Goldman-AND- Sachs PDF

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GOLDMAN AND SACHS

Scenarios and Dilemmas Examples:

A Top Goldman Banker Raised Ethics Concerns. Then He Was Gone. https://www.nytimes.com/2018/09/11/business/goldman-sachs-whistleblower.html

By the tight-lipped standards of Goldman Sachs, the phone call from one of the firm’s most senior investment bankers was explosive. James C. Katzman, a Goldman partner and the leader of its West Coast mergers-and-acquisitions practice, dialed the bank’s whistle-blower hotline in 2014 to complain about what he regarded as a range of unethical practices, according to accounts by people close to Mr. Katzman, which a Goldman spokesman confirmed. His grievances included an effort by Goldman to hire a customer’s child and colleagues’ repeated attempts to obtain and then share confidential client information. These complaints were never independently investigated or fully relayed to the Goldman board.

Mr. Katzman’s complaints suggest that, a decade after Goldman’s actions during the financial crisis severely tarnished its reputation, the firm continues to struggle with cultural problems. In the past, Goldman has been accused by employees, clients and government authorities of trying to profit at the expense of customers.

Organization:  location, size, industry sector (IT? Financial services? Marketing?) Major products/services

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Ethical reputation (if known)

Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. https://www.goldmansachs.com/our-firm/

Industry Financial Services : Size: 36,600 (2018) 1.Investment Banking services: o o o o o o

strategic advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings, spin-offs and risk management, and debt and equity underwriting of public offerings and private placements, including local and cross-border transactions and acquisition financing, as well as derivative transactions directly related to these activities.

2.I nst i t ut i onalCl i entSer vi ces 

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facilitate client transactions and make markets in fixed income, equity, currency and commodity products, primarily with institutional clients such as corporations, financial institutions, investment funds and governments. make markets in and clear client transactions on major stock, options and futures exchanges worldwide and provide financing, securities lending and other prime brokerage services to institutional clients.

3. Investing and Lending 4. I nvest mentManagement (primarily through separately managed accounts and commingled vehicles, such as mutual funds and private investment funds) across all major asset classes to a diverse set of institutional and individual clients.

Offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to highnet-worth individuals and families.

ETHICAL REPUTATION:

The conduct of Goldman Sachs with regards to Collateralised Debt Obligations (CDOs) and Mortgage Backed Securities (MBSs), exibited in the ABACUS scheme and resulting lawsuit has inherently damaged that reputation.

The bank is instead associated with misrepresentation and the violation of ethical standards (Santoro and Strauss 2013 pp. 117, 120-125, 145). https://sevenpillarsinstitute.org/goldmansachscodeofethicspost-2008/

Goldman Sachs Group

54 Securities fraud

The firm agreed to pay $12.5 million to settle a suit alleging that it failed to conduct adequate due diligence in underwriting WorldCom bonds (Morgenson, 2005). The firm agreed to pay $40 million to settle charges that it accepted “kickbacks” in exchange for investment banking business (Anderson, 2005).

Substantial fines were paid for their misdeeds

https://www.sciencedirect.com/science/article/pii/S0007681305001448

Ethical Scenarios and Dilemmas  identify nature/scope of ethical dilemma  Is it a personal or unique business challenges? Why or why not?  Identify key stakeholders. What are their interests/motivations/rights/ core values? Dilemmas: One example pertaining Confidential Information being leaked and Exposed Case of an internal dilemma: In the fall of 2014, Goldman Sachs faced an ethical dilemma when an employee was

caught taking confidential documents from the Federal Reserve. Motivation and interests : Employee took the information to gain profit and personal gain. Bansal wanted to trade ahead of client mergers, and within time The Securities and Exchange Commission (SEC) took notice.

Conflict of Interest: Goldman Sachs has multiple employees who have worked for the Federal Reserve before coming to Goldman Sachs. Hiring employees that have previously worked for the Federal Reserve inducts a conflict of interest. Goldman Sachs is a company based upon trust and the idea that individual assets, life savings and confidential information with not be exposed or miss used, yet a lot of information was stolen.

Stakeholders: global clients and not only the U.S. economy but also the global economy. http://businessethicscases.blogspot.com/2016/11/goldman-sachs-trust-issues-due-to.html

Indiviudalism Theory: individualism theory is that a business should act in a way where the business makes the most profit In this case Bansal was trying to make the most profit for himself and in turn for the company by receiving confidential information to get him ahead. By Bansal doing this he maximized his profits.

Bansal did not necessarily have the intentions of making a profit for the company, but solely for himself.

Utilitarianism Utilitarianism theory follows the ethical rule that businesses should act in such a way to maximize happiness for all stakeholders long-term Bansal decided to make himself and customers short term happy, but did not think of the long term consequences. the benefits to costs ratio of analyzing Bansal’s actions the costs outweigh the benefits in this situation; therefore he violated the utilitarian theory. the stakeholders of the customers were affected by having no trust and therefore finding another company to do business with. Their employees are now hurt by their reputation of being unethical based upon another employees actions.

http://businessethicscases.blogspot.com/2016/11/goldman-sachs-trust-issues-due-to.html

Ethical solutions (5 points)  Critically assess different ethical solutions based on the theories discussed in the class  What ethical solutions your team propose to address ethical dilemma • What is the strength and weakness of proposed solutions...