The first rule of being a Vampire Squid is that you do not jam your blood funnel into the Queen. Yet that is exactly what former head of Goldman Sach's U.S. equity derivatives business in Europe, the Middle East, and Africa did today in a scathing resignation letter in the New York Times. "I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity," Greg Smith begins. "And I can honestly say that the environment now is as toxic and destructive as I have ever seen it."

Smith, who worked at Goldman for nearly twelve years was a mentor to employees fresh out of college, and held in "very high regard," according to one former intern. "He took care of us junior guys, gave us great pieces of advice, and in general came across as one of the more personable, friendly, and genuine guys on the floor," the intern said. Perhaps that will earn Smith one less polonium eel roll in his bento box this week.

Two salient arguments are at the core of Smith's piece: Goldman cares solely about making money, not about their clients; and the firm has learned nothing after being the subject of public outrage for years.

To the first point:

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients—some of whom are sophisticated, and some of whom aren’t—to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

And to the second:

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

Smith, who notes his proudest accomplishments as "getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics," also names names.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch.

He hopes that his letter is a "wake-up call to the board of directors" to "make the client the focal point of your business again." But if Goldman had just stuck to the simple, boring principles that made companies like Grayson Moorehead Securities (and Goldman 40 years ago) so successful.


We've reached out to several of our friends who are employed by Goldman Sachs and all have declined comment for fear of immediate reprisal. Considering that not sitting around for five hours on the Friday before Memorial Day is grounds for termination, we understand.

The company itself released this statement on Smith's piece:

We disagree with the views expressed, which we don’t think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.

Fundamental truth: give executives larger severances so they don't talk shit to the New York Times.