Just last week Goldman Sachs, a well known Wall Street brand that is popular with investors and most definitely profitable, was accused of fraudulent actions involving sub-prime mortgages–investments that were likely to fail and these were selected by a Hedge Fund—Paulson & Co, Inc. According to a report on MSNBC.com with Lisa Myers, the SEC is accusing Goldman Sachs of “rigging the game” against investors.
Michael Appleton for The New York Times
The NBC report says that investors lost $1Billion. The Hedge Fund made $1Billion and Goldman Sachs earned $15Million in fees. As important is the perception this will have on the Goldman brand that has been strong for so long, the company denies the allegations saying they are “completely unfounded” and they have said they will “vigorously contest them and defend the firm and its reputation.”
This brings us to broader issue around business practices that are risky and for Goldman will most likely tarnish the brand. Goldman Sachs’ business principles consist of Integrity and Honesty, and Clients Interests Come First. Ouch! I truly hope this is not a repeat of the more recent situations of AIG or even Enron and Arthur Andersen a few years back, and how they touted Integrity among other guiding principles as core values. For Goldman’s sake, I hope they are absolved of fraudulent activity, but no doubt the brand has already been tainted with these allegations. Investors and the public are already on major alert and will be questioning all of Wall Street.
Goldman’s situation brings us to a broader business question—how serious are we as a global business community in living up to basic business principles of integrity and honesty? According to a study conducted by Booz Allen Hamilton and The Aspen Institute, companies around the world are increasingly adopting formal statements for company values and senior executives routinely identify ethical behavior—honesty and integrity as top issues. So why then are we finding the lack of both seemingly lurking in companies? Why does any business need to resort to unethical behavior? Well, that’s a good question. I invite you to share your thoughts.
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