Investment bank JPMorgan Chase tried to contain damage to Wall Street’s reputation yesterday by telling staff not to try to profit from rival Goldman Sachs’ embarrassment over a vitriolic resignation letter published in the New York Times.
JPMorgan Chase chief executive Jamie Dimon warned employees in an internal memo: “I want to be clear that I don’t want anyone here to seek advantage from a competitor’s alleged issues or hearsay – ever. It’s not the way we do business.”
Dimon’s memo, awaiting Asia employees in their e-mail inboxes yesterday morning, was sent to the bank’s global operating committee and later forwarded to wider parts of JPMorgan, said sources who have seen the memo.
JPMorgan declined to comment.
The storm goes to the heart of the reputational crisis in investment banking since public opinion started blaming the industry for its role in the 2008 banking crisis, which brought the global financial system close to collapse.
“This could be just a disgruntled employee, but it comes at a time when the industry is not having a great time,” said a senior mergers and acquisitions adviser. “Franchises can be affected by things like this,” the adviser said.
With the whole industry in a brighter spotlight since 2008, Goldman has faced a series of incidents that threaten to tarnish its image in particular.
Earlier this month it was accused of a conflict of interest for advising El Paso Corporation on its sale to Kinder Morgan, in which the bank was a significant shareholder.
Sources at banks including Citigroup, Credit Suisse and Nomura Holdings said they were not aware of any memo similar to Dimon’s at their respective firms.
While Goldman Sachs is attempting to play down the Greg Smith letter, the firm’s shares fell 3.4 percent in trading in New York on Wednesday, and its impact has become a topic of discussion among employees.
“It’s definitely got people talking in the office,” said a Goldman Sachs trader in Asia who did not want to be named.
“It’s amusing honestly because perceptions depend on the individual. For every one person who has something malicious to say about the company, you’ll find 10 others who have a 180 (degrees different) view,” the trader said.
Several former Goldman Sachs employees who worked at the company before its initial public offering said the firm’s culture did change after it got listed, as Smith alleged, with bankers increasingly under the gun to boost profit.
“The culture definitely has changed since I was there,” said property developer SOHO China chief executive Zhang Xin, who worked at Goldman Sachs some 20 years ago and now is a client of the firm. “Since the company went public there’s this pressure on earnings,” Zhang said.
But two Goldman Sachs clients who work at different hedge funds both said that the criticisms that Smith levelled at Goldman’s corporate culture could equally apply to its rivals.
“If clients want to start awarding business to nicer, friendlier banks that would be great. But I don’t think that is going to happen,” said one industry insider. – Reuters