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Goldman Sachs

From Alfawiki
The Goldman Sachs Group, Inc.
Company typePublic
IndustryInvestment banking, financial services
Founded1 January 1869; 157 years ago (1869-01-01) in New York City, United States
FounderMarcus Goldman
Headquarters
New York City
,
United States
Area served
Worldwide
Key people
Lloyd Blankfein (Chairman and CEO as of 2006)
ProductsInvestment banking, asset management, wealth management, securities underwriting, prime brokerage, market making, clearing and custodial services, private equity, hedge funds, financial products
Websitewww.goldmansachs.com

The Goldman Sachs Group, Inc. () is a prominent American multinational firm specializing in investment banking and financial services. Established in 1869, its main headquarters are located in Lower Manhattan, New York City, with additional regional offices situated in key global financial hubs. Goldman Sachs ranks as the world's second-largest investment bank by revenue and holds the 55th position on the Fortune 500 list, which ranks the largest U.S. companies by total revenue. In the 2024 edition of the Forbes Global 2000, it was ranked 23rd overall. The firm is recognized as a systemically important financial institution by the Financial Stability Board.

Goldman Sachs' operations cover a broad spectrum including investment banking services such as advisory roles in mergers, acquisitions, and corporate restructuring; securities underwriting; prime brokerage; asset management; and wealth management solutions. The company functions as a market maker for various financial instruments and offers clearing and custodial services. It also manages private equity and hedge funds, develops sophisticated financial products, and owns Goldman Sachs Bank USA, a direct banking entity. Its trading activities encompass both client-driven flow trading and proprietary trading conducted on its own behalf.

The organization actively invests in emerging companies and frequently secures additional mandates as bookrunner during their initial public offerings (IPOs), strengthening its position within capital markets.

Founding and early development

Goldman Sachs was established in 1869 by Marcus Goldman in New York City, initially operating from a modest office near a coal chute. In 1882, Marcus Goldman's son-in-law, Samuel Sachs, became part of the business, followed by his son Henry Goldman and another son-in-law, Ludwig Dreyfuss, joining in 1885 when the firm adopted the name Goldman Sachs & Co. The company introduced innovations such as commercial paper financing for entrepreneurs and gained membership in the New York Stock Exchange (NYSE) in 1896. By 1898, its capital had grown to $1.6 million, with expansion into cities like Boston, Chicago, San Francisco, Philadelphia, and St. Louis by 1920.

The firm's entry into the IPO market began in 1906 with Sears, Roebuck and Company, facilitated by Henry Goldman's relationship with owner Julius Rosenwald. Subsequently, it underwrote offerings for General Cigar Company (1906), F. W. Woolworth Company (1912), and Continental Can, popularizing the use of price–earnings ratios as a valuation tool that improved capital raising for retailers and companies with minimal physical assets.

In 1912, Henry S. Bowers became the first non-family partner to join Goldman Sachs. Henry Goldman departed in 1917 due to internal disagreements related to his pro-German stance during World War I. Control remained largely within the Sachs family until Waddill Catchings joined in 1918 and emerged as the largest shareholder by 1928. The firm made strategic investments including significant stakes in Merck & Co. (1919) and General Foods (1922). On December 4, 1928, Goldman Sachs launched the Goldman Sachs Trading Corp., a closed-end fund that collapsed during the 1929 stock market crash amid accusations of manipulating share prices and insider trading practices.

1930–1980

Sidney Weinberg assumed the role of senior partner at Goldman Sachs in 1930 amidst the Great Depression, steering the company’s emphasis away from trading and toward investment banking. Under his guidance, Goldman led prominent transactions such as the $657 million initial public offering of Ford Motor Company in 1956 and Sears Roebuck's $350 million debenture issuance in 1958. Weinberg also established an investment research division, created a municipal bond department, and was a pioneer in risk arbitrage strategies.

During the 1950s, securities trader Gus Levy advanced block trading techniques within Goldman Sachs. The firm formally founded its investment banking division in 1956 and moved its headquarters to 20 Broad Street, New York City, in 1957. Levy succeeded Weinberg as senior partner in 1969, revitalizing Goldman's trading operations and advocating a "long-term greedy" philosophy, encouraging partners to reinvest nearly all profits back into the firm. Weinberg continued as a senior partner until his passing that same year.

The 1970 bankruptcy of Penn Central Transportation Company, which had issued over $80 million in commercial paper through Goldman, threatened the firm’s capital base and reputation, resulting in lawsuits from the SEC. This event led to the adoption of credit rating systems for commercial paper issuers.

Under Senior Partner Stanley R. Miller, Goldman Sachs expanded its international footprint by opening its first office in London in 1970. By 1972, it had launched Private Wealth Management and fixed income divisions. The company introduced the "white knight" defense tactic during a hostile takeover attempt of Electric Storage Battery in 1974. In 1976, John Weinberg and John C. Whitehead were appointed co-senior partners, promoting shared leadership and codifying operations through 14 guiding business principles.

1981–2000

On November 16, 1981, Goldman Sachs acquired J. Aron & Company, a commodities trading firm that merged with its Fixed Income division to create Fixed Income, Currencies, and Commodities. J. Aron specialized in coffee and gold markets; this acquisition also brought future CEO Lloyd Blankfein into the company.

In 1983, Goldman relocated to its global headquarters at 85 Broad Street, which remained its base until 2009. The firm underwrote the public offering of the real estate investment trust (REIT) owning Rockefeller Center in 1985—the largest REIT offering at that time. Additionally, Goldman played an influential role advising companies during the global privatization wave following the Soviet Union's collapse.

Goldman Sachs Asset Management was founded in 1986 to oversee most of the firm's mutual funds and hedge funds. That year also saw Goldman underwriting Microsoft's IPO, advising General Electric on its acquisition of RCA, and expanding its mergers and acquisitions activities by joining stock exchanges in London and Tokyo. The firm was an innovator in electronically distributing investment research and launched the first public offering of original issue deep-discount bonds. In 1988, it assisted the State Bank of India with issuing $200 million in US commercial paper.

Robert Rubin and Stephen Friedman became co-senior partners in 1990, emphasizing globalization to enhance M&A and trading operations. That same year, Goldman introduced paperless trading on the New York Stock Exchange. Rubin departed in 1992 to serve in the Clinton administration. In 1994, Goldman launched the Goldman Sachs Commodity Index (GSCI) and opened its initial Beijing office. Jon Corzine replaced Friedman as CEO that year.

Throughout the mid-1990s, Goldman Sachs expanded its presence in emerging markets despite challenges such as the Mexican peso crisis—where it held substantial Mexican bonds—and became one of only two foreign firms authorized to operate on Mexico’s Bolsa stock exchange. The firm financed Rockefeller Center again in 1994 by acquiring an ownership stake before selling it to Tishman Speyer in 2000. Goldman also served as lead underwriter for Yahoo!'s IPO in 1996 and co-lead manager for NTT DoCoMo’s ¥2 trillion IPO in 1998.

In 1999, Goldman purchased Hull Trading Company for $531 million as part of a strategic move toward electronic trading platforms. That same year, after considerable debate among partners, Goldman Sachs transitioned to a public company through an initial public offering (IPO), selling 12.6% of shares at $53 each. Post-IPO ownership included approximately 48.3% held by former partners, 21.2% by non-partner employees, and 17.9% by retired partners along with key investors such as Sumitomo Bank Ltd. Following this transition, Henry Paulson succeeded Jon Corzine as chairman and CEO.

This era was characterized by substantial growth driven by strategic acquisitions, global expansion efforts, pioneering electronic trading innovations, and converting from a private partnership into a publicly traded corporation—fortifying Goldman's competitive position within investment banking and asset management sectors.

2000–2007

In September 2000, Goldman Sachs completed the acquisition of Spear, Leeds, & Kellogg, a prominent specialist firm on the New York Stock Exchange, for $6.3 billion. Earlier that year, in January, Goldman Sachs and Lehman Brothers spearheaded the World Bank's inaugural internet bond issuance.

During the same year, Goldman advised Jim and Janet Baker in the sale of Dragon NaturallySpeaking to Lernout & Hauspie (L&H) for $580 million in stock. Following L&H’s collapse amid accounting fraud revelations, the Bakers filed a lawsuit against Goldman alleging negligence and breach of fiduciary duty. Ultimately, in 2013, a federal jury ruled in favor of Goldman Sachs.

In March 2003, Goldman acquired a 45% interest in a joint venture with Australian investment bank JBWere and also purchased The Ayco Company L.P., a financial counseling firm operating on a fee-based model. Later that year, in October, economists at Goldman introduced the BRIC concept, identifying Brazil, Russia, India, and China as emerging economic powerhouses.

By May 2006, Henry Paulson departed to serve as U.S. Treasury Secretary, with Lloyd Blankfein ascending to chairman and CEO roles. In January 2007, Goldman collaborated with CanWest Global Communications to acquire Alliance Atlantis, which held broadcast rights for the CSI television franchise.

Subprime mortgage crisis: 2007–2008

Goldman Sachs was deeply affected by the subprime mortgage crisis and the broader financial turmoil of 2008 due to its involvement in securitization activities. In November 2008, the firm received a $10 billion capital injection from the U.S. Department of the Treasury under the Troubled Asset Relief Program (TARP), which was fully repaid with interest by June 2009.

Throughout the crisis, Goldman generated substantial profits by short-selling subprime mortgage-backed securities. Traders Michael Swenson and Josh Birnbaum were instrumental in producing approximately $4 billion in gains from this strategy. Initially, these profits helped offset losses on securitized loans and shielded Goldman from significant write-downs. However, as the crisis escalated in late 2008, concerns about the firm’s financial stability intensified.

In 2007, Goldman faced public criticism for repackaging high-risk mortgages as low-risk investments. Additionally, former trader Matthew Marshall Taylor was terminated after unauthorized derivative trades resulted in losses of $118 million; he later pleaded guilty and received a prison sentence.

On September 21, 2008, following regulatory approval, both Goldman Sachs and Morgan Stanley converted into bank holding companies, ending their independent securities firm status. Shortly afterward, Berkshire Hathaway invested $5 billion through preferred stock and warrants while Goldman raised an additional $5 billion via a public equity offering. The company also accepted a $10 billion preferred stock investment from the U.S. Treasury under TARP.

Despite receiving government bailout funds, Goldman awarded bonuses exceeding $1 million to 953 employees—a decision that attracted scrutiny from New York Attorney General Andrew Cuomo. CEO Lloyd Blankfein and six other senior executives declined bonuses, a stance supported by Cuomo. By June 2009, Goldman had repaid its TARP obligations with a 23% return to taxpayers.

During this period of market instability, the Federal Reserve established various credit facilities to support financial institutions; Goldman was a significant participant. It accessed programs such as the Primary Dealer Credit Facility and Term Securities Lending Facility for cumulative loans totaling $782 billion—all fully repaid according to agreed terms.

To address workforce challenges during this era, Goldman launched its "Returnship" initiative in 2008 aimed at assisting professionals reentering the workforce after career interruptions—particularly targeting women—thereby reinforcing diversity and talent retention efforts.

Nevertheless, Goldman's reputation suffered following the crisis; a 2009 survey indicated Morgan Stanley was regarded more favorably within the industry. In 2011, Goldman expanded its global footprint by acquiring full ownership of JBWere through a $1 billion transaction, strengthening its presence in wealth management markets.

Global Alpha

In September 2011, Goldman Sachs declared the termination of Global Alpha Fund LP, which was its largest hedge fund managed by Goldman Sachs Asset Management (GSAM). Established in the mid-1990s with an initial capital of $10 million, Global Alpha expanded to manage assets exceeding $12 billion by 2007, ranking among the world’s highest-performing hedge funds. The fund utilized quantitative techniques and high-frequency trading strategies grounded in statistical models created by founders Cliff Asness and Mark Carhart.

Characterized by The Wall Street Journal as a "large, discreet hedge fund" and referred to as the "Cadillac" of Goldman’s alternative investment vehicles, Global Alpha delivered substantial earnings for the firm by 2006. Nevertheless, its assets under management experienced a steep decline following the 2008 financial crisis—from $2.5 billion in mid-2008 down to under $1.7 billion by June 2011. After suffering losses in 2011, AUM dropped to roughly $1 billion, leading Goldman Sachs to discontinue the fund.

2013–2015

In 2013, Goldman Sachs served as underwriter for the $2.913 billion Grand Parkway System Toll Revenue Bond in Houston, Texas, which was secured by toll revenues. That April, Goldman and Deutsche Bank jointly led Apple’s $17 billion bond issuance—the largest corporate bond offering ever and Apple’s first since 1996; Goldman had managed Apple’s earlier bond deals during the 1990s.

By June 2013, Goldman acquired a loan portfolio valued at A$1.6 billion from Australia’s Suncorp Group for A$960 million. Later that September, Goldman Sachs Asset Management purchased Deutsche Asset & Wealth Management's stable value business, overseeing $21.6 billion in assets.

In 2014, Goldman bought an 18% interest in Denmark’s leading electric utility company DONG Energy (currently Ørsted A/S) from the Danish government. This transaction triggered political controversy and public demonstrations due to concerns about Goldman's involvement in the 2008 financial crisis and related tax issues. Goldman gradually reduced this stake starting in 2017 and completed its exit by the end of that year.

Also in January 2014, the Libyan Investment Authority initiated a $1 billion lawsuit against Goldman Sachs after suffering a 98% loss on its $1.3 billion investment made in 2007 through derivatives trades that yielded $350 million in fees for Goldman. Despite accusations of improper client relationship management, a court ruling in 2016 sided with Goldman, confirming standard client-bank interactions and justified fee structures.

In August 2015, Goldman agreed to acquire General Electric’s GE Capital Bank online deposit platform, which included $8 billion in online deposits plus an additional $8 billion in brokered certificates of deposit, thereby expanding its presence in consumer banking.

2016–2020

Goldman Sachs launched GS Bank, a direct bank, in April 2016. Later that year in October, Goldman Sachs Bank USA introduced unsecured personal loans with no fees under the Marcus by Goldman Sachs brand. Earlier in March 2016, Goldman acquired Honest Dollar, a fintech company specializing in affordable digital retirement solutions for small businesses and self-employed individuals.

During May 2017, Goldman purchased $2.8 billion worth of PDVSA 2022 bonds from Venezuela’s Central Bank amid widespread protests in Venezuela.

In April 2018, Goldman Sachs acquired Clarity Money, a personal finance startup. By September of that year, it had bought Boyd Corporation from Genstar Capital for $3 billion. In May 2019, United Capital Financial Advisers was acquired by Goldman Sachs for $750 million.

March 2019 saw Apple collaborate with Goldman Sachs to launch the Apple Card—the bank’s inaugural credit card product—after other major banks such as Barclays and JPMorgan Chase declined participation.

Also in March 2019, Goldman Sachs was fined £34.4 million by UK regulators due to misreporting millions of transactions over a ten-year period.

In December 2019, Goldman Sachs pledged to invest and finance $750 billion toward climate transition initiatives while ceasing funding for Arctic oil exploration and certain coal-related projects.

2020–present

In June 2020, Goldman Sachs introduced its proprietary typeface, Goldman Sans, initially distributed under a restrictive license that forbade criticism of the company. Following public backlash, the licensing terms were updated to the more conventional SIL Open Font License.

The firm encountered major legal repercussions tied to the 1Malaysia Development Berhad (1MDB) controversy, resulting in a historic $2.9 billion penalty under the Foreign Corrupt Practices Act. In July 2020, Goldman Sachs resolved criminal allegations in Malaysia with a $3.9 billion settlement. By October 2020, additional agreements exceeding $2.9 billion were finalized in other regulatory regions.

Starting in July 2020, Goldman Sachs adopted a policy mandating that companies pursuing IPOs in the U.S. and Europe include at least one diverse board candidate, emphasizing female representation—an initiative aimed at reinforcing its influence in capital markets and elevating corporate governance practices.

In August 2021, Goldman Sachs expanded its asset management capabilities by acquiring NN Investment Partners from NN Group for €1.7 billion, overseeing €335 billion in assets under management. The subsequent month saw the announcement of a $2.24 billion acquisition of fintech firm GreenSky, which was completed in March 2022 to bolster its consumer finance portfolio.

In March 2022, Goldman Sachs withdrew from its operations in Russia following sanctions imposed after the Ukraine conflict and simultaneously acquired NextCapital Group, a Chicago-based digital retirement advisory firm, enhancing its technological offerings in wealth management.

June 2022 marked Goldman Sachs’ debut into cryptocurrency derivatives with the launch of its first product linked to Ether. Additionally, the company secured a multi-year collaboration with McLaren Racing, underscoring strategic branding and positioning initiatives.

Amid financial challenges, Goldman Sachs announced workforce reductions in September 2022 after reporting diminished earnings earlier that July.

By early 2024, the firm had extended its reach into the energy sector through Rhythm Energy in Texas—part of its private equity investments—serving electricity grids that cover approximately 190 million Americans. It also deepened its presence in India’s healthcare market by acquiring a major stake in Medi Assist Healthcare.

In January 2025, CEO David Solomon revealed that the partnership with Apple on their credit card might conclude before the contract’s scheduled end in 2030. The following month, Goldman Sachs rescinded its policy requiring diverse board candidates for IPO companies—a significant change amid ongoing discussions around corporate diversity initiatives and reflecting evolving business priorities and stakeholder expectations.

Controversies and legal issues

Goldman Sachs has drawn criticism over ethical matters including associations with authoritarian governments, close connections to U.S. federal agencies facilitated by a "revolving door" of former personnel, and participation in commodity futures speculation. Internally, the company has faced scrutiny for imposing demanding work schedules of up to 100 hours per week, high levels of dissatisfaction among analysts, reports of harsh managerial behavior, insufficient mental health resources, and workplace stress contributing to physical health issues.

Involvement in the 2008 Financial Crisis

Goldman Sachs faced accusations of deceiving investors and capitalizing on the collapse of the mortgage market during the 2008 financial meltdown. These allegations led to inquiries by Congress, the Department of Justice, and the Securities and Exchange Commission, ultimately resulting in a $550 million settlement in 2010. The firm maintained its innocence, stating that clients were fully informed about its strategies to hedge against risks associated with mortgage-backed securities.

Although Goldman Sachs primarily served institutional clients, it encountered significant public and media condemnation. The company was famously labeled a "great vampire squid," accused of manipulating various markets ranging from technology shares to commodities. It became the focus of a dedicated Senate hearing and was criticized in a report that charged the firm with misleading customers and having conflicts of interest. The findings of the 2011 Senate investigation heightened attention on Goldman Sachs’ corporate governance and operational conduct.

Employee Bonuses Awarded in 2009 Despite Crisis

Following the repayment of funds obtained through the U.S. Treasury’s Troubled Asset Relief Program (TARP) in June 2009, Goldman Sachs distributed an unprecedented $11.4 billion in bonuses to staff, reflecting robust financial results amid ongoing economic challenges. This included at least $1 million bonuses for 953 employees, a move that drew scrutiny from New York Attorney General Andrew Cuomo due to the firm’s earlier acceptance of government assistance. Nevertheless, CEO Lloyd Blankfein along with six other senior executives declined their bonuses that year, citing accountability for the sector’s contribution to the downturn.

Advantages from AIG Government Bailout

During the crisis, American International Group (AIG) obtained $180 billion in government loans, much of which was used to settle obligations with counterparties such as Goldman Sachs, which received $12.9 billion. This distribution raised controversy over whether financial institutions should have borne larger losses instead of receiving full compensation via AIG’s government-supported funds. Critics contended that permitting AIG’s failure would have triggered a devastating market collapse, highlighting the bailout’s critical role in preserving global financial stability.

Goldman Sachs’ Position on AIG Payment Criticism

Goldman Sachs stated that its net exposure to AIG was "immaterial," safeguarded by hedging instruments (credit default swaps with other parties) and $7.5 billion in collateral, which protected it from financial harm if AIG had defaulted. The expense of these hedges surpassed $100 million. Chief Financial Officer David Viniar remarked that profits linked to AIG during early 2009 were minimal and expressed puzzlement over the heightened examination of Goldman’s dealings with AIG.

There is speculation that Goldman’s hedging positions might have failed to pay out had AIG collapsed. According to a U.S. Treasury report, an AIG default would have complicated Goldman Sachs’ efforts to unwind trading positions and exerted pressure on counterparties, potentially obstructing credit protection recoveries. Furthermore, it would have exposed Goldman to risks stemming from declines in collateralized debt obligations.

Goldman highlighted that credit default swap positions are marked to market daily, requiring sellers to post collateral as default risk increased—an approach they argue ensured their hedges remained effective against an AIG bankruptcy and associated defaults. However, critics argue that collateral may not fully cover losses during bankruptcy due to uncertainties around collateral valuation and incomplete coverage obligations for protection sellers.

Potential Advantages from Participation in the September 15, 2008, New York Federal Reserve Meetings

There have been assertions that Goldman Sachs gained special privileges by attending the pivotal September meetings at the New York Fed, where decisions regarding AIG’s future were made. This perception largely arose from a misinterpreted The New York Times article, which was subsequently corrected to state that CEO Lloyd Blankfein was "one of the Wall Street chief executives present." Executives from other financial institutions also took part. Goldman Sachs CFO David Viniar clarified that Blankfein did not have a direct meeting with US Treasury Secretary Henry Paulson about AIG, although they maintained frequent telephone contact. It is important to note that Paulson did not attend the New York Fed sessions.

Morgan Stanley was engaged by the Federal Reserve to provide advisory services concerning the AIG bailout. According to The New York Times, Paulson spoke with Blankfein approximately twenty-four times during the bailout week, having secured an ethics waiver in advance. While it is standard for regulators to communicate with market leaders during crises to gain industry perspectives, Paulson’s repeated calls with Goldman’s CEO were particularly notable. Officials stress that despite Paulson’s involvement in rescue deliberations, the Federal Reserve was responsible for structuring and financing the AIG bailout.

Stock Price Manipulation Allegations

Goldman Sachs faced accusations of releasing analyst reports that overstated financial forecasts for Exodus Communications and assigning it an unjustifiably top stock rating. On July 15, 2003, Goldman Sachs, along with Lehman Brothers and Morgan Stanley, was sued for artificially boosting RSL Communications stock prices through deceptive analyst evaluations, culminating in a $3.38 million settlement.

The firm was also charged with soliciting kickbacks from institutional clients who profited by flipping deliberately undervalued IPO stocks during the dot-com era. Legal documents related to the eToys.com IPO revealed Goldman intentionally underpriced offerings to favor select clients who then returned profits through increased business dealings, perpetuating this scheme. This practice defrauded both companies issuing undervalued shares and their initial investors.

Utilization of Offshore Tax Havens

A 2016 study by Public Interest Research Group revealed Goldman Sachs operates 987 subsidiaries located in offshore tax havens, including 537 entities in the Cayman Islands, despite lacking legitimate business activities there. The firm reportedly holds $28.6 billion in offshore accounts.

In 2008, Goldman Sachs’s effective tax rate plunged dramatically from 34% to 3.8%, with tax payments dropping from $6 billion to $14 million. Critics link this decline to income shifting toward subsidiaries situated in low- or zero-tax jurisdictions like the Cayman Islands—a tax strategy commonly employed by leading U.S. banks and corporations.

Role in the European Sovereign Debt Crisis

Goldman Sachs attracted scrutiny for its involvement in the 2010 European debt crisis. In 2001, to assist Greece in circumventing violations of the Maastricht Treaty, Goldman arranged a covert €2.8 billion loan structured as an off-balance-sheet "cross-currency swap," effectively concealing about 2% of Greece’s national debt. Goldman earned a €600 million fee for facilitating this deal. In 2009, Goldman helped establish a specialized credit default swap (CDS) index covering Greece's high-risk debt, which contributed to rising Greek bond yields and pushed the country toward near-bankruptcy during 2010–2011.

Several prominent European officials involved in crisis management had prior affiliations with Goldman Sachs. Lucas Papademos, former Greek prime minister, headed the Central Bank of Greece during these contentious transactions. Petros Christodoulou, general manager of Greece’s Public Debt Management Agency, previously worked at Goldman. Italy’s former prime minister Mario Monti acted as an international adviser for Goldman Sachs. Former Bundesbank board member Otmar Issing and then-European Central Bank president Mario Draghi were ex-Goldman executives as well. Additionally, António Borges, who led the IMF’s European Department amid the crisis, served as vice chairman at Goldman Sachs International previously. Former Goldman employee Carlos Moedas held influential government positions in Portugal overseeing structural reforms. Lastly, Peter Sutherland, Ireland’s former Attorney General, was a non-executive director at Goldman Sachs International.

Employee perspectives

In March 2012, Greg Smith, who was leading Goldman Sachs' U.S. equity derivatives sales in the EMEA region at the time, stepped down by publishing an op-ed in The New York Times. In this piece, he sharply criticized the firm's culture and leadership approach. Subsequently, Smith authored a book entitled Why I Left Goldman Sachs. While numerous accusations made by Smith lacked substantiation and he faced allegations of deceit from The Observer, The New York Times chose not to retract his editorial.

Two years later, in 2014, Steven George Mandis, a former portfolio manager at Goldman Sachs, released What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences. Drawing on his twelve years with the company and his doctoral research at Columbia University, Mandis examined how the shift to a publicly traded entity transferred risk from management to shareholders. This transition pressured Goldman Sachs toward growth, triggering cultural changes and conflicts of interest that influenced its operational model and strategic decision-making.

Organizational environment

Reports from 2021 revealed that first-year analysts often endured workweeks extending to 100 hours with minimal rest, alongside workplace mistreatment impacting their mental well-being. In response, Goldman Sachs implemented a revamped vacation policy in May 2022. This policy introduced unlimited vacation days for senior bankers and mandated a minimum of 15 days off annually for all employees to encourage proper rest and recovery.

Lawsuit concerning gender discrimination

In 2010, two former female employees initiated legal action against Goldman Sachs alleging gender-based discrimination, citing a workplace environment marked by sexual harassment and unequal pay. The lawsuit also pointed out exclusionary client-related activities and revealed that female vice presidents earned approximately 21% less than male peers. By 2018, the court permitted a class-action lawsuit focused on gender bias claims but excluded sexual harassment allegations.

In May 2023, Goldman Sachs consented to a $215 million settlement with nearly 2,800 female employees over claims of discriminatory compensation and limited advancement opportunities. Government statistics indicated that women at the firm earned about 20% less than men—a disparity notably higher than the national gender wage gap of 9.4%. This settlement came prior to the trial date.

As of March 2024, data shows that roughly two-thirds of women partners from the 2018 cohort have either departed or lost their partnership status. No woman currently heads a major division or is viewed as a potential successor to CEO David M. Solomon. Among the eight executive officers, only two are women, both occupying non-revenue positions in legal and accounting departments.

Recommendation to short California bonds underwritten by Goldman Sachs

On November 11, 2008, the Los Angeles Times reported that Goldman Sachs profited $25 million from underwriting California municipal bonds while simultaneously advising clients to take short positions against those same bonds. Although this apparent contradiction drew criticism, some observers emphasized that underwriting and trading functions operated independently under regulatory Chinese wall provisions—a structural barrier intended to prevent conflicts of interest and favored by critics advocating for stricter separation.

Personnel transitions between Goldman Sachs and U.S. government

Goldman Sachs has a well-documented pattern of former employees assuming prominent governmental roles. Notable individuals include British Prime Minister Rishi Sunak, former U.S. Treasury Secretaries Steven Mnuchin, Robert Rubin, and Henry Paulson, SEC Chair Gary Gensler, as well as ex-economic advisors such as Gary Cohn. The firm's alumni network extends to governors, prime ministers, and leaders of major financial organizations worldwide.

This continuous movement between Goldman Sachs and public office has drawn scrutiny over potential conflicts of interest, earning the firm the nickname "Government Sachs." Former CEOs Henry Paulson and Jon Corzine also served in significant political capacities. Controversy emerged when ex-Goldman lobbyist Mark A. Patterson was appointed chief of staff to Treasury Secretary Timothy Geithner, despite prior commitments to reduce lobbyist influence in government. In 2011, the Washington Examiner highlighted Goldman Sachs as a leading fundraiser for President Obama during the 2008 campaign, noting CEO Lloyd Blankfein's ten visits to the White House—underscoring the firm's substantial influence across financial markets and political spheres.

Cases of Insider Trading

In 1986, David Brown, an investment banker at Goldman Sachs, admitted guilt for disclosing confidential information regarding a takeover to Ivan Boesky. Three years later, in 1989, Robert M. Freeman, a senior partner and Head of Risk Arbitrage who was mentored by Robert Rubin, also pleaded guilty to insider trading involving both personal and firm accounts.

Insider Trading Allegations Against Rajat Gupta

In April 2010, Goldman Sachs board member Rajat Gupta became embroiled in an insider trading scandal after allegedly tipping off Raj Rajaratnam of the Galleon Group about Berkshire Hathaway's $5 billion investment in Goldman during the 2008 financial crisis. Gupta had notified Goldman a month prior that he would not seek reappointment as a director. The U.S. Securities and Exchange Commission (SEC) brought civil charges against him for leaking confidential earnings information from both Goldman and Procter & Gamble, where he also held a board position. Gupta had financial interests in certain Galleon hedge funds and maintained business connections with Rajaratnam. The insider information reportedly led to illicit gains amounting to $17 million from Goldman trades and over $570,000 from transactions related to Procter & Gamble. Gupta denied these accusations and was also serving on the board of AMR Corporation at the time.

In June 2012, Gupta was found guilty on four felony counts including conspiracy and securities fraud. By October 2012, he received a sentence of two years imprisonment, followed by one year of supervised release, along with a $5 million fine (~$ in ). He was released in January 2016 to complete the remainder of his sentence under home confinement. Although he appealed the conviction, it was upheld in 2019.

Abacus Synthetic CDOs and SEC Litigation

Goldman Sachs anticipated the subprime mortgage downturn, with some traders adopting a bearish stance on the housing market as early as 2004. Initially, mortgage-related securities were created to hedge potential losses; however, by late 2006, Goldman shifted towards a more negative outlook and increased production of these instruments not only for hedging but also to profit significantly from mortgage defaults.[1] Authors Bethany McLean and Joe Nocera observed that Goldman’s portrayal as simply a "market maker" became less accurate over time.[2]

These financial products, known as synthetic CDOs, differed from conventional collateralized debt obligations by basing payouts on premiums from credit default swaps (CDS) rather than actual mortgage assets. While Goldman and various hedge funds took short positions by paying premiums, investors such as insurance companies and pension funds held long positions, bearing risk if defaults occurred. Between 2004 and 2007, Goldman issued more than 20 CDOs under its "Abacus" series totaling $10.9 billion (~$ in ), and overall packaged, sold, and shorted 47 synthetic CDOs with nominal values reaching $66 billion.[3][4]

Although Goldman received recognition for its prescience, its substantial short positions raised questions about conflicts of interest. By April 2010, at least $5 billion (~$ in ) worth of these CDOs had been downgraded to junk status or had defaulted.[5]

A prominent case involved the $800 million (~$ in ) Hudson Mezzanine CDO issued in 2006. Executives at Goldman asserted that this was an effort to offload subprime securities by embedding them within the CDO’s underlying assets while simultaneously taking a short position against them. Critics contended that the prospectus concealed this approach by describing the assets as "'sourced from the Street,'" thereby disguising Goldman's involvement in their selection.[6] By March 2008, escalating borrower defaults compelled holders to pay approximately $310 million to Goldman and other parties who had bet against these securities.[1] Internal emails disclosed considerable harm to Goldman’s client relationships and overall franchise reputation stemming from these transactions.[7]

2010 SEC civil fraud lawsuit

In April 2010, the U.S. Securities and Exchange Commission (SEC) filed charges against Goldman Sachs and its vice president Fabrice Tourre, accusing them of securities fraud connected to a synthetic collateralized debt obligation (CDO) named Abacus 2007-AC1. The SEC claimed Goldman Sachs deceived purchasers by asserting that ACA Management, an independent manager, selected the underlying assets, whereas hedge fund Paulson & Co.—which bet against the investment—actually played a "significant role" in choosing those assets. This particular security ended up among the poorest-performing mortgage instruments during the housing market collapse.

Unlike other Abacus transactions, Goldman Sachs did not take a short position on 2007-AC1 and reportedly incurred losses; instead, Paulson held the short position and engaged Goldman to structure the deal. Paulson collaborated with ACA Management to pick 90 mortgage bonds rated BBB that were anticipated to decline in value. For structuring the transaction, Paulson compensated Goldman approximately US$15 million and ultimately earned around US$1 billion in profits, while investors including IKB Deutsche Industriebank, ACA Financial Guaranty Corp, ABN AMRO, and Royal Bank of Scotland faced significant financial setbacks.

The SEC alleged that Goldman Sachs "materially misstated and omitted facts" by failing to reveal Paulson’s role in asset selection while portraying ACA as independent. Furthermore, Tourre was accused of misleading ACA about conflicts between Paulson's interests and those of ACA. Goldman denied any misconduct, emphasizing that it provided thorough disclosures, lost $90 million on the deal, and that ACA independently chose the portfolio without knowledge of Paulson’s short position. Goldman also noted that ACA was the largest investor in the asset pool.

Opinions among legal analysts were mixed: some supported the SEC’s argument due to Goldman's minimization of Paulson’s involvement; others contended that sophisticated investors were capable of evaluating risks even without full transparency. Critics highlighted that Bear Stearns had turned down a similar arrangement with Paulson on ethical grounds, underscoring the conflict of interest inherent when short sellers influence asset selection.

The ethical implications extended beyond legal considerations. Observers criticized Goldman for leveraging informational advantages over clients, enabling it to foresee mortgage defaults ahead of investors. This raised concerns about fairness and transparency within Goldman's operational approach and risk management strategies.

The issue drew international scrutiny, with political leaders such as British Prime Minister Gordon Brown denouncing Goldman for "moral bankruptcy," stressing the potential harm to America’s standing as a secure investment destination.

On July 15, 2010, Goldman reached a settlement with the SEC for US$550 million—the largest fine imposed on a Wall Street firm at that time—without admitting guilt. The agreement included $300 million paid to the U.S. government and $250 million to harmed investors. Goldman acknowledged that some marketing materials contained incomplete information and consented to revise certain business practices related to mortgage-backed securities.

Charges against Fabrice Tourre

The July 2010 agreement did not encompass allegations against Goldman Sachs vice president Fabrice Tourre, the sales representative for Abacus. Tourre's attempt to have the SEC lawsuit dismissed was unsuccessful, leading to a trial in 2013. On August 1, a federal jury held him accountable on six of seven charges, including misleading investors regarding the mortgage transaction, though he was acquitted of intentionally providing false statements. Tourre faced no criminal prosecution or imprisonment but was penalized with a $650,000 fine and required to forfeit a $175,000 bonus. After the conclusion of the case, he shifted his professional focus toward academia.

Claims of Commodity Price Manipulation

Under the 1999 financial deregulation statute known as the Gramm-Leach-Bliley Act, commercial banks are permitted to engage in business activities deemed "complementary to a financial activity," provided such activities do not pose substantial risks to depository institutions or the broader financial system. Following this legislation, Goldman Sachs along with other major banks such as Morgan Stanley and JPMorgan Chase expanded their holdings into physical commodities including agricultural products and metals like zinc, copper, tin, nickel, and aluminum.

Critics like Matt Taibbi contend that permitting firms to simultaneously control physical commodity inventories while trading related financial instruments generates conflicts of interest akin to casino proprietors managing NFL teams on which they wager.

Goldman Sachs Commodity Index and the 2005–2008 Food Price Surge

Frederick Kaufman, writing for Harper's Magazine, argued that Goldman's development of the Goldman Sachs Commodity Index (currently known as the S&P GSCI) allowed passive investors—including pension funds and mutual funds—to speculate on food prices through financial products linked to this index. This speculative activity disrupted traditional supply-and-demand relationships, heightened price volatility, and weakened mechanisms designed to stabilize futures markets.

Conversely, a June 2010 article in The Economist defended commodity investors and oil index tracking funds by referencing an Organisation for Economic Co-operation and Development report which revealed that price increases also occurred in commodities lacking futures markets or index fund involvement during the same timeframe.

Accusations of Aluminum Price and Supply Manipulation

In July 2013, David Kocieniewski of The New York Times accused Goldman Sachs and other Wall Street entities of exploiting deregulated commodity markets with a focus on aluminum, based on financial records and regulatory filings. After Goldman Sachs acquired Metro International—a company specializing in aluminum warehousing—in 2010, delivery wait times for aluminum surged from six weeks to over sixteen months. This extension doubled spot market premiums, imposing costs exceeding $5 billion on U.S. consumers between 2010 and 2013. Goldman’s control over approximately one-quarter of the national aluminum supply through its ownership of 27 Metro warehouses in Detroit was implicated. To comply with London Metal Exchange requirements mandating daily metal movement, Goldman allegedly shuffled aluminum stock between warehouses instead of delivering it to manufacturers.

In August 2013, the Commodity Futures Trading Commission issued subpoenas to Goldman Sachs amid probes into potential intentional delays and price inflation at its storage facilities. Lydia DePillis of The Washington Post reported that Goldman encouraged traders to store metal in its warehouses to maximize rental income—a practice similarly employed by Glencore in Vlissingen. Bloomberg columnist Matt Levine dismissed the conspiracy theory as "rather implausible," while acknowledging it highlighted systemic inefficiencies that Goldman may have misunderstood.

Goldman Sachs exited the aluminum warehousing sector in December 2014 by selling Metro International to Ruben Brothers.

Subsequent legal proceedings ensued: in March 2015, a U.S. District Court dismissed antitrust claims against Goldman Sachs, JPMorgan Chase, Glencore, and others due to lack of sufficient evidence. The Second Circuit Court of Appeals revived the lawsuit in 2019 but dismissed it again in 2021, permitting only direct purchasers such as Reynolds Consumer Products to continue litigation. These plaintiffs ultimately reached settlements with Goldman Sachs and JPMorgan Chase in 2022.

This case underscores the inherent risks tied to positions in commodity markets and illustrates how regulatory investigations can influence corporate strategy and financial outcomes within multinational operations.

Speculation in Oil Futures

Major investment banks, including Goldman Sachs, have been accused of contributing to rising gasoline prices by speculating in oil futures markets. In August 2011, leaked documents exposed large positions held by prominent banks such as Goldman Sachs, Morgan Stanley, JPMorgan Chase, Deutsche Bank, and Barclays shortly before gasoline prices peaked in 2008. These financial institutions, despite not producing or physically handling oil, leveraged their substantial capital to influence market prices. Journalist Kate Sheppard of Mother Jones characterized this activity as artificially boosting crude oil prices. Nonetheless, other evidence suggested that many leading banks were actually wagering on a price drop prior to the 2008 peak, casting doubt on the assertion that speculation was the sole driver of price increases.

In April 2011, Goldman Sachs cautioned investors about excessive speculative activity causing volatile and dangerous spikes in oil prices. The firm acknowledged that net speculative positions were quadruple those seen in June 2008 and conceded that speculators had inflated oil prices by at least $20 per barrel. Despite this acknowledgment, Goldman Sachs and other institutions opposed Commodity Futures Trading Commission proposals to impose position limits designed to reduce speculative influence.

By 2012, Joseph P. Kennedy II pointed out that hedge funds and banking entities were injecting billions of speculative dollars into commodity exchanges, thereby elevating prices. This pattern originated in 1991 when Goldman Sachs successfully lobbied for exemptions that classified Wall Street dealers as legitimate hedgers, exempting them from regulatory trade limits. By 2008, eight investment banks controlled nearly one-third (32%) of the oil futures market, underscoring the significant control financial firms exerted over oil trading.

Securities Lending Violations

In January 2016, Goldman Sachs consented to pay $15 million following findings that between 2008 and 2013 its employees arranged securities borrowing to cover short sales without proper verification. U.S. regulations on short selling mandate broker-dealers to have either agreements or "reasonable grounds" to borrow securities prior to executing sales. Additionally, Goldman provided "incomplete and unclear" information during a 2013 SEC compliance review concerning these practices.

Collusion in Facilitating $1 Billion Bribes Related to 1MDB Malaysian Sovereign Wealth Fund (2015–2020)

Malaysia’s Prime Minister Najib Razak created the sovereign wealth fund 1Malaysia Development Berhad (1MDB) in 2009. By 2015, U.S. prosecutors investigated Goldman Sachs’ involvement in raising over $6 billion for 1MDB, with the bank earning roughly $600 million in fees—exceeding 9% of total proceeds.

Starting in 2016, scrutiny intensified over a $3 billion bond issuance for 1MDB handled by Goldman, focusing on potential breaches of the Bank Secrecy Act which mandates reporting suspicious activities. In November 2018, Tim Leissner, former chairman of Goldman’s Southeast Asia operations, admitted that more than $200 million from these bond proceeds was diverted into accounts under his control, circumventing compliance protocols. Leissner, along with ex-banker Roger Ng and financier Jho Low, faced charges related to money laundering. CEO David Solomon publicly expressed remorse for these violations and extended apologies to the Malaysian people.

In December 2018, Malaysia filed criminal charges against Goldman subsidiaries and former personnel for making misleading statements and misappropriating $2.7 billion from bond proceeds linked to 1MDB. In July 2020, Goldman agreed to a settlement paying Malaysia $2.5 billion in cash plus a commitment to return $1.4 billion worth of assets connected to the bonds—significantly less than the original $7.5 billion demand by Malaysia’s finance minister. The agreement included dropping criminal charges against Goldman and its executives; some analysts interpreted this outcome as favorable for Goldman. Nevertheless, Malaysia’s prime minister criticized the settlement as inadequate in September 2023, prompting Goldman to initiate arbitration proceedings against Malaysia in London the following month.

In October 2020, Goldman’s Malaysian subsidiary acknowledged audit deficiencies and consented to pay fines exceeding $2.9 billion related to the scandal. This settlement imposed a substantial financial burden on Goldman Sachs and highlighted the operational and compliance risks inherent in its international business activities.

Funding Venezuela amid human rights concerns (2017)

In May 2017, during the height of the 2017 Venezuelan protests and amidst Venezuela’s critical issues with hyperinflation and widespread malnutrition, Goldman Sachs acquired $2.8 billion worth of PDVSA 2022 bonds from the Central Bank of Venezuela. Critics, including Venezuelan opposition groups and demonstrators, accused Goldman Sachs of facilitating human rights violations by providing financial resources that limited the government's access to foreign currency necessary for food imports. This transaction led to the bonds being dubbed "hunger bonds." The opposition-controlled National Assembly called on the United States Congress to investigate the deal, condemning it as "immoral, opaque, and hypocritical," especially given the Venezuelan government's anti-Wall Street rhetoric. Julio Borges, then president of the National Assembly, asserted that the proceeds would be used to intensify repression against protestors. Sheila Patel, CEO of Goldman Sachs Asset Management’s international division, later described the incident as a valuable lesson that heightened the firm’s commitment to incorporating environmental, social, and corporate governance (ESG) principles.

Engagement with Russia

Goldman Sachs entered the Russian market in 1998 with a focus on investment banking rather than retail operations, a strategy that later aided its navigation through sanctions. Kirill Dmitriev, who was employed at Goldman Sachs in New York during the late 1990s, became CEO of the Russian Direct Investment Fund (RDIF) in 2011 and was appointed Special Representative for Investment and Economic Cooperation by the Russian President in 2025. Dmitriev’s background in Western finance and his network proved advantageous amid ongoing sanctions.

Following Russia’s 2022 invasion of Ukraine, Goldman Sachs announced its withdrawal from Russia, divesting its operations to Armenian firm Balchug Capital in April 2025 after securing Kremlin approval. Nonetheless, Goldman Sachs resumed offering ruble-denominated non-deliverable forwards (NDFs) in early 2025. Vladimir Putin authorized the transfer of Goldman Sachs’ holdings in major Russian corporations such as Gazprom and Rosneft to Balchug Capital.

During Donald Trump’s administration, the phrase "Government Sachs" emerged to describe former Goldman Sachs executives like Steven Mnuchin and Gary Cohn who held prominent government positions. This raised concerns about Wall Street’s influence over US policy and sanctions enforcement. While no concrete evidence exists that Goldman Sachs lobbied directly for relaxed sanctions on Russia, informal interactions—such as Dmitriev’s meetings with Trump associate Steve Witkoff—indicate possible indirect influence aimed at preserving ties with the Russian market.

Goldman Sachs’ cautious re-entry into Russia through ruble derivative transactions and Kremlin-sanctioned asset transfers demonstrates evolving geopolitical conditions. Despite persistent US restrictions, residual commercial interests combined with signals from the Trump era advocating sanction relief—and European companies’ exit from Russia—position Goldman Sachs strategically for a potential future re-engagement in the Russian market.

Financial performance

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Revenue 16.590 15.811 13.986 16.012 20.951 25.228 37.665 45.987 37.665 22.222 39.161 28.811 34.163 34.206 34.528 33.820 30.790 32.730 36.616 36.546 44.560 59.339 47.365 46.254
Net income 3.067 2.310 2.114 3.005 4.553 5.609 9.398 11.407 2.041 12.192 7.713 2.510 7.292 7.726 8.077 5.568 7.087 3.685 9.860 7.897 8.915 21.151 10.764 7.907
Assets (billions) 290 312 356 404 531 707 838 1,120 885 849 911 923 939 912 855 861 861 917 932 992 1,163 1,464 1,442 1,642

Note: Financial figures are presented in billions USD; workforce numbers are in thousands; data sourced from SEC Form 10-K filings (2000–2023).

Ownership

By August 2024, the principal shareholders of Goldman Sachs were predominantly large institutional investors:

Political contributions

In the 2022 U.S. election cycle, Goldman Sachs along with its employees donated a total of $3.3 million to various candidates and political organizations spanning multiple parties; the largest single beneficiary was David McCormick, former CEO of Bridgewater, who received $336,000.

Officers and directors

The board's non-employee members consist of M. Michele Burns, Mark Flaherty, Kimberley Harris, Kevin Johnson, Ellen J. Kullman, Lakshmi Mittal, Adebayo Ogunlesi, Peter Oppenheimer, Jan E. Tighe, Jessica Uhl, and David Viniar. These independent directors are compensated annually with $100,000 in cash plus $350,000 worth of restricted stock; those serving as committee chairs receive an additional $25,000.

List of chairmen and CEOs

  1. Marcus Goldman (1869–1894)
  2. Samuel Sachs (1894–1928)
  3. Waddill Catchings (1928–1930)
  4. Sidney Weinberg (1930–1969)
  5. Gus Levy (1969–1976)
  6. John C. Whitehead and John L. Weinberg (1976–1985)
  7. John L. Weinberg (1985–1990)
  8. Robert Rubin (1990–1992)
  9. Stephen Friedman (1992–1994)
  10. Jon Corzine (1994–1998)
  11. Henry Paulson (1999–2006)
  12. Lloyd Blankfein (2006–2018); Senior chairman (2019–present)
  13. David M. Solomon (2018–present)

See also

External links

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  4. ↑ FCIR p. 145
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