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Goldman Sachs Stops Bankers from Buying Stocks

goldman sachsAccording to someone with direct knowledge, the “conflict-of-interest” policy for Goldman Sachs Group, Inc. (GS) is being changed. Reportedly, GS which is the top advisor on corporate takeovers is prohibiting investment bankers from trading individual stocks and bonds.

This change was revealed today to employees at the New York-based firm and will take effect right away. As stated by the anonymous resource, this matter has not been made public and in addition to not being able to trade, investment bankers are banned from investing in event-driven or activist hedge funds. Prior to this, bankers could invest in individual stocks but only with the necessary approval.

This announcement coincides with another Goldman Sachs story featured in reports by ProPublica and public radio pertaining to a former examiner, Carmen Segarra, with the Federal Reserve Bank of New York who recorded ex-colleagues and their dealings with GS.

In a lawsuit filed last year against her former employer, Segarra, who was terminated in 2012, allegedly lost her job because she refused to alter her finding of GS not having a conflict-of-interest policy. Although the case was dismissed in April, a formal appeal has been filed.

In the same year as Segarra’s firing, a Delaware judge scolded Goldman Sachs specific to the firm’s “incomplete and inadequate” handing of a conflict of interest case pertaining to the $21 billion purchase of El Paso Corp by Kinder Morgan, the largest takeover involving GS in 2011.

Former Goldman Sachs partner, Stephen D. Daniel, was the lead banker on the deal but failed to disclose that he personally owned approximately $340,000 in Kinder Morgan stock.

The change announced today has been talked about for months. With this change, a policy that had been adjusted after the Kinder Morgan deal will be tightened. The goal of the modified conflict-of-interest policy is to reduce possible client conflicts but also to serve as protector over Goldman Sach’s reputation.

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One Comment

  1. John

    September 27, 2014 at 3:26 pm

    Goldman Sach’s reputation? You mean too big to Jail? … Isn’t this kinda like insider trading??