Does Goldman Sachs play fair with clients?
Aug 24th 2009 7:00AM
Updated Dec 3rd 2009 12:54PM
Goldman Sachs (GS) has been the subject of a lot of criticism lately. Congress and the Administration have attacked it for its rich pay packages. Some experts worry that its trading practices are too aggressive. There have been a number of charges that it is too close to the New York Fed for the regulator to be objective.
The latest charge may be the most damning. In a special report, The Wall Street Journal says that "Goldman analysts offer stock tips at a gathering the firm calls a 'trading huddle.' But few of the thousands of clients who receive Goldman's written research reports ever hear about the recommendations."
It is not entirely clear whether or not the practice is legal. It may simply violate the spirit of the law, which is that all investors should get vital trading information at the same time.
What the news certainly means is that Goldman management has learned very little from the market meltdown. Goldman has already become the villain in press reports about Wall Street firms that received U.S. funds but have acted as if they do not have to abide by any new sets of rules established by regulators and Congress.
What will Goldman's "tin ear" cost it? Perhaps a great deal. Regulators are still anxious to make an example of Wall Street excesses to prove that they have the teeth to succeed were they failed when the credit crisis began. Goldman is the perfect target and it seems to hurt its own cause with each passing day.
Douglas A. McIntyre is an editor at 24/7 Wall St.