Bloomberg News

Goldman’s Board Must Act on Smith Op-Ed, Former Partner Writes

March 19, 2012

Goldman Sachs Group Inc. (GS)’s directors must investigate a former employee’s allegations about a change in the firm’s culture, Jacki Zehner, who was a partner when she left the company in 2002, wrote on her blog.

Zehner said she doesn’t know Greg Smith, the derivatives salesman whose New York Times op-ed piece blamed Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn for fostering a “toxic and destructive” environment, causing Smith to quit last week. Zehner, who worked at Goldman Sachs for 14 years, wrote that she’s heard from “many people” in the past few years that the firm is emphasizing profits over character.

“These are very serious accusations from a credible person in my view and I hope it does indeed provide a ‘wake-up’ call to the board of directors,” wrote Zehner, who was the first female trader promoted to partner and is married to a former partner. She is now CEO and president of Women Moving Millions, a non- profit supporting the advancement of women and girls worldwide.

“It is the board that is accountable to shareholders and before they take another paycheck I hope they ask a heck of a lot of questions and get honest answers,” Zehner, 47, wrote in her March 16 commentary.

Blankfein, 57, and Cohn, 51, who have held their current roles since 2006, responded to Smith’s op-ed with a memo expressing disappointment with his assertions and cited a survey of employees that found most disagree. Still, “if an individual expresses issues, we examine them carefully and we will be doing so in this case.”

‘Verbal Hand Grenade’

David Wells, a spokesman at Goldman Sachs, declined to comment beyond the contents of the memo.

Janet Tiebout Hanson, who left Goldman Sachs after almost 14 years in 1993 and in 1997 founded the women’s networking firm 85 Broads, wrote her own blog response to Smith’s op-ed piece, calling it a “cowardly act.”

“By tossing a verbal hand grenade on his way out the door, he sullied the reputations of the vast majority of the people at the firm who work and live by the highest possible professional standards every single day,” wrote Hanson, who was the first woman at Goldman Sachs to be promoted into sales management. “He is just a quitter who never gave management an opportunity to respond before he verbally strafed the entire firm in print.”

Seek Some Answers

Hanson, 59, said she was “delighted” to become a Goldman Sachs client when she started an asset-management firm, Milestone Capital, in 1995. Milestone Capital had an “awesome relationship” with the fixed-income trading desks at Goldman Sachs, which she said was partly responsible for its growth the next five years.

“Greg Smith got his 15 minutes of lame fame, which is all it is,” she added.

In Zehner’s blog post, she said the board should decide how to respond to Smith’s accusations after they get some answers.

“If those answers are that the kind of behavior reported by Mr. Smith is not the norm, then they would have done their job, this story will fade and Goldman will go about its business for another 143 years,” she wrote. “If the answers are the opposite, heads should roll.”

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.


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