Goldman Sachs has fired several employees at its recently established transaction banking division for “serious violations” of its communications policies, according to reports.
Four fired including Hari Moorthy, Global Head of TxB
In a memo released internally on Wednesday 14th September, 2023, Goldman told staff that it had:
“Terminated the employment of several leaders in the transaction banking (TxB) business after losing confidence in them following serious violations of firm policies”.
Four employees have been terminated, including Hari Moorthy, a partner at Goldman and Global Head of Transaction Banking. Moorthy had previously discussed how he used meditation as part of his leadership style as “to be able to listen to others … you have to be able to listen to yourself”, although the irony is that his ‘listening to others’ has taken place over non-controlled channels. The division will now be led by Philip Berlinski, Akila Raman, and Luc Teboul.
The individuals are reported to have violated the firm’s communications compliance policy, which requires employees to communicate about firm-related business matters via approved communications channels. While violation of the communications policy is a serious enough matter, it has also been reported that the executives subsequently failed to cooperate with Goldman’s compliance department – doubling down on their non-compliance.
A little bit of history repeating
“Those who cannot remember the past are condemned to repeat it”, according to George Santayana. For many, Goldman Sachs being in hot water for illicit communications will feel like a very recent memory; less than a year ago they were one of 16 Wall Street banks charged by the Securities and Exchange Commission (SEC) as part of a $1.1 billion action for off-channel communications and recordkeeping failures. The firm also made headlines earlier this month after it was fined $5.5 million by the Commodity Futures Trading Commission (CFTC) in a separate case around lapses in record retention.
Goldman has handled this issue in-house, before regulators stepped in, stating that:
“We are not going to comment on individual disciplinary matters. We take our communications policy seriously, and we expect all of our personnel to comply with it.”
These terminations are clear evidence of the firms’ commitment to its communications policy (which is unsurprising given the eye-watering sums paid out in its last entanglement with regulators for illicit comms). Goldman has confirmed that it “remains fully committed to [its] transaction banking business”, which was established in 2020 to help diversify away from its traditional trading and investment banking businesses.
When it comes to effective communications policy, proactivity and pragmatism are key. While organizations might seek to implement channel bans of IM or social media platforms as a ‘sticking plaster’ measure, the tempo of regulatory enforcement actions proves that teams will use the channels they (and their clients) prefer, often in defiance of bans. With new messaging and social channels emerging and being adopted at pace, implementing strong, adaptable policies before channels can pose risk is a vital part of effective communications compliance strategy.
Get the message
The final line in Goldman’s statement – “we expect all our personnel to comply” – carries extra emphasis given the seniority of one of the executives terminated. The rules around communication compliance apply to everyone equally, regardless of rank, and senior staff need to be seen leading by example on compliance policy.
Amid an increasingly ‘zero-tolerance’ atmosphere from regulators on both sides of the pond, an ongoing shift towards individual accountability, and an ever-growing number of communications channels, illicit-comms is a keen challenge for compliance teams. While this instance of Goldman Sachs ‘cleaning house’, and other examples like Morgan Stanley’s system of internal fines, are positive signs of proactivity, time will tell if firms are truly getting the message on communications compliance. And for individuals failing to follow the rules, it might cost you more than a few bucks.
Regulatory scrutiny around off-channel communications is increasing, and with more channels emerging and individuals being held personally liable for breaches, compliance is becoming ever more challenging. Our app enables business communication across every channel, and gives your compliance teams and staff peace of mind by unlocking compliance – without compromise.
FAQs
In brief: Four Goldman Sachs executives have been terminated for “serious violations” of the firm's communications compliance policies. This includes Hari Moorthy, a partner at Goldman and Global Head of Transaction Banking. The employees are reported to have also failed to cooperate with the compliance department.
Did Goldman fire transaction banking chief over communication policy? ›
Goldman fires transaction banking chief, execs over communication breach. Four employees, including Hari Moorthy, the head of transaction banking, were let go following a violation of the firm's communication policy, according to a memo seen by Reuters and Bloomberg.
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The company has been criticized for lack of ethical standards, working with dictatorial regimes, close relationships with the U.S. federal government via a "revolving door" of former employees, and driving up prices of commodities through futures speculation.
Are Goldman Sachs in trouble? ›
Until recently, the bank had been dogged by a drumbeat of losses from its unsuccessful stab at consumer banking and soured real estate portfolio, among other problems. Helping the bottom line: Goldman cut 3,200 employees over the course of 2023, a 7 percent trim in its head count.
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A former Goldman Sachs employee alleged in a lawsuit filed Monday that she faced retaliation for attempting to speak up about allegations of sexual misconduct by the bank's head of litigation, Darrell Cafasso, and that he and the bank's general counsel, Karen Seymour, attempted to cover up Cafasso's behavior.
What did Mark Carney do at Goldman Sachs? ›
Goldman Sachs
He worked on South Africa's post-apartheid venture into international bond markets, and was involved in Goldman's work with the 1998 Russian financial crisis. In 2003, Carney left Goldman Sachs to join the Bank of Canada as a deputy governor.
Why did Goldman Sachs fire employees? ›
The layoffs come after Goldman let go some 3,200 people in January 2023 amid a slump in deal-making with bonuses being trimmed as well as. But there is hope that there might be a strong rebound before the end of this year, despite fears of a possible economic downturn and instability over the forthcoming US election.
What is the latest scandal of Goldman Sachs? ›
Goldman has in the past said that certain members of the former Malaysian government and 1MDB officials lied to it about how proceeds from the bond sales would be used. Goldman in 2020 agreed to settle with the DoJ for $2.9 billion and its Malaysian unit pleaded guilty to a corruption charge.
Why does Goldman Sachs have a bad reputation? ›
Goldman was a major player in the events leading to the financial crisis and was a major participant in the CDO market. As with most financial institutions Goldman was heavily criticized for its role in the crisis.
What is the compliance issue with Goldman Sachs? ›
This past August, Goldman Sachs found itself in the crosshairs of the Commodity Futures Trading Commission. The regulator charged that the bank had both violated a cease-and-desist provision of a prior order and committed record-keeping violations where the firm did not properly record and retain specific audio files.
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Is Goldman Sachs going to shut down Marcus? ›
In 2022, Goldman announced plans to shutter its consumer and wealth management segment, and move Marcus Invest and Marcus Deposits, which offers users high-yield savings accounts, to the asset and wealth management business.
Is Goldman Sachs still prestigious? ›
Working at Goldman Sachs is often considered prestigious due to its reputation, but perceptions of glamour and prestige can vary among individuals.
Why is Goldman struggling? ›
Goldman struggled to expand its GM card base, in part because of the popularity of travel reward cards. It turned to third-party websites like Credit Karma to find new customers, which ended up attracting users with lower credit scores, per the report.
How trustworthy is Goldman Sachs? ›
We give Marcus by Goldman Sachs 4.4 out of 5 stars after evaluating factors including its branch availability, account fees, interest rates and customer support. The bank's CD offerings earn its highest rating, followed closely by its savings account. *Ratings are determined by our editorial review team.
Why is Goldman Sachs being investigated? ›
The Goldman Sachs Group, Inc.
GS is being investigated for fees that it charges for futures trading. The investigation is being carried out following a whistle-blower tip. The news was first reported by Bloomberg, citing people with knowledge of the matter.
Who is the chief of transaction banking at Goldman Sachs? ›
NEW YORK, Dec 11 (Reuters) - Goldman Sachs (GS. N) , opens new tab has hired former Wells Fargo executive Paul Camp as its new head of transaction banking, according to a memo seen by Reuters.
Who is the head of communication at Goldman Sachs? ›
“With respect to employee communications, it's hugely important right now that companies do a much better job,” Tony Fratto, Global Head of Corporate Communications at Goldman Sachs, said at a recent Axios HQ event.
Which president attempted to dismantle the banking system? ›
Although Jackson was successful in shutting down the Bank, historians give mixed reviews to the results. Bank President Nicholas Biddle's loan restrictions tightened the monetary supply. Jackson's veto of the Bank charter and the removal of the federal deposits to the state banks worsened the Panic of 1837.
Which bankers were fired for WhatsApp? ›
In 2020, two senior Morgan Stanley executives left the bank after unauthorized use of WhatsApp to discuss work matters.
