...Ethical Dilemma: Goldman Sachs Was Goldman Sachs Socially Responsible? Pamela Bryant Northcentral University Abstract Illegal and unethical activity was prevalent in the Goldman Sachs administration and the charges filed against them by the SEC were inevitable. The underlying thought at Goldman Sachs amidst the allegations was a social purpose and a contribution to the economic cycle. While there were many gray areas of activity, this research will focus on the investment strategies used to control the clients financial investment gain and in most cases loss. Furthermore, this paper will outline the unethical behavior that was associated with the fraudulent transactions of Goldman Sachs as it related to the clients and public investors. Was Goldman Sachs Socially Responsible? The problem to be investigated is whether Goldman Sachs violated its own Code of Ethics in dealing with clients and public investors. According to the Preamble of the Business Code of Ethics, Goldman Sachs believes the highest standard of integrity should be included as the focal element in a business relationship. Regardless of how perceptive one might be in understanding the investment strategies of Goldman Sachs or even its relationship to the difficulties of the market, it is clear that not all activities were in accordance with the good old-fashioned law of principle and ethics. Background Goldman Sachs history has never been clear of controversy, dating back to its inception in...
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...goals effectively helps in motivating the employees and improves communication processes both internal and outside public relations. Let us now look at the goals which Goldman Sachs has set for itself, identified from its vision & mission statements, business principles and its various public reports. * To provide superior returns to its shareholders. Goldman Sachs believes that profitability is critical to achieving superior returns, building their capital, and attracting and keeping the best people. This is a very quantifiable goal and its measured every quarter and is a primary indicator of the health of the firm. It thus relates to measurability of the SMART model1. * Strive to anticipate the rapidly changing needs of its clients and to develop new services to meet those needs. Goldman Sachs is primarily in the service industry which is highly competitive. Thus to ensure that it stays ahead of the competition, it is imperative for Goldman Sachs to continuously evaluate the requirements of its clients and ensure that they are being met.It thus focuses on specificity as mentioned in the SMART criteria. * To identify and recruit the very best person for every job and to offer them the opportunity to develop their career faster than anywhere else. Goldman Sachs is a people driven firm and consider them as their...
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...Foreign Exchange Risk Management Goldman, Sachs & Co. October 2008 Table of Contents Introduction to the FX Markets I Market Update II FX Hedging III Slide 2 Introduction the FX Markets Statistics FX is the largest / most liquid global market Daily Turnover Bid / Offer Number of securities FX Market 3.2 Trillion 4 bp (0.04%) 150 (40 actively traded) Bond Market 900 Billion 5 bp 2,000,000 Equity Market 400 Billion 15 bp 20,000+ Source: BIS (September, 2007) Slide 3 Market Dynamics Short Term Drivers of the Market Market sentiment Release of new data (economic and political) Equity and bond market performance Positions of market participants Central Bank intervention Options activity Hedging mechanism, and protection from a knockout level are reasons for heavy trading Technical analysis Slide 4 Market Dynamics Long Term Drivers of the Market Supply/demand Current account vs. capital account + reserves “Current account” associated with trade flows “Capital account” associated with investments and speculation “Reserves” associated with central bank activities FX and Interest Rate policies are closely linked Purchasing Power Parity (PPP), e.g. the Economist Magazine’s “Big Mac” index Central Banks Mission is to preserve economic stability, in particular to preserve price stability Interest rates can drive FX markets... “Interest Rate Defense”: Raising interest rates can attract foreign...
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...Portfolio Strategy Portfolio Strategy This paper will focus on 23 global emerging markets studied by Goldman Sachs Investment Research. In this paper I will revise the initial portfolio strategy from 1999 that touched on long-term perspective on short term risk. The emerging countries are within Asia, Latin America, Eastern Europe, and Middle East. The information the company provided was strictly based on a predicted study of future outcomes based on emerging markets. The paper of itself does not issue a company strategy on how to use the information found. In this paper I will use scenarios the company presents and determine how Goldman Sachs should invest 5 million dollars recently received to maximize its wealth. In the overview Goldman Sachs mentioned: That they developed a model of discount rate determination that permits the company to recreate discount rate history and calculate discount rates for 23 emerging markets over the last 25 years. The comparison of current discount rates versus their long-term trend has powerful investment implications and turns the investment decision on its head. Abnormally high discount rates relative to history (normally interpreted as punishing cash flows) may be a buy signal, while abnormally low rates may be a sell signal. Current emerging market discount rates are approximately in line with their five-year moving average. From purely a risk perspective, Asian markets appear undervalued, while Latin America and EMEA...
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...Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc. is a leading global bank and financial holding company, which was founded in 1869 by Marcus Goldman. The firm is headquartered in New York and maintains offices in all major financial centers around the world. It engages in “investment banking, institutional client services, investing and lending, and investment management” (“Annual Report”). As we all know, it is verycompetitiveinthe financial service industry. Goldman Sachs has many competitors, who are“brokers and dealers, investment banking firms,commercial banks, insurance companies, investmentadvisers, mutual funds, hedge funds,private equity fundsand merchant banks” (“Annual Report”). While many competitors have been put their emphasis on their money management operations, Goldman Sachs Asset Management (GSAM) have chosen “organic growth over growth by acquisition” (Bruno, 340). Overall, “GSAM's assets under management increased by roughly 19% for the year ended Feb. 28, according to a filing with the Securities and Exchange Commission. All of the firm's asset classes increased, with equity up 26%, fixed income up 19%, alternatives up 19% and money market assets up 7%” (Bruno, 340). Goldman Sachs Group has “a 52 week low of $90.43 and a 52 week high of $159.00. The stock’s 50-day moving average is currently $144.5. The company has a market cap of $77.120 billion and a P/E ratio of 11.23” (Jones). This great success can be directly attributed to the company's sale...
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...Goldman Sachs Stockholders The group and I have decided that Stockholders are fourth in line when it comes to importance. Stockholders are important to the Goldman Sachs because they’re the individuals and/or groups whom provide the initial capital for the corporation. Stockholders also meet annually to determine if the corporation is heading in the direction they want. If not, they can vote for new board of directors. Stockholders are mainly interested in how the company is managed in order to maximize the return on their investments. Also, stockholders are interested in how the managers and employees are behaving. If they’re behaving unethically, this could hurt the company’s reputation, putting the stockholders capital to waste. In terms of needs, stockholders need to know that the capital they invest is not wasted in the long run. They expect the business to be highly profitable, and to be honest with them. Stockholders also expect to have some level of control over the board. This was if members are not performing as expected. Stock holders also expect greater protection of investment, as well as greater returns. When Goldman Sachs was hit with all the legal woes, stockholders called a meeting to clarify what should and shouldn’t be done. At the meeting the stockholders had a number of proposals that would need votes to determine the outcome. Among them: executive compensation, collateral increases for derivatives trading and splitting the chairman/CEO position (Washington...
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...You can never imagine a world without Emma Goldman. Emma Goldman died on May 14, 1940. Emma dedicated her life to the creation of a radically social order. Also, she embraced anarchism for its vision; and it offered liberty, harmony, and social justice. She had a deep commitment to absolute freedom and that led her to espouse a range of controversial causes. Goldman was a radical thinker. Forty years on she is more than emblematic, she is iconic. Emma Goldman was born in the imperial city of Russia of Kovno on June 27, 1869. Emma’s mother Taube was married to a man when she was 15 years old He later died and she was left with two children. Emma’s mother had a second marriage arranged to Abraham Goldman. First of all, when Emma was a child she constantly was abused by her stepfather when she displeased him. Emma was uncontrollable and rebellious to her stepfather “I’ll kill that brat”, he often said. (Gornick 7). Also, the family constantly moved from Konovo to Konigsberg to Petersburg. Emma’s education was very limited. Although she passed the exam to secondary school, she was denied the character reference necessary for admission. The religion teacher declared her “a terrible child who would grow into a worse woman” (Gornick 7.)When Emma became 12 years old education came to an end for her. When Emma was 16 years old her father told her it was time for her to get married and he would arrange this. She begged once more to return to school instead of getting married. Emma...
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...Melisa Schellhamer, April 13, 2010 Melisa Schellhamer, April 13, 2010 SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems The Goldman Sachs fraud case opened by the Securities and Exchange is one of the items that were highlighted by the down turn of the economy in the last few years. Goldman Sachs has vigorously denied any wrongdoing, but the case against them seems fairly tight if the information currently provided is accurate. At the center of all of this Fabrice Tourre. Tourre is an employee of Goldman Sachs that has been charged with fraud. The nature of the charge is that as an employee of Goldman Sachs he helped create a Collateralized Debt Obligation (CDO) that was not disclosed to potential investors. More damning than anything however that seized email correspondence is seems to point to the fact that he was fully aware of what he was doing. How this all ties in is that a CDO is an investment vehicle whose performance is directly related to a set of assets. In regards to this case the CDO was a family of securities that were backed by subprime residential mortgages. As this is considered risky...
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...9-406-002 REV: MARCH 22, 2007 BORIS GROYSBERG SCOTT SNOOK Leadership Development at Goldman Sachs Our people have driven Goldman Sachs’ success for 130 years through sustained, superb execution across a range of markets and products. The best way to maintain that advantage is by recruiting, training and mentoring people as we always have—one at a time, with great care. We want Goldman Sachs to be a magnet for the very best people in the world—from new graduates to senior hires. At the same time, we are focusing on developing our very deep bench of talented people and improving and extending our skills. We are, for instance, placing young leaders in demanding positions that stretch their abilities. We are also devoting more time and attention to the formal training and development of leaders, particularly senior leaders. — Henry M. Paulson, “Letter to Shareholders,” Goldman Sachs, 1999 Annual Report Late on the evening of November 7, 1999, a small cadre of senior leaders huddled around a conference table on the 22nd floor of 85 Broad Street, deep in the heart of New York City’s financial district. The heady atmosphere and high-octane blend of intensity, anticipation, and quiet professionalism were not unusual for one of the world’s most storied investment banks. Tonight, however, eleven of Goldman Sachs’ finest were working not on a major acquisition or IPO, but on a revolutionary leadership development plan for the firm. In June 1999, Goldman’s Management...
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...| A brief look at one of the 10 best investment banks- Goldman Sachs | | Submitted ToHumayan Kabir Course Teacher Merchant and Investment Banking Course code: FNB 308 Submitted ByShadman Sakib (Student ID: 1264) Md. Fahad Bhuiyan (Student ID: 1271) Edward Francis Gomes (Student ID: 1290) Md. Shariful Alam (Student ID:1287) Rezaul Karim (Student ID:1643) | Dhaka, BangladeshJune 23, 2012 | AssignmentDepartment of Finance & Banking Jahangirnagar University Savar, Dhaka | Introduction The Goldman Sachs Group, Inc. (Goldman Sachs) is global investment banking, securities and investment management firm that provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Goldman Sachs reports activities in four segments: Investment Banking, Institutional Client Services, Investing & Lending and Investment Management. As of December 2011, it had offices in over 30 countries, including office in financial centers worldwide. Mission Goldman Sachs Group use Business Principles rather than a Mission Statement: 1. Our clients' interests always come first. Our experience shows that if we serve our clients well, our own success will follow. 2. Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws...
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...Leadership development at Goldman Sachs 1. Why is Goldman Sachs considering a more systematic approach to developing leaders? The 90’s boom had a downside for the banks: “hot” new industries placed additional stress on an already tight labor market by wooing skilled workers away from more traditional fields. The ensuing “war for talent” threatened to put a damper on the growth of professional service firms as bankers, lawyers and consultants all sought opportunity in these new industries. Many firms turned to unconventional sources to fill the staffing void, eventually hiring Ph.D. graduates, medical doctors, scientists, and others with non-traditional business backgrounds. The increasingly diverse workforce challenged the strong cultures of professional service firms that historically had preferred to grow their own talent. Time-honored, organic models of leader development were put to the test. 2. What should the Leadership Development Advisory Committee include as key design features of Goldman’s new leadership development program? Goldman’s approach to professional development should be guided by four key objectives: 1. Developing the firm’s key asset: With the firm’s people representing our most critical asset and competitive advantage, the task of keeping our talent excited and moving up a steep learning curve has become mission-critical. 2. Winning the “War for Talent”: Accelerated professional development is a key element in the overall...
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...Goldman Sach vs. SEC By: Lemar Clayton The Goldman Sachs situation presents a leadership ethics dilemma. Is it okay for banks to bet against their customers to manage risk and hedge their bets? In fact, I’m willing to bet that opposing sides in the argument don’t even see this as a dilemma. “The senate subcommittee grilled Goldman executives for 11 hours because they clearly think that what Goldman did was morally wrong, if not illegal.” ("Sec charges goldman," 2010) Contrast that with Goldman’s shareholders, who probably think it’s unethical for Goldman’s executives not to hedge against a mortgage collapse. There is a middle position that says the hedging itself wasn’t wrong, it was how Goldman did it that was questionable. Goldman should have disclosed its short position and possibly even details about the origins of those CDOs to customers. Let me begin by explaining what is a CDO, Goldman takes a reference portfolio, or a bunch of bonds. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Each set of bonds is senior to all the bonds below it, and they pay principle in order of their seniority. You can view it as a pyramid with different slices. The portfolio is giving a rating by Wall Street. Each slice has a different maturity and risk associated with it. The higher the risk, the more the CDO pays. Level E will take losses before D, and level C will take losses before B. It’s important to note the bonds don’t have...
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...Goldman accused of subprime fraud By Francesco Guerrera and Henny Sender in New York Published: April 16 2010 16:11 | Last updated: April 17 2010 00:56 US authorities on Friday accused Goldman Sachs of securities fraud that caused investor losses of more than $1bn, in the toughest regulatory crackdown so far on the excesses of the credit-bubble era. News of the civil action by the Securities and Exchange Commission wiped more than $12bn off the market value business model, and rocked other banks. The SEC move came as President Barack Obama made a final push for financial reform in the Senate Goldman and one of its vice-presidents of failing to disclose that in 2007 the hedge fund Paulson & Co had a major role in creating a collaterised debt obligation, a security backed by subprime mortgages, so that it could bet against it. d the firm and its position of Lloyd Blankfein CDO but did not name any executives. Goldman shares closed nearly 13 per cent lower to $160.70. The civil complaint alleges that Goldman and Fabrice Tourre, one of its vice-presidents, hid from investors the fact that Paulson & Co, which has not been charged, had a heavy hand in influencing the composition of loans that made up the CDO. Mr Tourre could not be reached for comment. - Within nine months of the creation of the CDO, 99 per cent of its loans had been downgraded, yielding Paulson & Co a profit of $1bn. Investors around the globe including IKB, the German bank which became the first casualty...
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...Gray: The Goldman Sachs Standard Are there ethics in big business? Or does big business answer to a different power? This can be a rather gray area. The problem to be investigated is the Goldman Sachs Standard and the ethics (or lack thereof) that exist in the company. The original market strategy was to provide loans for small businesses and then sell these loans as commercial paper. (Jennings, 2012) In the 1920s, this became a tough market in which to make a profit. So, to borrow a phrase, when the going gets tough, the tough change strategies. In the late 1920s, Goldman changed its investment strategy to layered investments. This strategy involves creating a company and then personally purchasing a large amount of the shares. Goldman would generally purchase approximately 90 percent of these shares. The public, unaware of the original purchase, only saw a profitable company so they eagerly purchased not only the remaining initial shares, but also purchased shares sold by Goldman at a higher rate. Goldman would also purchase some of these to artificially inflate the market even further. This enabled Goldman to make money off of the secondary sales. Goldman was lying to its clients because the company it created was not truly as profitable as the inflated share price would indicate. It was fully aware of this and continued to layer additional companies into the strategy that would appear successful only as long as the market continued to grow. Goldman was lying...
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...Lauri Peltonen Student number: 2190329 Goldman Sachs as creepy as we think? This report is concerning talk show, which I watched on CNN. There were four people talking about Goldman Sachs, which is one of the most powerful investment banks in the world. The whole discussion was based on one of former employees’ letter of resignation. Last week Greg Smith, former executive director and head of the firm’s US equity derivatives business, left after almost 12 years at the firm and he wrote an explosive letter where he explained his decision. The letter has ever since been on headlines and now the panelists of the show talked is Goldman Sachs really as toxic as Smith told. The discussion was led by the host and the other participants talked when there was their turn. As one might guess, considering the topic the atmosphere was quite negative. For example one of the panelists, Rolling Stones magazine’s journalist, who some years ago wrote an article concerning the way of act’s in Goldman Sachs, was quite sure that there occur a lot of problems in Goldman at the moment. Smith told in his letter that in Goldman Sachs nothing else matters than money. According to Smith’s letter Goldman’s treasurers are cheating and betraying their clients daily. It is awful to think that some individual company can control world this much. The company owns derivatives as much as the amount of whole worlds GDP is; I think that it is an incomprehensible amount of money. For example meanwhile other...
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