GOLDMAN SACHS HAS A SECRET PROPRIETARY-TRADING UNIT THAT IS RISKING THE BANK’S OWN CAPITAL BY MAKING INVESTMENTS AND CEO LLOYD BLANKFEIN SAID GOLDMAN WASN’T PROP-TRADING ANYMORE AND THAT IS WRONG AND HE LIED AND HE SHOULD BE HOG-TIED WITH HIS OWN BLACKBERRY CHARGER.
That’s a typical reaction to this Bloomberg piece on Goldman’s “secret” prop-trading team for you. Read more
The saintly Jamie Dimon would like to make something crystal clear:
Today’s New York Times op-ed by a Goldman Sachs executive is generating a lot of discussion around the street. I want to be clear that I don’t want anyone here to seek advantage from a competitor’s alleged issues or hearsay – ever.” Read more
Well, not yours, obviously. But random market professionals in the City of London who in recent days have been contacted by the mighty Goldman Sachs.
From: Lloyd C. Blankfein [mailto:firstname.lastname@example.org]
Sent: 08 December 2011 19:33
Subject: Goldman Sachs requests your feedback: ADV solicitation materials from Goldman Sachs Read more
Goldman Sachs confirmed on Monday that chief executive Lloyd Blankfein, and other executives, have hired external lawyers to advise them after the US Senate referred a report on the bank’s activities to the Justice Department earlier this year, the WSJ reports. According to the newspaper Blankfein has hired Reid Weingarten, a top criminal defense attorney at Steptoe & Johnson who has represented WorldCom Inc.’s former chief executive Bernard Ebbers, former Enron accounting officer Richard Causey and former Tyco International Ltd. general counsel Mark Belnick. Weingarten wasn’t immediately available to comment. The FT reports that shares in the bank fell almost 5 per cent on after the report was publicised. The threat of charges has weighed on Goldman shares since the spring, when the US Senate permanent subcommittee on investigations, which had been probing the causes of the financial crisis, referred evidence concerning the bank’s behaviour to the justice department.
Goldman Sachs chief executive Lloyd Blankfein has hired high-profile Washington lawyer Reid Weingarten, Reuters says, citing an unnamed government source, as the Justice Department continues to investigate the bank. Goldman Sachs shares fell almost 5 per cent on after the report reignited concerns that the bank’s legal headaches may return, the FT reports. The threat of charges had weighed on Goldman shares since the spring, when the US Senate permanent subcommittee on investigations, which had been probing the causes of the financial crisis, referred evidence concerning the bank’s behaviour to the justice department.
Average pay for bank chiefs in the US and Europe leapt 36 per cent last year to $9.7m, according to data compiled for the FT. Jamie Dimon, and Lloyd Blankfein were paid more than 15 times their 2009 earnings by JPMorgan and Goldman Sachs. Mr Dimon received nearly $21m in 2010, topping the FT’s survey of the salary and bonus packages awarded to 15 top bankers. Mr Blankfein earned $14.1m, including a $5.4m cash bonus – up from $863,000 in 2009. The analysis by Equilar, the US-based pay research company, shows chief executive pay at several banks is still significantly lower than its pre-crisis high. Mr Blankfein earned more than $70m at Goldman in 2007 while Mr Dimon received $40m in 2006.
Bank chiefs’ average pay in the US and Europe leapt 36 per cent last year to $9.7m, according to data compiled for the FT, despite variable performance across the sector. Jamie Dimon of JPMorgan Chase and Goldman Sachs’ Lloyd Blankfein were paid more than 15 times their 2009 earnings last y ear, at $21m and $14.1m respectively — although both received much less than in 2007. In the UK, the chief executives of Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland were awarded cash and stock bonuses valued at more than $26m last year. That contrasts with 2009, when all four declined bonuses in a nod to public and political furore. Full results of the analysis, carried out by Equilar, are available in an interactive presentation.
When Lloyd Blankfein faces Goldman Sachs shareholders at the annual meeting on Friday morning, he will almost certainly be hit by a barrage of familiar questions on the bank’s actions during the crisis, its pay practices and its run-ins with regulators, the FT notes. One of these likely inquiries looms larger now: will this be his last appearance as Goldman’s chairman and chief executive? The Guardian reports that Goldman Sachs is bracing itself for what may be the most contentious annual meeting in the embattled investment bank’s 142-year history. On Friday shareholders are planning to call on Goldman’s executives to justify the combined $69.6m payday its top five executives received in 2010 and to answer questions about allegations that the bank misled clients and lied to Congress, the newspaper says.
When Lloyd Blankfein faces Goldman Sachs shareholders at the US bank’s annual meeting on Friday morning, he will no doubt be hit by a barrage of familiar questions about Goldman’s actions in the financial crisis, its pay practices and its tangles with regulators, reports the FT. But a key question is whether this will be his last appearance as Goldman’s chairman and chief executive. This past year brought the bank’s $550m settlement with the SEC and two official reports on the causes of the crisis, which highlight Goldman’s role. In January the bank unveiled its own remedy: a 39-step plan to improve business practices and transparency. But as the bank moved to revamp itself in the post- crisis era, the spotlight shifted to the legacy of the man who has steered Goldman through the most turbulent period in decades.
Prosecutors on Wednesday played a recorded phone call in which Raj Rajaratnam, the founder of Galleon Group, is heard telling a colleague that he learnt from a Goldman Sachs board member that the bank would report a quarterly loss, reports the FT. The recording played on Wednesday in the fourth week of the government’s insider trading trial against the hedge fund billionaire, is among the strongest evidence presented so far in its case. Prosecutors allege Rajaratnam was tipped off by Rajat Gupta, then a Goldman board member and former head of McKinsey, about a $5bn investment by Warren Buffett and that the bank would report its first loss as a publicly traded company in late 2008. The WSJ notes that Wednesday’s hearing gave a view into how Galleon carried out its self-described mission to “arbitrage reality with consensus,” according to internal company documents shown during the trial.
Lloyd Blankfein, chief executive of Goldman Sachs, said that a former board member at his bank violated bank confidentiality when talking to Raj Rajaratnam, the billionaire Galleon fund manager accused of insider trading, the FT reports. Prosecutors allege that Rajat Gupta, the former Goldman Sachs board member, relayed secret information about Goldman’s earnings and strategy, often just minutes after board meetings, to Mr Rajaratnam, who then traded on it. Mr Blankfein said that the board approved the investment during a special meeting on September 23, 2008. The investment was “significant” for the bank, he said, adding “the implication of his investment means we were a good investment”. Reuters reports that in a show of courtesy for the accused hedge fund founder Blankfein did however extend his hand to Rajaratnam in 30-second encounter.
Lloyd Blankfein, chief executive of Goldman Sachs, told a US court that a former Goldman board member violated bank confidentiality when talking to Raj Rajaratnam, the billionaire Galleon fund manager accused of insider trading, reports the FT. Prosecutors allege that Rajat Gupta, the former Goldman board member, relayed secret information about the bank’s strategy, often just minutes after board meetings, to Rajaratnam, who then traded on it. Prosecutors allege Gupta tipped off Rajaratnam about Warren Buffett’s $5bn investment in Goldman amidst the financial crisis. Blankfein said the board approved the investment at a meeting on Sept 23, 2008. DealBook meanwhile looks at Blankfein’s starring role in the trial.
US prosecutors intend to call Lloyd Blankfein, the head of Goldman Sachs, as a witness in the insider trading trial of Raj Rajaratnam, according to a letter sent on March 21 to the presiding judge, reports the FT. The prosecutors expect Blankfein to testify about Goldman board meetings in 2008 relating to earnings and a $5bn investment the bank received from investor Warren Buffett. Prosecutors have alleged Rajat Gupta, then a Goldman director, passed inside information to Rajaratnam just minutes after the board meetings. Gupta was sued by the SEC regulator for allegedly tipping Rajaratnam but denies wrongdoing. He has not been charged criminally. Regardless of the substance of Blankfein’s testimony, says DealBook, his presence on the witness stand “will add to the already intense attention surrounding the prominent trial”.
Goldman Sachs’ two most senior executives, Lloyd Blankfein and David Viniar, chief executive and chief financial officer respectively, are among the high-profile names on a witness list for the insider trading trial of Raj Rajaratnam, the FT reports. The list contains names of people and companies that may be mentioned in the trial or who may be called as witnesses. It includes a former chief executive of Advanced Micro Devices, Kamal Ahmed, a Morgan Stanley banker alleged to have tipped a Galleon trader over a merger, and Gerson Lehrman Group, an expert network. Prosecutors have meanwhile prepared a ‘war room’ to lead strategy for the case, says the WSJ.
One of the best-known executives on Wall Street could be picked up as a surprising government witness at the high-profile criminal trial of Raj Rajaratnam, the Wall Street Journal reports. People familiar with the matter have told the paper that Goldman Sachs’s CEO Lloyd Blankfein has agreed to testify on behalf of the US government at the upcoming trial of Rajaratnam, the billionaire hedge-fund manager and founder of the Galleon Group, who is facing 14 counts of securities fraud and conspiracy in one of the largest insider-trading cases of a generation. Another 26 defendants in the case have already pleaded guilty. According to the paper, Blankfein could establish an important link between information shared among Goldman board members and executives with the former Goldman director Rajat Gupta. Prosecutors are alleging that Rajaratnam obtained this inside information about Goldman in October 2008. A separate civil administrative proceeding filed this week saw the Securities and Exchange Commission allege that Gupta had passed along inside information about Goldman to Rajaratnam.
US and Chinese officials touted a $45bn package of export deals on Wednesday to coincide with the state visit of Hu Jintao, the Chinese president, but the largest contract was in fact a reiteration of a previously announced order, notes the FT. US companies have been critical of China in the past 12 months, pressing the administration of Barack Obama to toughen defence of their intellectual property rights and their ability to access lucrative Chinese government procurement contracts. To smooth the waters, the Chinese president met the chief executives of high- profile US companies on Wednesday such as Jeff Immelt of General Electric, Steve Ballmer of Microsoft and Lloyd Blankfein of Goldman Sachs. The export package includes a $19bn order for Boeing aircraft, 70 extra contracts involving 12 US states worth $25bn and a series of investment deals. Combined, the deals will support about 235,000 US jobs, the White House said.
Goldman Sachs has moved to address criticisms it put the bank’s interests ahead of its clients, introducing a 39-step “self-improvement” plan that adds layers of oversight while leaving its top management team intact, the FT reports. The programme, presented by Goldman’s business-standards committee to the bank’s partners on Monday following an eight-month review, introduces several governance committees, overhauls the bank’s financial reporting structure and shifts some activities between business lines. But NYT DealBook, citing an analyst, says “a memo only goes so far.”
Nomura’s banking analyst Glenn Schorr recently caught up with the Goldman boss (plus chief financial officer David Viniar).
And Schorr was able to quiz him on some of the pressing issues of the moment: the eurozone, regulation, emerging markets, etc. Read more
Lloyd Blankfein, chief executive of Goldman Sachs, has suggested that the bank could consider shifting operations out of Europe if the regulatory crackdown on the industry becomes too tough, reports the FT. Blankfein told a conference in Brussels that Europe remains of vital importance to Goldman, with less than half of the bank’s business now generated in the US. He backed current moves to toughen bank regulation, but warned that the introduction of “mismatched regulation” across different regions as governments seek to avert future financial crises would tempt banks to search out the cheapest, least intrusive jurisdiction in which to operate.
Another day and another fine from the Financial Services Authority.
This time it’s Goldman Sachs on the receiving end. A £25m hit (reduced to £17.5m for good behaviour) for the heinous crime of not telling the FSA it was being investigated by the SEC over the Fab Fabrice/Abacus CDO case. Read more
The Goldman Sachs CEO was right at the top of Vanity Fair’s 2009 list of the 100 most influential people:
That’s earnings before interest, taxes, depreciation, amortisation and fines…
At least Lloyd Blankfein is safe, the NYT says, as Wall Street digested the aftermath of his bank’s $550m settlement with the Securities and Exchange Commission over the Abacus case. However, the SEC could still turn its attention to similar deals struck by other banks over mortgage-related products, according to the WSJ. And while Goldman Sachs has won this battle, the history books are likely to take a different view on a bank that still looks more vulnerable than at any time since divisions between its partners in 1994, the FT’s John Gapper writes.
Lloyd Blankfein, Goldman Sachs chief executive, has joined the effort to rally some of the biggest US financial groups to contribute to a $125m rescue for a Chicago community bank, reports the FT. The lender, ShoreBank, was told by the FDIC regulator in March it had 60 days to raise capital or risk being seized. Under the terms being discussed, Goldman would inject about $25m into the bank and Citigroup about $20m. Other potential investors include Bank of America, Morgan Stanley, JPMorgan, US Bancorp and State Farm as well as non-profit organisations that are already investors in the bank.
Goldman Sachs chief executive Lloyd Blankfein took responsibility for the bank’s conduct on a call with wealthy clients on Wednesday, reports Reuters. Blankfein said Goldman must “recognise that we put ourselves in a position where people can raise those types of doubts,” according to a recording of the call broadcast on CNBC. Goldman is facing fraud charges from the SEC over its sale of CDOs to investors. Also on Wednesday, Jon Corzine, a one-time Goldman CEO, downplayed the charges, saying it is “hard to see” how Goldman could have broken the law. See also FT Alphaville, “The price of Blankfeins“.
Lloyd Blankfein’s stock is up. Or rather, the perceived likelihood that he will depart from Goldman Sachs before the end of the year has fallen sharply since he popped that magic PR pill.
Here’s the relevant chart from self-styled “prediction market” Intrade:
Here’s an interesting gauge of how attitudes to Lloyd Blankfein may have shifted over the past 14 days, reports FT Alphaville. On April 21 the New York Post published a story mentioning that Goldman Sachs CEO Lloyd Blankfein received a standing ovation during a company meeting. The anecdote, however, slipped into media oblivion. Two weeks later though it was back in the media limelight. Read more
Lloyds Blankfein looks to be a different man to the one that appeared in front of a Senate subcommittee last week. Tune in to the Charlie Rose interview with the Goldman Sachs boss via FT Alphaville. Read more
Business of protection Read more
US Senators spent a full ten hours grilling Goldman executives on Tuesday over their role in mortgage markets. Thankfully, bloggers were much snappier. FT Alphaville presents the best coverage. Read more