panel of Judges wrote this about enforcing criminal laws in Health insurance claims that are regulated by U.S. title 29 :

“the enforcement of such provisions is the exclusive prerogative of the Attorney General”

The Attorney General and Secretary of Labor appointed and directed by Obama are very aware the patients can die while they wait for their case to get to Court and be resolved. They refuse to seek prosecution even though Barack Obama said the following at the National Prayer meeting in February 2012 :

“When I talk about making sure insurance companies aren’t discriminating against those who are already sick I do it because I know that far too many neighbors in our country have been hurt and treated unfairly over the last few years, and I believe in God’s command to love thy neighbor as thyself. For me as a Christian, it also coincides with Jesus’s teaching To whom much is given much is expected”

(end of quotes)

This next website shows how MetLife Simultaneously Destroys 7 Laws Requiring Care, Skill, Diligence, Prudence and Safeguards!

http://www.sevenlawsviolated.blogspot.com

Links at the following website prove MetLife and two of their executives gave Obama huge contributions. Then the two executives signed page five of the DOJ’s agreement where no one was prosecuted for rigging huge bids to sell the exact same policies where MetLife is ignoring their life threatening medical conditions when patients file claims. Please view Exhibit C of :

http://www.obamadrugmurdersconnection.blogspot.com

Additionally, the website above shows claimants are being endangered in multiple types of insurance !!

There’s also evidence of Obama protecting corporations that commit multiple crimes including Wachovia Bank Laundering $378 Billion for the murderous drug cartels and no one was prosecuted. That’s enough money to fund the entire Afghanistan war twice, and no one was prosecuted !!!!!! Please excuse the evidence running together, this has all been very difficult due to my right eye cancer and left eye surgery.

That’s about five percent of the evidence I’ve presented to Obama and his Directors, Republican Senator Grassley and leaders of both parties.

Both parties continue to ignore the deadly evidence while falsely proclaiming they are serving God as seen in the quotes I posted from Obama at the National Prayer meeting (seen above). Obama is willfully enabling the destruction of thousands of lives every year, while making speeches about “walking closer to God” and that’s why I continue to pray the real God of creation will help us all !

Terry Smyth,
Excellent posts and recommended reading list.  Funny too.  Do any of the authors/writers you mention draw a direct connection from organized crime members to wall street player, or is this your speculation?

I don’t have much to contribute to this discussion other than suggesting folks read Matt Taibbi’s Griftopia.  Since he wasn’t really a financial reporter before writing that book, his understanding of the jargon was very limited which I think makes his book much more accessible to the non-financial industries insider.  HIs reporting seems to be based on deep sources and his writing is dripping with snark, cynicism, and foul language if you like that sort of thing.

Mark A   -  Michael Ruppert has been lecturing for 20 years about the nexus between international drug cartels and money laundering by U.S. banksters, and the investment of hundreds of billion by the same cartels in the stock market. The laundering is illegal. The “investments” aren’t.  Anything by Greg Palast is worth reading - he studied directly under Milton Friedman at the Chicago Schl of Economics, so he has really cynical take on the neoliberal-con agenda.  Taibbi’s great - love his scathing sarcasm and outraged profanity.  I oscillate between serious comment and satire: the absurdity of the constant lies and distortion - by the “right,” both of facts and the public discourse itself,  beggars belief. And the dismaying reality that 46% of the populace in the United Snakes actually swallow this shit and are willing to vote for the clowns and psychopaths put up by rethugs.  You’ve just got to lapse into looniness some of the time. As bad as the Dumbocrats are, they at least try to even the playing field a little.

Thank you Barry Schmittou and others here who have pointed a very substantial light on the diabolical underpinnings of insurance companies, the banks, government at all levels, and other institutions that have bled the public,,,in vast cases to the point of literal death. There has been so much diligently presented in these posts that that alone will further awaken readers. Keep getting the word out!

Thanks for good comments. Just to add to the disaster that Goldman Sachs and other aliens have also started to bankrupt whole nations, Greece is going to the pits. Many others will follow. We pay. They dance. But citizens of Iceland have refused to to pay the banksters.

I sincerely hope you Americans manage to learn and change. There is more than just money between heaven and earth. The higgest asset has two legs, arms and a brain. It is called ‘we the people’. And while you’re working on that one, please have the rich pay at least 30% income tax asap. They ask for it. What’s holding you?
Good luck saving America.

When a Company can pay their 37,000 employees an average of $380,000 each in 2010 and $440,000 each in 2011, are we naive to think that there is not a shortcut and cheating going on like Insider trading.

Yep, we are naive aren’t we?

Where do you suppose all that money came from? How about fleecing Pensions, savings, and other assets of ordinary people who are cleverly being stolen from.

And, while we’re wringing our hands over our plight as the “highest assets” with “two arms, legs, and a brain” - let’s reflect on the fact that Amerikans spend their money on giant flat screens, iPods and chrome wheels, while the Tigers, Rhinos, Elephants, Whales, Lions, Orangs & Bluefins are being driven - actually, tortured & slaughtered - to extinction in our lifetimes.  Not only did we PISS away our economies - we slaughtered all the creatures that made up the magic in our own childhoods…..  What will you say to your grandkids when they ask where the Tigers went - “Here, put your 3D glasses on…......?    If every person in The West with disposable income sent 20 bucks a month to the World Worldlife Fund, Greenpeace, or Sea Shepherd, they’d have 10 or 20 BILLION a month to stop this insanity.  If the Tigers go extinct in the next 20 years - as far as I’m concerned, you can stomp the human race down the toilet.  But then, I’m such a bleeding heart Liberal…..

Greg Smith resigned after 12 years because he learned that GS was “putting profits ahead of clients”. Hey Greg, did you know that fish swim and birds fly?

This article is part of an ongoing investigation:
The Wall Street Money Machine

The Wall Street Money Machine

Enticed by profits and bonuses, Wall Street took advantage of complicated mortgage-based instruments to reap billions, only to exacerbate the eventual crash.

The Story So Far

As the housing market started to fade, bankers and hedge funds scrambled for ways to maintain the lavish bonuses and profits they had become so accustomed to, repackaging mortgages in complex securities called collateralized debt obligations. The booming CDO market masked how weak the housing market was, and exacerbated its collapse.

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