Goldman Sachs Loses $2.15 Billion After Exec's Scathing Resignation Letter
A day after a former executive at Goldman Sachs published his resignation letter in the op-ed section of the New York Times, Goldman Sachs lost $2.15 billion of its market value.
The shares of the investment bank sank 3.4 percent on Wednesday after London-based executive Greg Smith's scathing letter appeared in the New York Times.
Smith, who left his position after being with the company for 12 years, explained that is was Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn's fault for a "decline in the firm's moral fiber."
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"Over the last 12 months I have seen five different managing directors refer to their own clients as 'muppets,' sometimes over internal e-mail," the letter read.
"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," Smith wrote.
The company responded to the accusations in a statement by downplaying the claims made by Smith and explaining that his feelings don't reflect how business is conducted in the company.
The statement explained that the letter did not reflect "how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."
This was not the first time that Goldman Sachs has made headlines for the wrong reasons. Goldman Sachs had to pay a $550 million fine to settle a fraud lawsuit with the Securities and Exchange Commission.
The company was accused of misleading business practices by the U.S. Senate's Permanent Subcommittee on Investigations.
In response, Goldman Sachs published a report in January 2011 that included 39 recommendations on ways to improve how it conducts business in relation to what is best for its clients.
"It does hurt them," said Stephane Rambosson, managing partner at Veni Partners in London, told Bloomberg News.
"The perception of the firm has gone down, and a lot of the winners of tomorrow are sitting back and thinking. 'Do I want to be with Goldman?'"
